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Cobalt Market Report 2023
EXECUTIVE SUMMARY:
OUTLOOK REMAINS POSITIVE DESPITE SUSTAINED MARKET WEAKNESS

Battery applications account for 73% of cobalt demand and are the dominant driver of market growth. Electric vehicles (EVs) alone accounted for 96% of 2023 demand growth despite perceived weakness in the sector. EV sales growth is strong but slowing, rising by 33% in 2023, but it is important to note that the industry is building from a very low base and that previous growth rates are not sustainable.

The outlook for EVs remains positive and cobalt has a key role in this critical part of the global energy transition.

[Cobal demand drivers: Cobalt demand reached close to 200 kt for the first time in 2023, with the overall market size more than doubling since 2016. Demand grew 10% y/y at a similar rate to 2022 (9%). Battery demand now accounts for around three quarters (73%) of the cobalt market, up from 71% in 2022. Battery demand grew by 13% y/y, with non-battery applications growing by 2% y/y. Cobalt demand from batteries accounted for 93% of total demand growth in 2023.

Electric vehicles (EVs) alone are now supporting 45% of the market – 90 kt of cobalt demand. Demand from the sector rose 23% y/y, down marginally from 27% y/y growth in 2022. The second largest sector, portable electronics, primarily using LCO cathode chemistries, accounted for 26% of demand despite absolute demand falling 2.4% y/y to just below 52 kt.]

Cobalt remains an important component in a number of the dominant cathode chemistries used in lithium-ion batteries for EVs, portable electronics and nascent demand from energy storage systems (ESS). Cobalt has faced pressure from raw material substitution but maintains a key part in the stability and performance of several major chemistries and is integral to the strategies of many of the major cathode active material (CAM), cell and EV producers outside of China.

Cobalt is used in nickel-cobalt-manganese (NCM), lithium cobalt oxide (LCO) and nickel cobalt aluminium oxide (NCA) chemistries – mid nickel NCM overtook LCO as the primary driver of cobalt battery demand in 2023. Despite strength in cobalt-free lithium iron phosphate (LFP), cobalt-containing chemistries still accounted for 55% of total battery demand in 2023 with this share expected to remain steady in the medium to long term, providing support to growing cobalt demand.

24% of cobalt demand remains supported by non-battery applications with super alloys, primarily for aerospace applications, accounting for 9% of this share. The aerospace sector continued a faster-than-expected post-Covid recovery in 2023, supporting demand for cobalt’s largest non-battery application. Global military spending hit a new record in 2023 which further supports cobalt use in niche defence and aerospace applications. Another notable contributor to cobalt’s use in 2023 – equivalent to 4% of annual demand – was purchasing by China’s State Reserve Bureau (SRB), the first time strategic reserves have been added to since September 2020.

CMOC dominated supply side dynamics in 2023, as the Kisanfu mine started operations and quickly ramped up, exceeding market expectations. Kisanfu alone added 32.5 kt of supply. CMOC, at Kisanfu and also Tenke Fungurume, increased total output by 35 kt to become the largest global producer, surpassing Glencore for the first time. The DRC maintained a 76% market share and supported 78% of annual supply growth. Indonesia – now the second largest producer by some margin – supported 24% of annual supply growth as output increased 86% y/y. The pipeline of high pressure acid leach (HPAL) operations producing nickel and cobalt continues to build at pace as Indonesia looks to capture greater market share in the battery supply chain. By 2030, global supply will become more diversified with Indonesia to account for 16% of cobalt supply, up from 7% in 2023; the DRC’s share will fall to 67%. Over this period, the DRC will support 48% of total supply growth, with 37% from Indonesia.

Cobalt prices continued to decline throughout 2023 following the weakening market conditions in the second half of 2022. Global supply rose by 17% y/y in 2023 whilst demand growth (+10% y/y) maintained similar annual growth rates to 2022. Despite robust demand growth, significant de-stocking of raw materials in the battery supply chain weighed on market sentiment.

With supply outpacing demand, the market surplus widened in 2023 to 14.2 kt, equivalent to 7% of the overall market.

The current low point of the cycle is expected to persist in the short term, weighing on prices, although the medium to long term outlook for cobalt remains positive. By 2030, the cobalt market is set to double in size with 95% of growth supported by battery applications – global battery cell demand is forecast to almost quadruple. Cobalt’s key role in a number of the major existing battery chemistries will underpin market performance over this period. Demand is forecast to outpace supply and the market will shift into a deficit in the mid to late 2020s, providing support to cobalt prices