Energy

The Top 10 Reasons Investors Should Look at Cobalt

Published

6 years ago

January 23, 2017

Jeff Desjardins

Every once in a while, a previously underappreciated metal rises to prominence.

Several factors can cause this to happen: new technology, changing consumer preferences, supply constraints, or skyrocketing demand can all bring an unknown metal to the forefront of discussion.

Cobalt could be the latest metal that fits this description. It’s a crucial metal to the boom in lithium-ion battery demand, but it also has an increasingly precarious supply chain that could be very volatile moving forward.

Why Investors Should Look at Cobalt

Today’s infographic comes from eCobalt Solutions, a company focused on providing ethically produced and environmentally sound battery grade cobalt salts.

It presents the investment case for the relatively unknown metal.

The Top 10 Reasons Investors Should Look at Cobalt

With the green movement in full swing, there is compelling evidence that cobalt could be the next relatively unknown metal to rise to prominence.

Here are the top 10 reasons that investors should look at cobalt:

1. Cobalt is one of the few metals used for superalloys.

Nearly 20% of all cobalt is used for superalloys – a class of high-tech metals that originally emerged to suit the high operating temperatures of jet engines.

There are three main superalloy types:

Nickel-based: the bulk of alloys produced
Cobalt-based: higher melting point gives ability to absorb stress, and corrosion resistance
Iron-based: the original superalloy, invented prior to the 1940s

Their use has extended into many other fields – and today, superalloys are used in all types of turbines, space vehicles, rocket engines, nuclear reactors, power plants, and chemical equipment.

2. The green economy runs on cobalt.

There are many types of lithium-ion batteries, but the vast majority of li-ions sold today use cobalt in some capacity.

In fact, by 2020 it is expected that 75% of lithium-ion batteries will contain cobalt. Why? It’s because cobalt is the most important metal for increasing the energy density of lithium-ion cathodes.

3. …And green uses such as EVs are driving the upwards trajectory of cobalt demand.

By 2020, almost 1/5 of cobalt demand will stem from electric vehicles.

Total refined cobalt demand:

Year	Demand	% xEV batteries	% Electronics batteries
2010	64,000	<1%	30%
2015	95,000	6%	36%
2020e	124,000	17%	31%

Source: CRU

“Cobalt’s demand growth profile remains one of the best among industrial metals peers. Its exposure to rechargeable batteries continues to play a crucial role.” – Macquarie

4. Getting cobalt is the hard part.

98% of cobalt is produced as a by-product of copper and nickel mines. The problem? If copper and nickel production isn’t growing, then more cobalt isn’t mined to meet demand.

5. Why not find more cobalt?

It’s easier said than done. The vast majority of the world’s cobalt lies in risky regions like the DRC.

Country	% Cobalt Supply in 2014
DRC	58%
Russia	6%
Cuba	5%
Australia	5%
Philippines	4%
Madagascar	4%
Other	19%

Source: CRU

6. And so supply can tighten…

Chemical cobalt – the kind used in batteries, is expected to fall into a growing deficit over the next few years. By 2020, CRU expects that deficit to be at least 12,000 tonnes.

7. Meanwhile, the U.S. government definitely doesn’t have any strategic stockpiles.

According to the U.S Defense Logistics Agency, the government sold off cobalt all the way up until 2008. Now there is only 301 tonnes left in strategic stockpiles.

8. Cobalt was one of the best-performing metals in 2016.

Metal	2016 performance
Zinc	66%
Cobalt	47%
Nickel	17%
Aluminum	17%
Copper	17%
Silver	16%
Gold	9%
Platinum	1%
Uranium	-42%

9. Cobalt prices have been rising, but they are nowhere near all-time highs yet.

All-time highs for cobalt prices happened in 2008, after the DRC government placed restrictions on export of ores and concentrates. For a brief stint, cobalt prices even exceeded $50/lb.

The current price? Roughly $16/lb.

10. Many experts predict the cobalt market to be interesting to watch in 2017:

“Just how much cobalt is in stockpiles in China is the Million Dollar Question. Clarity here can materially affect the cobalt price.” Chris Berry, House Mountain Partners, LLC

“The refined cobalt market will fall into a 3,000 tonne deficit this year following seven years of overcapacity and oversupply. CRU anticipates prices to increase onward into 2017…” – Edward Spencer, CRU Group

“With this growth will come further disruption to the traditional market structures that have developed in cobalt over the last 30 years. In short, a new, more secure supply chain for the modern era will need to be created, a task that includes new mines, new refineries, and a more transparent supply chain.” – Andrew Miller, Benchmark Minerals

Related Topics:green tesla cobalt batteries lithium ion batteries cathode

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Energy

Visualizing the Scale of Global Fossil Fuel Production

How much oil, coal, and natural gas do we extract each year? See the scale of annual fossil fuel production in perspective.

Published

6 days ago

January 31, 2023

Govind Bhutada

The Scale of Global Fossil Fuel Production

This was originally posted on Elements. Sign up to the free mailing list to get beautiful visualizations on natural resource megatrends in your email every week.

Fossil fuels have been our predominant source of energy for over a century, and the world still extracts and consumes a colossal amount of coal, oil, and gas every year.

This infographic visualizes the volume of global fossil fuel production in 2021 using data from BP’s Statistical Review of World Energy.

The Facts on Fossil Fuels

In 2021, the world produced around 8 billion tonnes of coal, 4 billion tonnes of oil, and over 4 trillion cubic meters of natural gas.

Most of the coal is used to generate electricity for our homes and offices and has a key role in steel production. Similarly, natural gas is a large source of electricity and heat for industries and buildings. Oil is primarily used by the transportation sector, in addition to petrochemical manufacturing, heating, and other end uses.

Here’s a full breakdown of coal, oil, and gas production by country in 2021.

Coal Production

If all the coal produced in 2021 were arranged in a cube, it would measure 2,141 meters (2.1km) on each side—more than 2.5 times the height of the world’s tallest building.

China produced 50% or more than four billion tonnes of the world’s coal in 2021. It’s also the largest consumer of coal, accounting for 54% of coal consumption in 2021.

Rank	Country	2021 Coal Production (million tonnes)	% of Total
#1	🇨🇳 China	4,126.0	50%
#2	🇮🇳 India	811.3	10%
#3	🇮🇩 Indonesia	614.0	8%
#4	🇺🇸 U.S.	524.4	6%
#5	🇦🇺 Australia	478.6	6%
#6	🇷🇺 Russia	433.7	5%
#7	🇿🇦 South Africa	234.5	3%
#8	🇩🇪 Germany	126.0	2%
#9	🇰🇿 Kazakhstan	115.7	1%
#10	🇵🇱 Poland	107.6	1%
	🌍 Other	600.9	7%
	Total	8,172.6	100%

India is both the second largest producer and consumer of coal. Meanwhile, Indonesia is the world’s largest coal exporter, followed by Australia.

In the West, U.S. coal production was down 47% as compared to 2011 levels, and the descent is likely to continue with the clean energy transition.

Oil Production

In 2021, the United States, Russia, and Saudi Arabia were the three largest crude oil producers, respectively.

Rank	Country	2021 Oil Production (million tonnes)	% of Total
#1	🇺🇸 U.S.	711.1	17%
#2	🇷🇺 Russia	536.4	13%
#3	🇸🇦 Saudi Arabia	515.0	12%
#4	🇨🇦 Canada	267.1	6%
#5	🇮🇶 Iraq	200.8	5%
#6	🇨🇳 China	198.9	5%
#7	🇮🇷 Iran	167.7	4%
#8	🇦🇪 UAE	164.4	4%
#9	🇧🇷 Brazil	156.8	4%
#10	🇰🇼 Kuwait	131.1	3%
	🌍 Other	1172.0	28%
	Total	4221.4	100%

OPEC countries, including Saudi Arabia, made up the largest share of production at 35% or 1.5 billion tonnes of oil.

U.S. oil production has seen significant growth since 2010. In 2021, the U.S. extracted 711 million tonnes of oil, more than double the 333 million tonnes produced in 2010.

Natural Gas Production

The world produced 4,036 billion cubic meters of natural gas in 2021. The above graphic converts that into an equivalent of seven billion cubic meters of liquefied natural gas (LNG) to visualize it on the same scale as oil and gas.

Here are the top 10 producers of natural gas in 2021:

Rank	Country	2021 Natural Gas Production (billion m³)	% of Total
#1	🇺🇸 U.S.	934.2	23%
#2	🇷🇺 Russia	701.7	17%
#3	🇮🇷 Iran	256.7	6%
#4	🇨🇳 China	209.2	5%
#5	🇶🇦 Qatar	177.0	4%
#6	🇨🇦 Canada	172.3	4%
#7	🇦🇺 Australia	147.2	4%
#8	🇸🇦 Saudi Arabia	117.3	3%
#9	🇳🇴 Norway	114.3	3%
#10	🇩🇿 Algeria	100.8	2%
	🌍 Other	1106.3	27%
	Total	4,036.9	100%

The U.S. was the largest producer, with Texas and Pennsylvania accounting for 47% of its gas production. The U.S. electric power and industrial sectors account for around one-third of domestic natural gas consumption.

Russia, the next-largest producer, was the biggest exporter of gas in 2021. It exported an estimated 210 billion cubic meters of natural gas via pipelines to Europe and China. Around 80% of Russian natural gas comes from operations in the Arctic region.