Chinese mining giant CMOC Group, the world’s leading cobalt producer, has expressed concern over cobalt’s diminishing importance in electric vehicle (EV) batteries.
Despite producing cobalt at a rate surpassing competitors like Glencore Plc, CMOC warns that the energy transition’s future may increasingly bypass cobalt.
The rapid adoption of cobalt-free lithium iron phosphate (LFP) batteries, which are cheaper to produce, has contributed to this shift.
Consultancy CRU Group projects that by 2024, only 31% of EV batteries in China will contain cobalt, a significant drop from 44% two years prior.
“We predict that EV batteries will never return to reliance on cobalt,” stated Zhou Xing, a CMOC spokesperson. He noted that the percentage of batteries containing cobalt could ultimately fall to under 10%.
CMOC’s cautious outlook follows a cobalt market surplus, largely fueled by its own expansion at two large copper-cobalt mines in the Democratic Republic of Congo (DRC).
Production has exceeded targets, driving cobalt prices to their lowest levels since 2016. In contrast, Glencore, formerly the top cobalt supplier, has reduced output at its Mutanda mine in the DRC.
Though cobalt is also used in aerospace alloys and petrochemicals, it is frequently mined as a copper by-product, and CMOC remains bullish on copper’s long-term prospects.
Zhou emphasized that stockpiling cobalt to counteract price declines would be costly due to storage expenses.
“The global cobalt outlook remains bearish,” noted Thomas Matthews, battery materials analyst at CRU, highlighting that new, low-cost refining capacities in China and Indonesia could further press down prices next year, with a recovery possibly years away.
To navigate this challenging landscape, CMOC has strengthened its relationship with Contemporary Amperex Technology (CATL), the world’s largest battery maker and its second-largest shareholder since 2022.
CATL continues to purchase cobalt from CMOC, securing a stable supply amidst a market glut.
“A secure and stable cobalt supply helps us meet customer demand,” a CATL representative confirmed, adding that investment in upstream suppliers ensures supply chain stability.
However, CATL also anticipates continued growth in LFP battery market share.
Despite these alliances, CMOC acknowledges the impact of falling cobalt prices on its bottom line. “We are troubled by the cobalt by-product oversupply driving down prices, which has significantly cut into our profits,” Zhou stated.
In other news, China’s central bank has committed to a supportive monetary policy to bolster economic growth, while Chinese state media has intensified its criticism of the U.S. presidential election.
Economic analysts suggest that a renewed Trump presidency could prompt China to target U.S. agricultural and energy exports for retaliatory tariffs.
