Cobalt supply: a vital commodity becomes vulnerable

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First, the basics

Cobalt is ubiquitous in our everyday lives. At the end of November, safety concerns prompted the Dow Jones Industrial Average to briefly take a plunge of 400 points. It was the earliest point of a “fall” since August 2008, and it put a scare into a lot of people. For another the Dow’s stock drop earlier this year was similar; the market was down 1,400 points at one point and then more than 1,400 again. Many people just forget that regular market events occur. Not to be cynical, but that kind of stuff happens.

But November’s spectre had something more interesting going for it: It brought to light the short supply of two precious metals that are in big demand because of growing demand for clean energy: cobalt and lithium. Cobalt is used in rechargeable batteries for cell phones, laptops, and electric vehicles. Lithium, made from the ore lithium-ion, is used to make supercapacitors, which hold a charge longer than a battery but cannot be fully discharged until a charge has been released.

These metals are critical for our well-being, but every great demand and supply problem has a solution. That’s why Washington lobbyist Mike Sheehan got up to speak at Wednesday’s White House science fair, celebrating the importance of science education. His pitch: “At the end of the day, we are in the business of winning and staying competitive in the world economy, and that means working together to find solutions for these issues.”

Sheehan recently announced that he had launched Cobalt Now!, a nonprofit to find the answer to the rare, needed materials. Cobalt Now! has partnered with the Cato Institute, a think tank known for its libertarian bent. Among others, Sen. Rand Paul (R-KY) is a fellow, so we know who is a de facto sponsor.

Cobalt mining was once so plentiful that many countries including Venezuela and Democratic Republic of Congo—whose industry was once intertwined with crime and corruption—abandoned it years ago because they could no longer make money from it. Now, the industries that consume that cobalt depend almost entirely on cobalt produced in Australia, Canada, and China. “The cause has pretty much been supplied by a single nation over the last 30 years: China,” Sheehan told the New York Times.

But talk of lithium and cobalt shortages was clumsily reported last week by Quartz, which incorrectly identified these two cobalt ore as “lithium beans.”

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The reason for these shortages

So where does this desire for cobalt come from? Well, it’s not clear:

As with so many commodities, we rely more and more on these vital metals to make things faster, brighter, safer, and cheaper, so these supplies get a lot more demand than they used to. Cobalt is one of the most crucial metals in technology, for example. Other metals are in even greater demand—for example, tiny lithium-ion batteries can make electric vehicles a lot cheaper, and the increased demand for lithium-ion batteries has led to the development of more from mining, but without the same scarcity.

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The solution

There are a few ways to increase supply. One is through the massive mining projects we keep hearing about. Right now, Chinese companies own 85% of the global supply of cobalt. China has invested heavily in cobalt mines on both coasts of Africa.

Another way is to make big deposits of something like cobalt easier to mine. Today, cobalt mining in Canada and Canada’s Atlantic provinces is very difficult to sustain without government-backed subsidies. That’s why companies like Sandstorm Gold—one of the few mines in Newfoundland and Labrador—do well. Sandstorm Gold has teamed up with Cobalt 27 to build a cobalt refinery in Lac Knife, Newfoundland and Labrador. Another way to increase supply is to fund renewable energy. Sandstorm Gold recently partnered with a Chinese company to make an IPO in China, so it can pursue funding in that country as well. Lastly, companies like Dow and Exxon can invest in an increased supply, if they so choose.

One lesson we learned: We need to play hardball to get our energy and industrial companies to invest in more energy. (

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