Critical cobalt overshadowed by lithium
Critical Minerals Alliances 2022 - September 12, 2022
Last updated 9/20/2022 at 2:45pm
Replacing this oft-maligned lithium-ion battery metal comes at a cost
Traditionally a headline-grabbing metal due to the perceived human rights and monetary costs it adds to lithium-ion batteries and the electric vehicles they power, cobalt is being overshadowed by the enormous demand and price increases for the lithium and nickel that also go into the storage cells that deliver the "E" to the EV revolution.
Cobalt, however, continues to be a vital ingredient that improves the energy density and longevity of EV batteries.
"Future facing commodities like cobalt play a pivotal role in decarbonizing energy consumption and the electric vehicle revolution," said Ash Lazenby, U.S. cobalt marketer and trader at Glencore. "Glencore is already a leading producer, recycler and supplier of these commodities, which underpin our own ambition of achieving net zero total emissions by 2050."
Cobalt miners such as BHP have thus far been able to keep pace with the growing demand for this future-facing battery metal.
Late last year, S&P Global Market Intelligence forecast that the cobalt market would move into surplus in 2022 after suffering an estimated shortage of 1,800 metric tons in 2021.
More than 70% of the world's cobalt, however, comes from mines in the Democratic Republic of Congo (DRC), a country plagued with political and social issues. This puts the supply of this critical battery metal at risk of disruptions from civil unrest.
As it turns out, natural disasters are also a risk tolled by placing this much global cobalt supply in one basket. In April, heavy flooding in South Africa washed away infrastructure that is used to deliver cobalt mined in DRC to ports and then onward to global markets.
This situation forced Glencore, the world's largest cobalt producer, to invoke force majeure due to the inability to fulfill its contractual commitments for cobalt from its DRC operations. This disruption could motivate battery and automakers to put further effort into implementing battery chemistries that reduce the amount of cobalt needed – a task that is not easy without sacrificing the safety and performance provided by this critical transition metal.
At the same time, governments and mining companies are advancing projects that will diversify the supply chain and lower the risk of supply disruptions for this critical battery metal.
Changing the recipe
While flooding that prevented much of the global supply of cobalt from leaving Africa adds to EV manufacturers' desire to lessen the amount of this metal going into lithium-ion batteries and look for alternative sources, the headline-grabbing human rights conditions in DRC was the original impetus for these moves.
Artisanal mining in DRC has been condemned by human rights advocates due to the unsafe working conditions for the men, women, and children digging into some of the richest sources of cobalt on Earth.
It is estimated that artisanal mines, a term given to small family-scale mining operations that typically involve hand digging to extract the desired mineral, are the source of 10 to 20% of the cobalt coming out of DRC, or roughly seven to 14% of global supply.
Perceptions that the cobalt going into a battery may have been dug up by a child working in unsafe conditions is a problem for EV and green energy companies seeking to demonstrate the highest levels of environmental, social, and governance (ESG) standards.
Bending to pressure from human rights groups and socially conscious EV drivers, many electric automakers and lithium-ion battery manufacturers have sworn against sourcing their cobalt from DRC – especially artisanal mines.
The perception that cobalt could be tainted by DRC human rights abuses has automobile and battery manufacturers looking for solutions, including less cobalt-intensive recipes for cathodes.
Tesla, which delivered nearly 1 million EVs to customers during 2021, is among the companies seeking lithium-ion battery chemistries that require less cobalt.
Eliminating cobalt from the lithium-ion batteries, however, is akin to developing a gluten-free pizza crust recipe – alternatives are available for those who absolutely cannot have gluten, but it is tough to develop a flourless recipe that has all the attributes that would make all pizza lovers want to eat the pie.
While other transition metals such as manganese, nickel, iron, and titanium are potential substitutes in a lithium-ion battery recipe, none can match cobalt when it comes to delivering high-voltage, energy density, and the movement of lithium ions.
"Moving away from high cobalt content means the new cathode materials must be optimized for all of these performance characteristics via subtle changes in the arrangement of the transition metals and their relative compositions," the U.S. Department of Energy explains.
Responsibly sourced cobalt
While government and industry efforts are expected to lower the percentage of cobalt going into each battery, this will not offset the massive volume of batteries to be produced over the coming years and decades. This has EV manufacturers, even those looking to eliminate cobalt from batteries altogether, racing to the mines to ensure they have the socially and environmentally responsible supplies of this battery metal.
Tesla, General Motors, and BMW are among the automakers that have cut deals for responsibly-sourced cobalt for the batteries going into their EVS.
In April, GM struck a multi-year agreement to purchase cobalt from Glencore's Murrin Murrin operation in Western Australia, which sidesteps any controversy related to whether the battery metal came from an artisanal mine in DRC.
Both Glencore and GM are also members of the Responsible Minerals Initiative, a group of 400 companies and organizations dedicated to ensuring mineral supply chains contribute positively to social-economic development globally.
"GM and our suppliers are building an EV ecosystem that is focused on sourcing critical raw materials in a secure sustainable manner," said Jeff Morrison, vice president of global purchasing and supply chain at GM. "Importantly, given the critical role of EVs in reducing the carbon footprint of the transportation sector, this agreement is aligned with our approach to responsible sourcing and supply chain management."
For GM and other North American EV manufacturers seeking to establish secure and sustainable supply chains, sourcing cobalt in the U.S. and Canada would be ideal.
While the U.S. and Canada only produced 5,000 metric tons of cobalt during 2021, which accounted for about 3% of global production, both countries have cobalt-enriched areas that could provide North American supplies.
Cobalt is great place to look
When looking around for a potential North American source of cobalt, a town in a mining jurisdiction like Ontario that brandishes the name of this critical battery ingredient is a great place to start.
This aptly named town about 260 miles north of Toronto is known for the rich stores of silver-cobalt mineralization historically produced there.
While this region still has the potential to feed cobalt into lithium battery supply chains, bringing a cobalt refinery that operated there from 1996 to 2015 out of retirement is considered a first priority.
Toward this goal, the provincial government has invested C$5 million to help support Electra Battery Materials Corp.'s efforts to upgrade and expand this refinery to deliver battery-grade cobalt into North American supply chains.
Since acquiring the refinery, Electra has been advancing a strategy to develop an eco-industrial park around the hydrometallurgical facility that is capable of supplying enough battery materials for 1.5 million electric vehicles per year.
Toward this objective, Electra is upgrading and expanding the existing refinery to produce 25,000 metric tons of battery-grade cobalt sulfate annually, which will account for more than 25% of this important lithium-ion battery ingredient produced outside of China.
In parallel, a circuit is being built alongside the cobalt refinery that will recycle lithium, nickel, cobalt, copper, and graphite from spent lithium-ion batteries. Electra also plans to add a plant to produce nickel sulfate, another key lithium battery ingredient, during later phases of development at the park.
This would make the Electra Battery Materials Park – which lies within 500 of Detroit, Michigan – a major hub for supplying battery-grade cobalt, nickel, lithium, and graphite needed for EV manufacturing facilities being built in Canada and the U.S.
Electra also owns more than 10,000 hectares (24,700 acres) of silver-cobalt exploration properties along the Ontario Cobalt Belt near the emerging battery park, which could offer new sources of cobalt coming out of the critical minerals-enriched province.
In addition to its Ontario initiatives, Electra is in talks with the Quebec government to build a cobalt refinery in a battery materials park being developed near the town of Becancour, a region that has quickly earned the name Battery Valley.
General Motors, POSCO Chemical, and BASF are among the global-scale corporations developing battery materials and recycling plants in this strategic Quebec locale.
Now, Electra has entered into preliminary talks with Quebec officials to build a cobalt refinery in Battery Valley.
"Given a forecasted deficit in domestic cobalt sulfate production by 2025, we have received significant interest from industry and government stakeholders to build a second refinery in North America," said Electra Battery Materials CEO Trent Mell. "The industrial park in Bécancour, Quebec is quickly becoming an important future hub for EV battery materials in North America given its numerous advantages, including a deep-water port, extensive infrastructure, hydro-electric power, strong support from the Quebec government, and a qualified work force."
An Idaho alternative to DRC
In the U.S., Electra is advancing exploration on its Iron Creek cobalt-copper project in Idaho, which hosts one of the few primary cobalt deposits in the world.
"At a time of heightened geopolitical tensions, America must commit to securing a domestic supply of critical minerals for the green energy transition," said Mell. "Idaho is arguably the most prospective location in the world to identify new primary sources of cobalt outside the DRC."
According to a 2019 calculation, Iron Creek hosts 2.2 million metric tons of indicated resource averaging 0.26% (12.3 million pounds) cobalt and 0.61% (29 million lb) copper; plus 2.7 million metric tons of inferred resource averaging 0.22% (12.7 million lb) cobalt and 0.68% (40 million lb) copper.
In March, Electra announced that broad widths of strong copper-gold mineralization tapped with drilling extends the higher-grade cobalt mineralization at Iron Creek. A mine at this high-grade and growing cobalt deposit could provide a North American source for Electra's refinery.
"Electra's ultra low carbon refinery in Canada will create the first domestic supply of battery grade cobalt for EVs later this year and Idaho can become an important part of a continental onshoring strategy that is both in the national interest and good for the environment," said Mell.
In addition to Ontario and Idaho, several North American exploration projects have the potential to offer cobalt as a coproduct of other metals that would be produced if a mine were to be developed.
One of the most intriguing of these deposits is at Fortune Minerals Ltd.'s NICO cobalt-gold-bismuth-copper project in Northwest Territories.
According to a 2020 plan, a mine at NICO and an associated refinery would produce an average of 1,800 metric tons of battery-grade cobalt sulfate; 1,700 metric tons of bismuth; 300 metric tons of copper; and 47,000 oz of gold annually over the first 14 years of mining.
In January, Fortune entered into a deal to acquire a former steel fabrication plant in Alberta to build a refinery to process concentrates produced at NICO.
"Cobalt, lithium and nickel are all minerals with huge demand in the modern world. Fortune's new refinery is exactly the type of job creating, diversifying investment we envisioned with our mineral strategy and action plan," said Alberta Premier Jason Kenney.
Giga Metals Corp.'s Turnagain project in British Columbia is another potential Canadian source of cobalt, which would be produced along with nickel, another important material in lithium-ion batteries.
A 2020 study outlines plans for a mine at Turnagain that would produce an average of 33,215 metric tons of nickel and 1,962 metric tons of cobalt annually over 37 years of mining.
It just so happens that the tailings left behind after the nickel and cobalt extracted from the ore at Turnagain are really good at absorbing carbon dioxide out of the atmosphere.
Testing carried out by University of British Columbia Professor Greg Dipple showed a mine at Turnagain has the potential to offset nearly all the CO2 if an electric mining fleet charged with Northern BC hydropower was used to do the digging and hauling.
In Alaska, a world-class copper deposit being advanced toward development by Ambler Metals, a joint venture owned equally by Trilogy Metals Inc. and South32 Ltd., has the potential to produce cobalt alongside the copper needed in vast quantities for EVs and renewable energy.
According to a 2022 calculation, Bornite hosts 6.3 billion lb of copper and 88 million lb of cobalt.
Metallurgical work shows promise that a cobalt concentrate could be produced at this world-class Alaska deposit, which is a good indication that a future mine there could produce the battery metal as a byproduct.
While such cobalt byproducts have often not been economical to pursue in the past, the rising demand and prices of a metal that is hard to replace in the lithium battery recipes will likely make such endeavors an intriguing option to boost and diversify cobalt supplies.