Metal properties and end uses
Cobalt (chemical symbol Co) is a magnetic and lustrous steel grey metal and possesses similar properties to iron and nickel in terms of hardness, tensile strength, machinability, thermodynamic properties and electrochemistry. Cobalt is one of only three naturally occurring magnetic metals (with iron and nickel). The melting point of cobalt metal is 1,493°C (2,719°F) with the boiling point 3,100°C (5,600°F). The density is 8.9 grams per cubic centimetre.
Cobalt has 12 radioactive isotopes, none of which occur naturally. These radioactive isotopes can be produced by high-energy physical methods (including neutron bombardment) instead of the metallurgical processing required to produce the naturally occurring Co (58). The most widely known is the radioactive Co (60) isotope which is used for specialist control and monitoring of objects (such as equipment inspection), medical treatment (such as cancer chemotherapy) and tracer substances. This chapter will focus on naturally occurring Co (58).
Cobalt is an important raw material for the production of battery materials, high-temperature alloys, cutting tools, magnetic materials, superalloys (defined below), petrochemical catalysts, pharmaceuticals and glaze materials. When used as an alloy, cobalt improves the high temperature strength and corrosion resistance of more common metals, especially nickel and chromium.
Cobalt is essential in defence and aerospace where it is widely used as an alloying element in a range of high temperature applications known as “superalloys”. Superalloys are high temperature alloys that exhibit superior characteristics including mechanical strength, resistance to thermal creep deformation, good surface stability and resistance to corrosion or oxidation, used typically in jet engine parts and gas turbines.
Overview of cobalt demand
Today, most portable applications are powered by cobalt based lithium ion batteries, initially commercialised in the 1990s, which then bifurcated cobalt demand into new and old economy drivers. New economy drivers have two components: (1) Battery materials, as a means of distributed energy storage in an era of high energy prices, decarbonisation of power grids and powering Electric Vehicles (EVs); and (2) Superalloys. The figure below shows the breakdown of global cobalt consumption. The old economy demand drivers can be summarised as industrial/metallurgical and other uses.
Cobalt Demand for batteries
The cobalt based lithium ion battery was first commercialised by the Sony Corporation of Japan. This technology possesses a number of physical characteristics that represent a significant improvement on the incumbent Nickel Metal Hydride (NiMH) and Nickel Cadmium (NiCd) battery technologies. In particular, lithium ion batteries possess high specific energy (energy/weight), low rates of self discharge (ability to lose charge/energy over time) and are generally maintenance free. Lithium ion batteries may be classified as cobalt versus non cobalt based, with major commercial types shown below:
Cobalt Based Battery Technologies:
Cobalt alloys form part of the lithium ion battery’s cathode material. There are three dominant cobalt based cathode materials; namely:
- Lithium Cobalt Oxide – (LiCoO2) ~60% Co, commonly called LCO
LCO batteries were developed as an early generation lithium ion battery and have subsequently taken mass market share, particularly for small portable devices. The drawback of LCO is a relatively short life span, low thermal stability and limited load capabilities (specific power). LCO is maturing and newer systems include nickel, manganese and/or aluminium to improve longevity, loading capability and cost. Uses include mobile phones, tablets, laptops and cameras.
- Lithium Nickel Manganese Cobalt Oxide: (LiNiMnCoO2) ~15% Co, commonly called NMC
NMC batteries have improved lifespan and specific energy relative to LCO batteries. Uses include electric bikes, medical devices, electric vehicles including the Nissan Leaf, Chevy Volt and BMW i3 and industrial applications.
- Lithium Nickel Cobalt Aluminium Oxide (LiNiCoAlO2) ~9% Co, commonly called NCA
NCA batteries are a more recent development and possess even higher energy densities that NMC batteries. However, they have lower life spans. Uses include medical devices, industrial and electric powertrains, specifically for Tesla motor vehicles.
Non-Cobalt Based Battery Technologies:
- Lithium Manganese Oxide (LiMn2O4) (no cobalt), commonly called LMO
LMO batteries possess specific energies that are typically lower than LCO. However, the technology has greater design flexibility that allows for batteries to be optimised for either longevity (life span), power or specific energy. Uses include power tools, medical devices and electric powertrains.
- Lithium Iron Phosphate (LiFePO4) (no cobalt), commonly called LFP
LFP batteries possess good power characteristics, high current rating and a long life span. The chemistry also provides thermal stability and enhanced safety for high temperature or demanding conditions. The battery is typically used to replace a lead acid battery requiring strong currents and endurance.
Outside of lithium ion batteries, the other dominant rechargeable chemistries remain NiMH and NiCd. NiMH batteries contain nickel (50%), rare earths (30%) and cobalt (6%-10%) whilst NiCd batteries also include nickel and the use of the toxic heavy metal, cadmium, which remains a potential source of pollution/contamination (and thus the European Union has taken legislative steps to ban these batteries from 2016).
Global shipments of battery cathodes (of which cobalt forms an alloying constituent) reached 223,400t in 2015, surging by 30% yoy. Cobalt based batteries continue to dominate with LCO, NMC and NCA technology supplying 68% of the global lithium ion battery market.
The figure below highlights the Global Demand Breakdown of Lithium Ion Batteries by Type – 2015.
Lithium ion battery demand is driven by three broad categories of end use:
- Electric Vehicles – includes Battery Electric Vehicles (BEVs) and Plug in Hybrid Vehicles (PHEVs), Hybrid Electric Vehicles (HEVs), commercial trucks, buses and electric bikes. Globally, EV market growth remains robust, incentivised by significant policy support. EV adoption policies are in effect direct subsidies which are typically designed to deliver energy security, air quality and/or Greenhouse Gas (GHG) emission reductions. Over the last 15 years the EU, US, Japan and China have continuously raised standards for vehicle fuel economy and green house gas emissions, incentivising automotive manufacturers to develop electric alternatives to traditional internal combustion engine designs. EV demand, coupled with increasing battery size as required by the shifting from smaller (~1kWh) HEV batteries (eg: Toyota Prius) to larger EV batteries (~85kWh) (eg: Tesla Model S) is driving significant demand growth – with 2012-2020F 23.7% CAGR.
- Fixed Energy Storage – includes centralised and decentralised behind/front of meter energy storage. The economics of large scale energy storage, allowing households or entire communities to store electrical energy (when it is inexpensive) and consume it (when it is expensive) generates significant economic benefits for the consumer (bill savings), the network (reduced capital and maintenance costs) as well as environmental goals (decarbonisation of grid). Fixed energy storage is forecast to grow strongly (off a small base five years ago) at 2012–2020F 36.7% CAGR. Battery size in this segment varies greatly from modular domestic units (eg: Enphase Inc modular batteries @ 1.2kWh) to massive commercial scale battery banks totalling GWh.
- Mobile Electronics – typically small and portable devices such as laptops, tablets and mobile phones. Mobile Electronics represents small battery size combined with longer cycle life and has held the dominant end use share of lithium ion batteries for nearly two decades coming into 2010. The small rate of Mobile Electronics battery growth (representing near fully penetrated markets multiplied by small battery sizing) relative to EVs and fixed energy storage, will see market share compress from 2012 87.5% to 2020F 15.3%. Figure 19 below shows the Lithium Battery Demand By Application (Global) 2012–2020F.
Production of lithium ion batteries is dominated by the triumvirate of China, Japan and Korea with 95% of global market share. World class production is predicated upon economies of scale coupled with intensive research and development programs. All three of these Asian production powerhouses have displayed a long term focus on battery technology, design and manufacture. Given its initial research and development, Japan received a head start on early generations of lithium ion design and manufacture, but has steadily been losing share as global economics dictate lower production cost centres (Korea and China) gaining share.
China possesses a capital and labour cost advantage and is now dominating lithium ion battery production for the base customer electronics market. Further, China remains a major processing hub for (lithium, cobalt and graphite) lithium ion raw materials, so domestic battery manufacturers retain a logistical advantage compared to exported intermediate products.
A superalloy is an alloy capable of withstanding high temperatures (typically >6000°C), high stresses, and often highly oxidizing (rust promoting) atmospheres with cobalt being one of its main alloying elements. Superalloys are used primarily used in aerospace,
nuclear power, gas turbines and automobiles. Iron and nickel-based superalloys typically contain 10–20% cobalt.
Globally, superalloy market demand totalled 300,000t in 2015. Chinese trade statistics highlight the widening gap in supply and demand over time, with high end superalloys increasingly being imported. However, energised by a supportive, domestically focussed industrial policy, Chinese superalloy production is expected to grow rapidly over the next decade supporting national aerospace, nuclear power and other downstream industries.
Currently, the largest superalloy application is aerospace, occupying ~50% of total consumption (consisting of commercial, business and rotary wing segments), the power sector 20% and machinery 10%. Figure 23 below shows Cobalt Based Super Alloy Applications.
Cobalt production by region
The global cobalt market (2015) is highly concentrated with the top five countries supplying 76% of the global market. The DRC alone supplies 51% of the global market, highlighting the dependence the cobalt market has on one country to supply, and keep on supplying, this strategic metal. Table 6 below shows the Output of Cobalt in Major Countries, 2012–2015.
Price Forecast and Conclusion
Despite global cobalt demand reaching 89,000t (+9.9% yoy) in 2015, the industry was still in oversupply. In 2016 the market is finally in balance, and will swing to increasing multiyear deficits as factors determining cobalt demand (articulated in this research as battery materials, superalloys, magnetic alloys and hard alloys) drive a net demand growth of 2015–2020F 8% CAGR against modest net supply growth of 3.5% CAGR. Figure 29 below shows Global Cobalt Demand Forecast by Application (t).
Looking over the 2011–2020F decade, the market is forecast to report a cumulative deficit of over 22,000t, creating pricing incentives to deliver semi-finished and previously unreported inventories into the market place. Further, the maturing of the cobalt derivatives market with larger customers increasingly enthusiastic to hedge supply risk over longer time frames, will create positive spot price pressures.
On the supply side, the growing political and economic risks within the DRC, as well as the continuing shocks of copper and nickel mines being shut (in turn caused by well supplied copper and nickel markets) will continue to pressure cobalt supply growth.
Against this global backdrop of modest supply and robust demand, the 2016-2020F cobalt price is forecast to achieve US$22/lb.
These trends are shown below in Figure 30 – Global Cobalt Market Balance (t) and Pricing Forecasts (US$/lb).