The cobalt battery revolution is only just getting started: what does it mean for people and planet?
May 12, 2023
“The cobalt battery revolution is only just getting started.” This was a common refrain I heard at the Cobalt Congress 2023, held this year at Istanbul. 2021 was the first year electric vehicles (EVs) became the largest consumer of cobalt - and this trend was reinforced in 2022. Demand for cobalt is set to double by 2030 - driven by growth in EVs, a key component of the green transition.
What does this battery revolution mean for people and planet? What’s ahead?
Over the past two years, we have been partnering with the Cobalt Institute - the global trade association for the cobalt industry - on its environmental and human rights work.
We started with work with the Cobalt Institute, its members and Levin Sources on identifying the environmental and human rights risks across the full cobalt value chain, using the salience methodology captured in the UN Guiding Principles on Business and Human Rights, while recognising that some environmental risks are provided weight because of their impact on the planet, irrespective of their impacts on people.
This work in turn paved the way for the creation of The Cobalt Environment, Human Rights and Just Transition Group (the “Cobalt Learning Group”), a peer learning group we have been convening over the past 18 months to build the capacity of cobalt players to strengthen their environmental and human rights due diligence efforts in accordance with international frameworks.
This insight delves into the environmental and human rights risks we identified as part of this process. But first, where does cobalt comes from and what is it used for?
Where does cobalt come from?
Unlike other metals, cobalt is rarely found in its pure form. It comes (mainly) from ore produced as a by-product of copper and nickel mining. This means that we don’t have ‘cobalt mines’ per se - we have cobalt coming out of copper and nickel mines. (This helps explain why it doesn’t make sense to have cobalt-specific expectations, since these expectations need to apply to multiple metals to be realistic for mines to implement.) More and more cobalt is also coming from recycling products that previously contained cobalt. So where does our cobalt come from?
One country in particular supplies the majority of cobalt to the world: the Democratic Republic of Congo (DRC). The DRC provides 73% of cobalt globally (2022 figures).
In 2022, a new major player emerged on the scene: Indonesia. Indonesia became the second largest producer in 2022, overtaking Australia, the Philippines and Cuba, with 5% of the supply (close to 10,000 tonnes). Although this is much smaller than the DRC’s 73% share, experts predict that Indonesia’s cobalt supply will increase ten times by 2030.
Australia, the Philippines and Cuba each have 3% of the supply
Other supplying countries are (in descending order): Russia, Madagascar, Canada, Papua New Guinea, Turkey, New Caledonia, Morocco, Zambia, Finland, China, USA, Mexico and South Africa.
Secondary cobalt supply from recycling has is also a source of supply – up to 5% of total supply in 2022.
Deepsea mining of cobalt is currently at an early experimental stage
What is cobalt used for?
Cobalt has unique physico-chemical properties. The metal is hard wearing and wear-resistant and provides stability and safety to chemistries. This explains why it’s in demand:
Electric vehicles (EVs) became the largest consumer of cobalt in 2021. This was reinforced in 2022: EVs now account for 40% of total cobalt demand. (EVs supported 86% of the annual demand growth of cobalt in 2022). (If you’ve ever wondered: batteries need a positive cathode, a negative anode and electrolyte that act as a catalyst to work. Cobalt serves as a cathode material of many Lithium-Ion batteries - this is the positive electrode that acquires electrons from the external circuit - in short that helps the recharging process. The material used for the cathode is what matters for the durability and range of the vehicle.)
Another important use is portable electronics (phones, laptops, etc.). 30% of demand is in portable electronics (2022 figures).
Another use is superalloys (9%) which are high-strength metals used in aerospace, chemical processing, and power generation - amongst other applications.
There are other uses too: magnets, paints, tyres, ceramics, etc.
There has been a growth in batteries that do not use cobalt (primarily lithium iron phosphate - LFPs) in China. At the same time, cobalt is expected to remain a key raw material in EVs, in large part because of its unique properties which have proven hard to replicate. The Cobalt Institute predicts that cobalt demand will double by 2030, growing at a 10% annual rate.
Environmental and human rights risks
With the sharp increase in demand, driven by a drive to reduce greenhouse gas (GHG) emissions, the cobalt value chain is evolving fast, with new mining operations rapidly starting up and expanding globally. Geopolitics are also rapidly shaping the cobalt landscape – the passage of the Inflation Reduction Act (IRA) in the US and the Critical Raw Materials Act (CRMA) in the EU in particular will shape future supply chain locations.
The environmental and human rights risks we identified through our process with the Cobalt Institute, its members and Levin Sources are as follows:
Extraction and processing: 73% of cobalt globally comes from the DRC. Around 80% of cobalt originates from large scale mines (LSM), while around 10-20% of cobalt is extracted by artisanal -and small-scale mining (ASM). (ASM is where independent miners use their own resources to extract the mineral, and can be formal, led by local cooperatives or other types of legal associations and enterprises, or informal, commonly associated with hazardous working conditions, health care or environmental protection, exploitation, and child labour.) Cobalt-bearing ores are processed using physical, pyrometallurgical and hydrometallurgical methods. The risks at industry level with the highest impact to people and the environment are: child labour; precarious employment; perilous working conditions; workplace exposure to hazardous substances; conflict, disputes or tension with ASM and local communities; GHG emissions; and pollution of land and soil, water bodies and air.
Trading, transportation and warehousing: Cobalt is traded and transported to smelters and refiners for processing, and then to other stages of the value chain. This entails a reliance on transportation (trucking, maritime shipping, etc), with warehousing and other logistics hubs in locations all around the world. The risks at industry level with the highest impact to people and the environment are: workplace exposure to hazardous substances; precarious employment; and perilous working conditions.
Refining and chemical manufacture: 75% of refining of cobalt takes place in China. The crude cobalt product from processing is refined using hydrometallurgical and electrometallurgical methods. This refining then leads to a range of pure cobalt chemicals (such as cobalt nitrate, sulfate or hydroxide) or cobalt metal. These chemicals and metals are then used in the component manufacturing stage - depending on the end product and its specific needs. The risks at industry level with the highest impact to people and the environment are: workplace exposure to hazardous substances; pollution of land and soil, water bodies and air; and GHG emissions.
Component manufacturers and end products: We discussed earlier the fact that cobalt can be used in a range of different applications - EVs, portable electronics, superalloys, and others. The top risks here are workplace exposure to hazardous substances and GHG emissions.
Recycling and disposal: In principle, cobalt is endlessly recyclable, and recycling is on the rise: cobalt recycling is expected to provide 15% of cobalt volumes in 2030 and more than 40% by 2040. This includes recycling of batteries as well as of hard metal scraps. Top risks in this part of the value chain include perilous working conditions; and pollution of land and soil, water bodies and air.
Of course, this list of risks is evolving. For instance, the latest cobalt market report stated that the global warming potential of cobalt mined in Indonesia is almost four times higher than cobalt mined in the DRC (36 kilogram of CO₂ per kilogram of cobalt, as compared to 10 kg to be precise). This is due to the country’s reliance on coal and diesel fuel, over renewable energy, coupled with the lower ore grade available in Indonesia which requires more energy to produce the same quantity of cobalt as in the DRC. There are a range of other environmental and human rights risks associated with mining from Indonesia, ranging from waste treatment concerns, safety of workers (with major accidents still being reported), acidification and eutrophication burdens, and biodiversity concerns.
The risks associated with existing sourcing (e.g. related to artisanal and small-scale mining; child labour and forced labour) are also evolving. And there will likely be more risks to navigate as the cobalt industry evolves – including for instance as the deepsea mining debate continues.
The more entrenched these complex environmental and human rights risks, the harder it will necessarily be for any company to tackle them alone. This is why collaboration amongst cobalt players - and dialogue with those across the value chain, all the way to end use and recycling - is an imperative. This will also stand companies in good stead for the growing scrutiny of this industry, coupled with legislative developments.