Cobalt demand on rise as prices expected to fall — Battery sector becomes fastest-growing market

Higher prices for cobalt have led to increased production, and demand is expected to grow still further, according to a report released by a London-based firm of analysts.

Roskill Information Services notes that prices rose to a peak of US$30 per lb. in the early 1990s from US$10 per lb. in the late 1980s. The increase is attributable to higher demand and to a drop in supply from Zambia and Zaire.

Higher prices, however, have led to the development of new cobalt projects, which are expected to depress prices and bring about greater market stability. By the end of the decade, demand is projected to increase by 3% to 3.5% per year. Cobalt prices dropped steadily throughout 1996, reaching a low of about US$19 per lb., only to rise to US$25 per lb. as a result of supply fears stemming from political turmoil in the former Zaire. Prices are estimated to drop to about $US10 per lb. by 2000.

World demand for cobalt was strong in 1996 and is likely to remain so for the remainder of 1997. The growth has been led by the superalloys sector, the largest consumer of cobalt and a supplier of the aerospace industry.

Commercial jet production in the late 1990s is expected to grow by an average of 7% per year.

The battery sector is expected to grow at a faster rate than any other cobalt market over the next five years. Consumption of cobalt in batteries was estimated at between 800 and 1,000 tonnes in 1996 but could reach 4,000 tonnes by 2000. The increased demand is being spurred by the wider use of personal electronics, including cellular phones and portable computers, which require lightweight and easily rechargeable batteries.

World production of refined cobalt rose to 30,000 tonnes in 1996 after falling to 19,000 tonnes in 1993. Production of refined cobalt rose in Canada, Finland and Norway. In Canada and Norway, production has risen by 70% since 1990.