As a strategic raw material, cobalt is indispensable for high-performance batteries, alloys and chemical catalysts. Its physical properties – high energy density, temperature resistance and magnetic stability – make the silvery-grey metal irreplaceable for modern industry. At the same time, questions about sustainable extraction and security of supply are moving into the public spotlight and investors alike.
Source: Stockdio*
After a period of significant price declines due to the pandemic-related demand shock, the cobalt market has gradually stabilized since mid-2023. Demand from the battery industry picked up faster than expected with the global ramp-up of electromobility, while new Indonesian refinery capacities eased the supply pressure. Nevertheless, the market remains vulnerable: political uncertainties in the Congo, announcements of western funding projects and the growing importance of Chinese cathode manufacturers are causing short-term fluctuations. In parallel, recycling flows from used electric vehicles are becoming increasingly important, which will create an additional source of supply in the medium to long term. Overall, a fragile equilibrium is emerging in which small disruptions on the supply side can quickly trigger noticeable price reactions. There is therefore still a high demand for hedging structures on the metal exchanges.
The areas of application for cobalt range from energy technology to aerospace and the chemical industry. As an alloy additive, it gives superalloys extreme heat and corrosion resistance, while in lithium-ion batteries it increases energy density and cycle stability. In addition, cobalt plays an indispensable role in pigments, catalysts and hard metals for innovative high-performance technologies worldwide.
In lithium-ion batteries, cobalt stabilizes the cathode structure, increases energy density and extends service life. This makes it central to electric vehicles, stationary storage systems and mobile electronics. Although technological advances are reducing the cobalt content per cell, the absolute growth in demand remains considerable due to increasing unit numbers and is regarded by governments as a key element of the energy transition.
In nickel- and cobalt-based superalloys for gas turbines, aircraft engines and rocket nozzles, the metal provides exceptional high-temperature strength. The alloys retain their mechanical stability beyond 1,000 °C, which increases the efficiency of turbines and extends maintenance intervals. Despite substitution research, cobalt remains technically dominant here and is often irreplaceable for aviation approvals due to strict safety standards and reliability.
In combination with tungsten carbide, cobalt serves as a binder that makes hard metals dimensionally stable for drills, milling cutters and cutting inserts. These tools withstand extreme abrasion and temperatures in metal processing, mining and the construction industry. Cobalt-containing hard metals enable higher cutting speeds and more precise tolerances while significantly reducing tool wear and production costs per component.
Cobalt salts act as highly active catalysts in petroleum refining, in the Fischer-Tropsch synthesis and in the production of vitamins and polymeric plastics. They accelerate reactions, improve yields and reduce energy consumption. Research into green processes uses cobalt-based nano-material to electrochemically convert CO₂ into valuable chemicals, potentially reducing industrial emissions.
For centuries, cobalt has provided intense blue tones for glass, ceramics and artist pigments. Modern applications include heat-stable, non-toxic pigments in automotive and building paints as well as in temperature-sensitive color-changing inks. Cobalt oxide pigments retain their color stability under UV exposure and high temperatures, which is why designers and industrial laboratories rely on them reliably, valued worldwide for long-lasting aesthetics and functional surface protection.
The areas of application for cobalt range from energy technology to aerospace and the chemical industry. As an alloy additive, it gives superalloys extreme heat and corrosion resistance, while in lithium-ion batteries it increases energy density and cycle stability. In addition, cobalt plays an indispensable role in pigments, catalysts and hard metals for innovative high-performance technologies worldwide.
The majority of the global primary supply comes from copper and nickel mines, where cobalt is produced as a by-product. Around two thirds of mine production comes from the Democratic Republic of Congo, followed by Indonesia, Russia, Australia, the Philippines and Canada. In recent years, Indonesian high-pressure acid leaching plants (HPAL) have increased the availability of refined cobalt sulfate and involved Chinese metal producers more closely in the value chain. Western mining companies are driving forward projects in Idaho, Finland and Morocco to reduce their dependence on Central African deposits. At the same time, the supply from recycling is growing, especially from battery scrap, which is slowly increasing the secondary share of the overall market. Nevertheless, the supply remains concentrated and is subject to risks from infrastructure deficits, security issues and changing legal frameworks in the producing countries.
Global demand is dominated by the battery industry, above all producers of electric vehicles and energy storage systems. China bundles most of the cathode production and imports significant quantities of refined cobalt sulfate and hydroxide. South Korea and Japan also need the metal for high-performance batteries in consumer electronics and vehicles. European cell factories, which are being created as part of the regional industrial transformation, are also increasing their demand, while US funding policy is aiming for new supply chains in its own country. In aerospace, cobalt remains indispensable because of its role in superalloys, which creates demand from turbine manufacturing. In addition, specialty chemicals, hard metal and pigment industries absorb steady volumes. Despite substitution efforts, market analysts expect a further growing demand profile.
Investors have various ways to participate in the cobalt theme. Direct investments in physical metal are possible via standardized high-purity bars or warehouse certificates at specialized warehouses, but require high insurance costs. Alternatively, price exposures can be built up via exchange-traded futures contracts or cobalt swaps on metal exchanges, offering short-term trading opportunities for professional market participants worldwide.
Shares in mining and recycling companies as well as specialized commodity ETFs that hold cobalt in a basket with lithium or nickel are more widely accessible. Opportunities lie in the surge in demand from electromobility, but operational risks such as political instability, ESG requirements and volatile metal prices can amplify price movements. Investors should therefore carefully consider diversification, hedging strategies and long-term sustainability criteria.
The cobalt price reacts primarily to production volumes in the Congo and Indonesia, surges in demand from the battery industry, inventories on metal exchanges and exchange rate and energy costs. Political instability, ESG regulations and technological substitution trends can also trigger rapid price movements and increase volatility, especially if supply chains are interrupted or funding laws have to be changed at short notice – companies must then react immediately.
More than two thirds of global cobalt production comes from the Democratic Republic of Congo, especially from the Katanga copper belt. Indonesia is rapidly expanding its capacities and could supply the second largest share in the medium term. Other relevant producers are Russia, Australia, the Philippines, Canada and Cuba, although political framework conditions influence the funding dynamics.
Research activities focus on low-cobalt or cobalt-free cathodes such as lithium iron phosphate, high-nickel NCA and solid-state chemistries. These designs reduce dependencies on the raw material, but require compromises in terms of energy density or service life. Marketable substitution is therefore to be expected gradually, not as a short-term replacement. Recycling and material efficiency remain crucial strategies for security of supply and sustainability in parallel.
Recycling from used batteries, hard metals and electronics is becoming increasingly important as it makes it more independent of geopolitical risks and reduces the CO₂ balance and water consumption. Although the share of the total supply is still in the single digits, analysts expect a significant double-digit market share by 2030, which is accelerating investments in take-back systems and chemical processing technologies and creating jobs.
Private investors mostly use exchange-traded funds that map cobalt-exposed mining stocks or commodity futures contracts. Individual shares of producers, explorers or recycling companies enable more targeted bets, but involve higher volatility. Direct metal purchases, on the other hand, are capital and storage intensive. In any case, risk tolerance, diversification and ESG aspects should be checked before making a commitment decision in order to limit losses.
Source: Stockdio*
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