Cobalt is the metal most at risk of seeing price hikes.
60% of the world’s supply comes from the Democratic Republic of Congo.
Cobalt is an important ingredient in batteries, accounting for nearly one-fifth of the materials used in their make-up. As most areas and automakers are pushing for mass-adoption of EVs, demand for materials like cobalt will increase. The EU wants to require that these materials be ethically sourced however, according to an assessment prepared by researchers advising the European Commission, this will come at a cost.
An important issue is cobalt which is mainly supplied by the Democratic Republic of Congo. Of the 60% provided by the country, about 1/3 is supplied by small-scale miners and “freelancers”. Imposing regulations on these individuals and other companies in order to limit child labor and other such practices will involve various regulations.
“If, as proposed by the European Commission, due diligence on the cobalt supply chain will be mandatory for batteries sold in the EU markets in the near future, the demand for responsibly-sourced cobalt will increase rapidly,” the study prepared by the EU’s Joint Research Centre said.
This increase will undoubtedly drive up costs according to Bloomberg (subscription required). There is ongoing research being done to develop cobalt-free batteries but in the meantime, mining companies are looking to Australia and its deep-sea reserves of the materials.
