Cobalt producers in a race to cover the growing supply gap – BofA report

The exponential demand growth for cobalt is placing pressure on producers to increase supplies to cover the growing supply gap as electric vehicle (EV) penetration rates in auto production rise above 50% by 2030, new analysis by Bank of America Global Research has found.

The bank's Global Commodity Research team suggests three routes to bridging the supply gap: production increases at miners and refiners; improved processing technology; and recycling.

Sibanye-Stillwater (JSE: SSW), which is repositioning its portfolio towards MIFTs (metals important for future technologies), outlined in its 1H21 results that an increase of "requirements for EV production is already starting to have substantial implications for battery metal supply and is expected to accelerate.

"The resultant increased demand for battery metals to support a prolonged expansion of the global battery electric vehicle (BEV) fleet over the next two to three decades is going to require commensurate increase in the supply of battery metals. Primary expansion of the scale needed to meet BEV growth […] will be challenging.

"As an alternative source of supply, recycling is therefore likely to become a more significant contributor to battery metal supply as batteries and vehicles start reaching the end of their useful lives in increasing numbers towards the end of the decade and a circular economy is established."