Critical Supplier

Battery boom relies on DRC avoiding chaos of past

- Bloomberg

The cars of the future will depend increasingly on supplies of an obscure metal from a country in the African tropics where there has never been a peaceful transition of power and child labour is still used in parts of the mining industry.

Most major automakers are pledging to build millions of electric vehicles as the world’s governments crack down on climate-damaging emissions from traditional-fuel engines. As a result, demand is surging for lithium-ion batteries, and the materials needed to make them include cobalt, a relatively rare substance found mostly in the Democratic Republic of Congo (DRC).

The country, formerly known as Zaire, supplies 63% of the world’s cobalt. Its market share may increase to 73% by 2025 as producers like Glencore expand mines, according to Wood Mackenzie. By 2030, global demand could be 47 times more than it was last year, Bloomberg New Energy Finance estimates.

“There are a lot of grand plans being put in place by automotive manufacturers, but not many of them seem to have considered the cobalt supply chain,” says Wood Mackenzie director of cross-commodity analytics, in London, Gavin Montgomery.

Few commodity markets are so dominated by one supplier, and that presents a problem for the world’s automakers.

Cobalt is a by-product of copper and nickel mining. Until recently, there were often surplus supplies, as it was used mostly to harden steel. But the metal’s ability to efficiently conduct electricity has made it essential for high-end rechargeable batteries. A typical power unit in an electric car contains about 15 kg of cobalt, though some varieties use less than 5 kg.

Over the next two decades, the global fleet of electric vehicles may reach 282-million, or about 16% of all cars on the road, BNEF analysts estimate.