COMMENTARY — Cobalt demand to rise

World demand for cobalt could increase to about 28,000 tonnes per year in 2000, up from 23,500 tonnes in 1995. This demand should remain stable, and could increase further if the price of cobalt remains relatively low.

Increased production of nickel-metal hydrides (NiMH) and lithium-ion (Li-ion) batteries in Japan has led to an increased demand for cobalt in that market. Manufacturers of superalloys remain the largest consumer of the metal, accounting for about 27% of the total. In 1995, the battery market accounted for only 3% of cobalt demand.

The production of Li-ion batteries in Japan, which started in 1993, increased 300% in 1994 and 167% in 1995. The production of NiMH batteries rose 184% in 1994 and 50% in 1995.

Li-ion batteries generate 3.6 volts — three times higher than other types, including NiMH batteries. Since Li-ion batteries also have a higher energy density and weigh less, they are more suitable for portable electronic devices such as mobile phones. NiMH batteries generate 1.2 volts — the same as nickel-cadmium (NiCd) batteries — but perform better. NiMH batteries, however, easily replace NiCd batteries, and have been creeping into the NiCd market.

Since the demand for portable electric devices is expected to increase 18-21% per year by 2000, the demand for NiMH and Li-ion batteries will also increase. Over the next 4-5 years, demand for Li-ion batteries could increase as much as 13-fold over current levels. Demand for NiMH will double over the same period, whereas demand for NiCd batteries will decrease as they are replaced with the next generation of batteries.

Japanese electronics firm Sony is the market leader in the production of Li-ion batteries and is planning an expansion before 2000, as is Matsushita, another Japanese electronics company. Should production of Li-ion batteries expand as planned, total capacity will exceed demand after 1997. As a result, competition would increase and prices would drop. Producers would then be forced to lower costs as margins narrow.

According to Yano Economic Research, a Japanese research company, prices for Li-ion batteries are expected to fall by 38% by 2000, mainly due to decreased costs for raw materials and improved productivity. Prices for NiMH and NiCd batteries are also expected to decrease, though Li-ion batteries will remain more expensive than their competitors.

Assuming that the lithium cobalt oxides used in Li-ion batteries will not be replaced with lithium nickel or manganese oxides (both of which have lower production costs but poorer performance), cobalt demand for batteries (including the NiMH type) will grow to 2,500 tonnes by the year 2000 from 700 tonnes in 1995. Should the market continue to grow at its current rate, demand could increase to 4,000 tonnes.

The demand for cobalt in other markets will also increase, or at least remain steady. Such markets include:

* superalloys in the aircraft industry, where cobalt demand could reach 7,000 tonnes by 2000;

* hardfacing and other alloys, including low-expansion material and high-speed steel, where the demand for cobalt will grow modestly to 1,800 tonnes by the year 2000, up from 1,650 tonnes in 1995;

* aluminum-nickel-cobalt and samarium cobalt magnets, where demand for the metal will increase modestly to 2,600 tonnes by 2000;

* the oil industry, where a possible expansion could raise the demand for cobalt in catalysts to 2,800 tonnes by 2000;

* colors, where the demand for cobalt will remain steady at 3,100 tonnes over the short term;

* sulphates, including anodizing, recording and electrolysis, where cobalt demand will remain steady at about 1,500 tonnes, the same figure as in 1995; and

* organic cobalt compounds, such as tire adhesives and soaps, where cobalt demand is expected to rise to 3,000 tonnes by 2000.

— The preceding is an excerpt of an article originally published in “Cobalt News,” the publication of British-based Cobalt Development Institute.