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The Geopolitics of Cobalt

The name “cobalt” comes from the German word kobold, which translates as “goblin” or “evil spirit.” When sixteenth-century miners in Saxony discovered the metal, they thought they had stumbled upon silver, yet it was later revealed that the ores were poor in metals that were known at the time. Upon smelting, the ore (where cobalt is twinned with arsenic, resulting in cobalt arsenide) was found to produce poisonous fumes and became known for causing “mischievous effects”1 upon miners’ health. Then, as now, the element had a dubious reputation.2

Although once it was feared for its toxic health effects,3 today the focus is more on the adverse consequences that cobalt’s scarcity could have on Western economies. Meanwhile, human rights organizations are concerned about the poisonous effects that cobalt can have on the communities where it is extracted and the social misery its production sometimes inflicts. Goethe’s Faust contains the line “and Kobold shall slave,” which has a timely resonance given the Faustian pacts some have made in order to secure access to this critical material, which indeed slaves away at the heart of modern energy storage devices.

Policymakers, vexed by the challenge that the material’s importance poses to their nations’ security, could be forgiven for following the Saxonian miners in believing that this metal is cursed by goblins. Yet according to folklore, goblins will bring good things to the people they live with, as long as they are treated well.4 But should the relationship turn sour, a goblin’s retribution can be stinging.

For those who have secured access to the cobalt supply chain, the “goblin ore” is currently treating them very well. Once adequate provision is made for its extraction and refinement, the material imparts unique properties to the devices manufactured with it. Others have been less prepared. Those nations which have not secured sufficient supplies of cobalt face the risk that their industries will meet with the same disappointment as the miners who, believing they had discovered silver, ended up with only a pile of black ash and a nasty smell in the room.

In this article, I explore the manifold conundrums that cobalt conjures. To cover such a broad subject succinctly, however, this article can only begin to touch the surface of a vast number of complex issues. Moreover, cobalt does not stand alone in the list of critical materials and technology metals whose supply may become problematic in the years ahead. Each country or confederation will take its own view on a material’s criticality, based on the demands of its own economy and its own political relations with key supply chain actors around the world. While this piece focuses on the cobalt conundrum, the metal offers a window into the issues surrounding many other materials that are growing in importance.

Cobalt: A Critical Material for Advanced Technology

One of the markers that differentiates technology-critical metals from bulk metals is the scale at which they are produced. To give you a sense of scale, in 2019, 1.5 billion tons of iron and 64 million tons of aluminum were extracted from primary resources. By contrast, the amount of cobalt dug out of the ground was only 160,000 tons5—many orders of magnitude lower.

Despite its relative scarcity, cobalt is used in a wide range of applications. Before the nineteenth century, the predominant use of cobalt was as a pigment, used to make “smalt,” which would give the characteristic blue color to glass and ceramics. But apothecary bottles have long ceased to be a major driver for cobalt demand.

Today, cobalt has a wide range of applications in industrial catalysts and health care. Cobalt is also used in superalloys for aircraft engines and other aerospace applications.6 As the aerospace industry considers the hybridization of flight, and greater use of electric drives in its push to decarbonize, samarium cobalt magnets capable of operating at high temperatures are likely to play a pivotal role in future aircraft.7

The major growth market for cobalt, however, is the production of electric vehicle packs. The challenge here is one of scale. While the number of mobile phones on the planet (8.7 billion) is now larger than the global population (7.6 billion),8 and their small batteries tend to use cathode chemistries like lithium cobalt oxide, of which cobalt comprises around 60 percent by weight,9 these batteries are relatively small and contain only around sixteen grams of the material. Contrast this with a Tesla Model S battery pack. Although it uses a lithium nickel cobalt aluminum oxide (NCA) battery chemistry, which is more frugal in its use of cobalt (comprising 5–9 percent by weight), its vastly larger scale means that the total pack contains in the region of fourteen thousand grams of the material.10 In the United States, to electrify every light-duty passenger vehicle on the nation’s roads would require quantities of cobalt, nickel, and lithium that exceed the total amounts mined globally in 2019.11

The pandemic has also impacted the end-use sectors for cobalt. In its 2020 “State of the Market” report, the Cobalt Institute noted that, because of the widespread decrease in flying, use of cobalt in nickel-based aerospace alloys dropped by 12 percent.12 Similar effects were felt in the manufacturing sector, where the dip in industrial production led to a decrease of 8 percent in alloys used in industrial tooling. While the latter may rebound as industry reopens and production resumes, the aerospace market likely will take longer to recover, as sluggish global travel dampens demand. Against this backdrop, however, the rise of cobalt in lithium-ion batteries appears inexorable, with a 10 percent year‑on-year growth in the demand for electric vehicles translating to a 5 percent growth in the consumption of cobalt by application.

Norway has made particularly swift progress in the adoption of EVs.13 Presently, eight of ten new vehicle sales there are EVs (including both battery electric and plug-in hybrid vehicles), and it is estimated that by next year 100 percent of passenger vehicle sales will have some ele­ment of an EV drivetrain14 (this figure includes conventional hybrids as well as plug-in hybrids, though the latter account for less than 10 percent of hybrid sales).

How important is cobalt to the manufacturing of an electric vehicle? Taking the Chevrolet Bolt as an example,15 33 percent of the value of the vehicle is presently embodied within the battery pack. If we then break the pack down into the value distribution between the module, cell, and other components, we see that the lion’s share of the value is in the cell, which comprises 75 percent of the value of the pack. The rest is split between the module (11 percent) and the additional pack components (14 percent). If we further interrogate the value distribution of the cell, we see that the battery materials used in the anode and cathode make up over half of the value of the cell, and again the majority of this is in the cobalt-containing cathode materials.

Although electric vehicles, over their whole life cycle, are cleaner than the internal combustion engine (ICE) vehicles they replace, they are more energy intensive in manufacture, and they rely on the use of critical materials and technology metals which are challenging to pro­cure. Electric vehicles are also responsible for more emissions during production than the ICE vehicles they displace.16 This is one reason why policymakers in Europe have turned their attention to new regulations that aim to decarbonize the production of battery materials.17

These issues have caused a great deal of volatility in cobalt markets, which rallied in 2017 and peaked in April 2018.18 The market turned and prices corrected, however, as the rally was built on speculation rather than physical demand.19

The Cobalt Supply Chain

The United States is heavily reliant on imports of certain mineral commodities that are vital to the Nation’s security and economic prosperity. This dependency of the United States on foreign sources creates a strategic vulnerability for both its economy and military to adverse foreign government action, natural disaster, and other events that can disrupt supply of these key minerals.20

So opens the summary of the U.S. Department of the Interior’s 2018 “Final List of Critical Materials.”21 That America has arrived at a point where control of key resources is largely vested in the hands of competi­tors is the result of a long-standing reliance on the market to develop solutions, and on outside producers to make the necessary investments to deliver these materials. China’s approach is the opposite, with a “government-led approach to securing direct control over the supply chain.”22 Relying on the market means accepting the risk of disruption or shortages, but the impact of these costs may in time prove too great to bear.

Prior to the Covid-19 pandemic, concern over supply chains had been the preserve of logistics and operations management geeks. Most people simply assumed they work, and relied on their seemingly invisi­ble operation to deliver needed products and services. But after the disruptions experienced around the world since the pandemic—from challenges with the initial supply of masks to the recent semiconductor shortages—the public, corporate sector, and policymakers are more acutely aware of the tangible impacts that supply chain disruption can have on societies and economies. To understand the challenges with cobalt, we need to consider its use throughout the whole supply chain—from the mine, to the steps that turn the mined product into a usable material, to its use, end of life, and reuse.

To begin with, there is an uneven distribution of critical materials, including cobalt, around the globe.23 The largest concentration of re­serves is in the Democratic Republic of the Congo, and there are also major deposits of cobalt in Australia, Russia, Cuba, New Caledonia, and Canada. There is only one mine in the world where cobalt is the main ore, and that is at Bou Azzer in Morocco. Cobalt is, in the main, mined as a by-product of nickel and copper, and so the development of new mines for cobalt relies upon the markets for these other metals, too.

Looking at the cost structure of cobalt mining, a 2018 analysis by S&P showed that some of the biggest costs are to be found in transportation (roughly 31 percent), followed by reagents (25 percent); only 11 percent of the cost of cobalt mining is comprised of labor.24 Establishing the infrastructure to move the mined material for processing is very capital intensive. This is perhaps one of the reasons why China’s strate­gy to secure access to Africa’s mineral wealth by offering infrastructure development in exchange has been so successful.25

Another barrier to exploiting cobalt reserves is the enormous investments required to establish and develop new mining operations. In 2019, there were no new cobalt mines in development outside of the DRC,26 and there has been concern about a lack of new projects.27 The “all‑in sustaining cost” (AISC) of cobalt is currently $22,400 per ton.28 With present cobalt prices of $44,000 per ton, all cobalt production is currently cash-positive. But that has not always been the case, with wild fluctuations in the price of cobalt.

One of the notable features of the cobalt market during the past few years is that, following price booms, oversupply from the informal sec­tor can swamp demand. The flexibility of informal mining helps to match supply and demand, but with this flexibility in the system, jus­tifying hugely expensive and high-risk new mine development can be challenging. In addition, when cobalt prices are depressed, some large mines are put into “care and maintenance,” and when prices start to pick up again, mine operations are restarted.29

Significantly, the production of cobalt is amenable to small-scale production—so-called artisanal or small-scale mining (ASM).30 In 2020, ASM comprised 9 percent of cobalt production in the DRC,31 with the Cobalt Institute estimating that this activity employed a hundred thou­sand people.

But there is a significant human cost associated with ASM,32 which has been linked with child labor, hazardous working conditions, and unfair remuneration.33 The Amnesty International report This Is What We Die For: Human Rights Abuses in the Democratic Republic of the Congo Power the Global Trade in Cobalt34 exposed a grim picture, and prompted many of the companies highlighted to take action.35

Companies in the West are understandably squeamish about asso­ciating their brands with such practices.36 More than 380 companies are signatories to the “Responsible Mineral Initiative,” pledging to ensure that the cobalt used in their products is sourced responsibly.37 Nevertheless, there are complex moral and ethical debates around how cobalt is obtained. The Fair Cobalt Association (FCA), which promotes a plan to push positive change in the ASM sector, has said that “Artisanal mining should not be seen as an outlaw [activity], but as people wanting to make a living.”38 The FCA’s plan focuses on implementing monitoring controls and improving the living conditions of ASM communities, as well as offering other alternatives through education, community devel­opment, and financial literacy. The FCA is working with one of the mine concession operators, Congo DongFang Mining/Huayou Cobalt, a Chinese firm. They argue that withdrawing from sourcing cobalt through ASM “is actually an irresponsible business act, which would very possibly aggravate the local poverty in cobalt mining regions and worsen the livelihood of local legal artisanal miners.” In softer tones, and with less vested interest, this sentiment is echoed by Professor Saleem Ali at the University of Delaware, who has warned that broad-based divestment is “parochial from an environmental justice perspective” as it leaves the communities that depend on mining for income without the means to develop economically.

Companies have clearly struggled with the complex issues around sourcing cobalt from ASM. In a Washington Post article, Apple, which sources around 20 percent of its cobalt from Congo DongFang Mining/Huayou Cobalt, was quoted as saying that they do not seek remedies that are solely aimed at “making the supply chain look pretty.” This position evolved following media pressure, including a Sky News investigation that highlighted poor working conditions and child labor in the cobalt supply chain.39 Apple ultimately announced that it would stop buying cobalt mined by hand in the Congo in its entirety.40

Some are also looking to unconventional sources outside of known deposits to diversify the mineral supply chain. Companies have devel­oped marine mining robots that can harvest treasures from the deep and bring them to the surface.41 Cobalt-rich manganese nodules found up to six kilometers beneath the surface42 could yield a bountiful source of battery minerals, including cobalt. Here, however, there are concerns that such submarine scooping of the seafloor could damage marine ecosystems that we barely understand. We know less about the bottom of the ocean than we do the surface of Mars,43 and we could destroy something before we even know what is being lost.44 Furthermore, whatever the impact below the waves, there will also be impacts on land. Pacific island communities want to see plans for deep-sea mining before moving forward.45 Although they have a vested interest in the economic gains that could result from the development of a brand new industry, they also face a greater peril from adverse environmental effects. There are arguments on both sides as to whether deep-sea mining for cobalt is a cure for the climate crisis or a curse.46

Finally, new technology may play a role in aiding the search for new deposits. KoBold Metals is a start-up based in Berkeley which aims to use artificial intelligence and machine learning in order to make sense of complex geochemical, geophysical, and geological data to enable a swifter search for valuable deposits.47

Looking for Cobalt Closer to Home

The need for key technology metals and critical materials to power America’s economy is a noncontroversial issue that attracts bipartisan support. The simple fact is that without these raw materials, manufacturing will grind to a halt, jobs will be lost, and consumers will be disappointed. Yet while there is a broad consensus that access to these materials needs to be secured, there is some divergence between the two most recent administrations on how to achieve these goals.

In 2019, the Trump administration launched “A Federal Strategy to Ensure a Reliable Supply of Critical Minerals.”48 Explicit in that strategy was a directive to the U.S. Department of the Interior (DOI) to search for domestic sources of critical minerals, collect information enabling their extraction, and expedite permitting to allow projects to go ahead. Nevertheless, at present there is little cobalt mining activity in the United States. A small amount is mined in Michigan as well as some extraction from mine tailings in Missouri.49

While the Biden administration’s full strategy will only become known after a yearlong supply chain review,50 its present policy trajec­tory appears to focus on sourcing resources from abroad, representing a departure from the Trump administration. Current plans to improve the supply chains for electric vehicle materials focus on sourcing the materi­als from friendly countries like Canada, Australia, and Brazil, along with developing processing capacity and higher-value activity.51 Looking to near neighbors, Canada represented 3 percent of world cobalt production in 2020,52 and the grades of cobalt produced there are considered some of the highest in the world.53 The Energy Resource Governance Initiative54 is one of the keys to this plan, helping allies develop their mineral resources, rather than permitting new domestic mines.

But is this a missed opportunity? America is believed to have 285,000 tons of known cobalt reserves, while Canada holds 230,000 tons. Al­though U.S. reserves are considerably lower than the DRC’s 3.6 million tons, they still represent a significant source of supply for the continent.55 The concern, however, is that the development of domestic mining capacity could run into roadblocks from environmental and local opposition.56

This concern isn’t entirely unfounded. Proposed work for a new lithium mine near the Oregon-Nevada border has run into problems as tribal lawyers seek to block digging near a scared site where dozens of Native Americans were massacred in 1865.57 Lithium Nevada Corp.’s proposed mine would be the biggest open-cast lithium mine in the world, if it gets approval. Similarly, another planned project faces hur­dles as environmentalists seek to protect a rare desert wildflower that is being considered for endangered status.58 While these challenges relate to lithium—another critical technology metal for lithium-ion batteries—they serve to highlight that such enormous projects are seldom uncontentious. Here, a tricky paradox emerges, pitting local concerns against the global push for decarbonization, with national strategic priorities also in the background.

Not everyone is happy with the Biden administration’s stance. Pini Althaus, CEO of USA Rare Earth has said

The U.S. Government cannot make assumptions that non-U.S. . . . critical minerals producers will sell their materials into the U.S. supply chain and not to China. China is actively and aggressively pursuing acquisitions . . . all over the world, and non-U.S. project owners will make the best commercial decisions for their own shareholders, not the idealistic and regulated approach that U.S. miners will take—prioritizing materials for the U.S. supply chain.59

In a House Natural Resources Committee hearing, Representative Lauren Boebert (R-Colo.) bluntly said, “These ‘not-in-my-backyard’ extremists have made clear they want to lock up our land and prevent the mining of minerals.”60 But even within the Democratic Party, some are worried that this blow to mining communities has the potential to hurt the party’s chances in the 2022 midterm elections.61

Even with an aggressive push to produce cobalt domestically, however, the Biden administration’s review into resilient supply chains still concludes that America does not have sufficient reserves to meet future demand for cobalt.62 So the search continues for new sources. No U.S. president has ever visited the Democratic Republic of Congo,63 but someone has to be the first. Will Biden boldly go?

Whose Production Line Is It Anyway?

Like the mineral itself, the processing capacity for cobalt is unevenly distributed. It is currently dominated by China, and this situation is the source of increasing geopolitical concern. In a Politico piece, Bryce Cocker, CEO of Australia’s Jervois Mining, said, “China is not pro­cessing that refined cobalt to export to the United States to support your electric vehicle revolution. . . . They’re going to make cheap cars them­selves and the best you can hope for is that they’ll export cheap cars to you.”64

China’s Belt and Road Initiative (BRI), introduced by President Xi Jinping in 2013, aims to finance, develop, and build new infrastructure around the world.65 The price levied in exchange is access to natural resources, with China having built over a dozen ports in Africa66 to provide unfettered access to the continent’s mineral wealth. And once cobalt enters China, it seldom leaves for battery manufacturing else­where in the world.67

To illustrate the steps in cobalt processing, let us consider the production of battery materials from copper-cobalt ores. Once the raw cobalt-containing ores are extracted from the ground, they are processed through flotation to produce a cobalt-rich concentrate. Using air bub­bles and agitation, the mineral is brought to the surface, with additives preferentially attracting the cobalt to the froth-flotation bubbles. The sulfide concentrate is then transformed into a soluble sulfate through a process of roasting. This product is then leached, and the remaining copper and iron are removed from the leachate. After filtering, washing, and milling, this substance is then mixed with lithium carbonate and put into a sintering kiln, in combination with other elements depending on the cathode chemistry. This forms the cathode active material.68

At present, 50 to 60 percent of the world’s global refining capacity for cobalt is located in China.69 Furthermore, China controls approximately 85 percent of the world cobalt sulfate processing capacity,70 which is the form used for the manufacture of battery cathode materials. Outside of China, there are also significant processing facilities operated by Freeport in Finland, Umicore in Belgium, and Sumitomo in Japan.71

But what of the future of cobalt processing in the United States? President Biden has proposed a $1.7 trillion infrastructure plan with $174 million earmarked for the development of the U.S. electric vehicle industry.72 In addition, corporate initiatives, like Ford’s recent announcement of an $11.4 billion investment in electric vehicle manufacturing,73 will be a welcome fillip for U.S. efforts in this space. Significantly, Ford has said that it wants to create a vertically integrated supply chain.74 But so far little tangible progress has been made.

Evolution in the Design of Lithium-Ion Batteries

In the United States, the Federal Consortium for Advanced Batteries, in its “National Blueprint for Lithium Batteries,” has called for the elimi­nation of cobalt and nickel from new lithium-ion batteries by 2030.75 In 2020, Tesla announced its goal of transitioning to cobalt-free cells in the future.76 Although some see it as imperative to move the industry away from problematic materials, like cobalt, others question whether such moves will just create more strain on supply chains for other materials.77

There are a variety of different lithium-ion battery chemistries. A few common types include lithium cobalt oxide (LCO), nickel manganese cobalt (NMC), and lithium nickel cobalt aluminum (NCA), all of which contain cobalt. Lithium-iron phosphate (LFP) and lithium manganese oxide (LMO), on the other hand, do not. Decisions around cathode chemistry selection are complex, and automakers’ choice of chemistry depends on a range of factors including the inherent performance characteristics, properties, and cost curves of different materials.78 Some newer cathode formulations are more reliant on switching out the cobalt and replacing it with a higher proportion of nickel.79 These are used for higher performance battery chemistries.80

The growth in high-nickel-content batteries has caused some con­sternation, however, as attention has begun to shift to the impact this might have on nickel supply chains. By way of example, while nickel is not on the European Union’s Critical Materials List, it has been consid­ered an element of interest81 that must be carefully monitored, given the growth in demand anticipated from the battery industry. Elon Musk has said that nickel is his biggest concern for the manufacture of lithium-ion batteries.82

For less demanding applications, lithium manganese oxide batteries (LMO) can sometimes suffice. These batteries present less supply chain concerns than nickel- and cobalt-rich batteries. Another option that may offer a path away from cobalt dependency is the LFP, or lithium-ion phosphate batteries, jokingly referred to by some battery geeks as “rust and fertilizer batteries.” The cheeky moniker provides some insight to the relative abundance of the materials contained within the battery. There is always a trade-off, however. One of the challenges with this battery is that, while intrinsically very safe, removing the cobalt from the formulation reduces energy density, which translates into a lower range.

This is perhaps one of the reasons why LFP batteries have found more traction among Chinese automakers. Pound for pound, this cath­ode material offers less performance than cobalt-containing chemistries. Fortunately, the Chinese market for electric vehicles is more accommodating on this score than the U.S. market. In China, the “neighborhood electric vehicle” has been very popular—small, micro cars using fairly rudimentary technology such as lead acid batteries and off-brand, cheap vehicles83 with the most basic functionality.

Although LFP batteries do not offer the same performance as battery cathode materials that are rich in cobalt, the Chinese automakers have introduced some clever tricks to make the most of the material. One of these concepts is “cell to pack.” If the cathode material won’t offer the same energy density by weight, one response is to be frugal and save weight elsewhere in the battery pack.

In many electric vehicles manufactured to date, individual cells are combined into larger modules, which provide electrical interconnection and a method of fixing the cells into a unit. These modules are then further combined into the battery pack. It is a good design solution that lends itself to serviceability, as modules can be swapped and replaced if necessary. The downside of this design, however, is the added weight of the intermediate module structure, which is “dead weight” in the pack. The cell-to-pack concept omits this intermediate layer, making the cells bigger and combining them straight into packs. This reduces the amount of non-active weight in the battery, so although the cathode material is less energy dense, the overall performance of the pack does not suffer. The effects of these design changes on two key technical parameters, the “gravimetric cell-to-pack ratio” and the “volumetric cell-to-pack ratio,” are immense. The former has been enhanced to over 60 percent and the latter to over 80 percent relative to a conventional modular battery design, which typically posts figures of around 40 percent for both parameters.84

BYD’s “Blade” cell battery pack embodies this concept. The geo­metry is key: larger cells, combined directly into a pack, better utilize space and weight.85 There are also potential corollary benefits for a future circular economy of electric vehicle batteries. The larger, flat cells, on the face of it, appear much easier to disassemble, enabling cleaner extraction of the resources within. Compare this to the cylindrical cell pack design adopted by Tesla, with thousands of small, can-like cylindrical cells, within which electrodes are arranged in a spiral. Careful disassembly of this design would likely not be cost effective, limiting future recycling technologies.

Although some analysts have been cautious about the potential for the adoption of LFP batteries in the West, these forecasters may reevalu­ate their predictions after Tesla’s announcement that it is planning to switch to LFP batteries in its standard-range vehicles in markets outside of China.86 In September, the firm consulted with those on the reservation list for its Model 3 sedans, for sale in the U.S. market, and questioned whether buyers would be prepared to accept LFP instead of the nickel cobalt aluminum oxide cells presently in use. These batteries are cheaper to produce, and so potentially could increase Tesla’s profit margin on the vehicles.

Retaining Valuable Critical Materials in a
Circular Economy

There comes a point when every lithium-ion battery exhausts its potential in its “first life” application. When an EV battery reaches 80 percent state of health (this is when its ability to store energy reaches 80 percent of its design specification), it is considered ripe for retirement. Consumers will notice this change as a drop in vehicle range and perfor­mance, and other factors may be responsible for the car reaching its end of life (crashes, worn trim, old model, etc.).

At this point, a decision must be made as to what happens next: “remanufacture” or “reuse”? Batteries that are still above 80 percent state of health and are classed as suitable for a first-life application may be remanufactured into battery packs for electric vehicles. Remanufacturing can contribute significantly to resource efficiency.87 The other op­tion, reuse, means the battery finds its way into an energy storage application that is different from its first-life application, such as station­ary energy storage, rather than powering another electric vehicle.

It is debatable whether batteries should first pass into reuse in a second-life application, or whether they should go straight to recycling and remanufacture. In part, this depends on the sort of business model that the battery was deployed in in the first instance and who the asset is owned by. If placed on the open market, the battery will naturally go to the highest bidder.88

The market scenario seems to favor reuse. There are a wide variety of second-life applications for batteries,89 but ultimately the use of batteries in these applications will be dictated by the economics of disassembling old batteries and repurposing them (taking into account their diminished performance), relative to the cost of purchasing new batteries. In par­ticular, stationary energy storage is likely to be of increasing importance as electricity grids are decarbonized. Electrical energy storage can be used to stabilize grids, provide backup power, and is a key tool in bal­ancing the intermittency of some renewable energy sources.

Yet while real-world economics may take us down a road of reusing batteries and sweating the asset for as long as possible, this may not be the optimal route from a resource-efficiency perspective. As previously discussed, battery chemistries are evolving, and old batteries with a high cobalt content, enjoying a leisurely retirement in a less strenuous appli­cation, may not be the best use of scarce resources. Recycling has the potential to liberate that critical material. Given cobalt’s value, its presence in end-of-life batteries makes cobalt-rich batteries attractive to recyclers. At present, battery recycling operations have largely focused on recovering the cobalt and nickel from EV batteries, as this is the “low‑hanging fruit” in terms of material value.

Two concepts must be kept in mind when trying to appraise the value that can be recovered from dead batteries. On the one hand, we have the intrinsic value of the materials that are contained within the battery, isolated to their “raw” state. On the other hand, we have the value of the materials when they are combined into a product. The cake is worth more than the flour, eggs, and sugar that went into its production. The same economics apply to electric vehicle battery cathode materials. If we could keep the cathode material in its manufactured state, and “rejuvenate” it into a new material, more value would be retained than if we take all of its constituent components back to earlier stages of the process.

An analogy for this is the game of “snakes and ladders,” or “chutes and ladders,” depending on which side of the Atlantic you are reading this from. If you start at the bottom of the board, each roll of the dice is analogous to one of the processing steps that takes place in the journey from mine to manufactured battery. The different recycling processes are like the chutes or snakes that take you down the board, to an earlier step in the processing sequence. Pyrometallurgy, in which batteries are put into a pyrometallurgical furnace, takes you a long way down the board. Hydrometallurgy, by contrast, still takes you down the board, but not as far. A concept known as “direct recycling” would only take you a short way down the board. In this process, a battery cathode material is cleanly separated from the other components of the cell, “rejuvenated,” and turned into a fresh cathode material. The advantages of this process are numerous. Not only is the value of the materials retained, but also the value in the “structure” of the cathode material—all the energy and labor that has previously been invested into turning the raw battery materials into something useful. The process of reju­venation should be relatively light-touch, and the material can then be used in a new battery.

A number of technical challenges need to be solved in order to operate this process at scale, however. There are also business challenges: would a new battery manufacturer want to provide warranty coverage for a material of unknown provenance that was originally produced by a competitor?

Somewhat paradoxically, this problem is less significant for cobalt-rich batteries. Cobalt is relatively easy to recover from batteries using fairly crude processes, and so the problem of value recovery becomes more pronounced as the amount of cobalt in batteries decreases, and attention turns from trying to recover the value inherent in the materials to trying to recover the value in the whole cathode.

The evolution of batteries also presents a further challenge. While it may be simpler to produce like-for-like rejuvenated cathode material, formulations are changing all the time as manufacturers seek to improve performance and reduce critical materials content. Why would you remanufacture “yesterday’s cathode formulation” when design has im­proved in the intervening years? Could cathode material be upgraded, and old “high-cobalt” cathode material be transformed into a greater quantity of newer, “low-cobalt” cathode material? These are the challenges that materials scientists are currently focused on.

At present, the current state of recycling electric vehicle batteries relies on what is known in the trade as comminution, which could be more accessibly described as “shredding.” Battery cells or modules are fed into a shredder, which breaks them apart and allows the materials to be separated. Comminution is a stock-in-trade of the recycling industry. When presented with large chunks of mixed waste, it makes sense to break them apart into smaller pieces that are more easily accessible for post-shredder sorting. This does pose some problems, however. While shredders break things apart, they also mix things together. The chemis­tries needed to select specific materials from a jumble become increasingly complex (and by implication, more costly and energy intense) if they must select that material from a more diverse mix. So although shredding is mechanically simple, the subsequent chemical processes must be very complicated.

One possibility is to increase the mechanical complexity of front-end disassembly to produce purer waste streams (taking things apart carefully, if you will, rather than just shredding them). The enhanced initial mechanical complexity could then yield gains down the line, as the chemical separation could subsequently be much simpler.90 Automation could be an enormous aid in this respect. At the moment, batteries are largely hand disassembled by trained technicians with insulated socket sets. This is labor intensive and adds significant costs to recycling end-of-life of electric vehicles. There are also substantial risks associated with handling EV batteries at the end of life, particularly in vehicles that have experienced crash damage.91 Automation would help take humans out of the loop in some of these more hazardous and menial jobs. Apple has created “Daisy,” a robot that can aid in the automated disassembly of iPhones for the recovery of valuable critical materials.92

On the other hand, there are more significant challenges involved with disassembling EV batteries. Their physical size and bulk make them more difficult to handle than tiny mobile phones, and there is also an enormous amount of variety in the shapes, sizes, and form factors of EV batteries.93 Although a robot designed to process one model of phone can be relatively “dumb,” dealing with the enormous variety of EV batteries on the market will require advanced robotics with artificial intelligence. Scientists at Oak Ridge National Laboratory have demonstrated automated disassembly of EV batteries,94 and similar work is going on in the UK.95

There is much that could be done to make new batteries easier to recycle, but it remains to be seen whether that is a priority for manufacturers. Here, policy can play a role. Although new EU battery regulation only applies in the jurisdiction of the European Union, its impacts will certainly be felt by U.S. automakers that want to sell into that market.96 Enhanced producer responsibility legislation has more traction in the European Union than in the United States, but some U.S. states are also experimenting with it, with Maine introducing legislation for consumer packaging.97

The Competitive Advantage of Nations

In the history of innovation, it is often the case that the nations responsible for developing new technologies are not always the ones to profit from their commercialization. Consider the 2019 Nobel Prize for Chemistry, awarded for the development of the lithium-ion battery.98 M. Stanley Whittingham was working for Exxon in the United States when he discovered how to make battery cathodes from titanium disulfide and paired this with an anode of metallic lithium. John Good­enough discovered, while working at Oxford University (and later moving to the United States), that lithium ions could intercalate through cobalt oxide, which formed the basis of modern cathode materials. Akira Yoshino, working in Japan, discovered that lithium ions could also intercalate through petroleum coke. These three innovative discoveries combined form the basis of modern lithium-ion batteries.

Yet in this case, as in many others, the countries who developed and nurtured these transformative discoveries have not (so far) been the ones to capture the enormous treasure that has been generated from their commercialization. As others have noted in this publication, the invest­ment required for battery manufacturing scale-up has been a poor fit for venture capital funding, but it has been a good fit for government-backed funding initiatives in China, which have been able to take a long-term strategic view.99 Indeed, the unparalleled resources of the Chinese state provide an abundant source of patient capital for the development of new industries in China’s race to “catch up with and surpass the United States.”100 Chinese governance guidance funds (政府引导基金) are unmatched in their scale, scope, and reach. The blurring of state and market101 in China has also created unique conditions that have allowed Chinese manufacturers to capture all elements of the cobalt supply chain from mine to manufactured product. Given the formidable lead that China has attained in this race, and the “tender economic choke points”102 around resource availability, it is hard to imagine this situation changing any time soon.

In an essay in this publication, Walter M. Hudson draws an analogy between current U.S.-China tensions and the competition between Great Britain and the United States in the Edwardian Era.103 He argues that one of the factors driving the success of America and Germany in the late nineteenth and early twentieth centuries, relative to Great Britain, was “domestic resource abundance.”104 Another was that indus­try in Great Britain could not match the scale of developments across the Atlantic. English firms, for example, could not match the production rate of Chicago’s Western Electric for producing telephones, and so were locked out of lucrative opportunities.

In the words of Sydney J. Harris, “History repeats itself, but in such cunning disguise that we never detect the resemblance until the damage is done.” Today, we see the West struggle to develop manufacturing capacity at the same scale as China. In 2020, 7.6 percent of the world’s lithium-ion battery manufacturing was located in the United States, an order of magnitude lower than China’s 73.5 percent.105

Benchmark Mineral Intelligence is tracking plans for two hundred large-scale (greater than one gigawatt hour) battery factories (of which 122 are already operational) in the pipeline to 2030.106 As of 2021, 148 of these are in China, 22 are in Europe, and 11 are in America.107 By the end of 2021, 77 percent of this capacity will be located in China. Under current plans, by 2030, this figure will only see a modest decline to 67 percent.108 The race is being won, for the foreseeable future at least, by “Eastern Electric.” But it isn’t just about having a factory. In a hotly contested space, competition over resources will be the real stumbling block to competitiveness in the electric vehicle space.

China’s daunting lead in the race to secure key critical materials poses an existential challenge to manufacturing industries in the West. Borne out of fear, sometimes the discourse around the need to catch up can border on Sinophobic. Yet in a world where rapid decarbonization is an imperative, the foresight shown by China, and its ability to strategically coordinate economic activity and elevate long-term goals over short-term profit,109 is impressive.

It should be a source of embarrassment to the West that decades of laissez-faire policy,110 complacency, stagnation, and inertia in the auto­motive industry have led us to the point where Western products are no longer competing on merit. For the first decade of the millennium, one of America’s premier brand names had become more associated with the death of the electric car111 than the birth of a new era. The moniker of “legacy automakers”112 will be challenging to shake off.

Not so long ago, it was easy to dismiss the quality of Chinese autos, but now they are serious contenders. If the current crop of Chinese products were allowed to compete toe-to-toe against Western products for squeezed consumers focused on value for money, they would be creating a serious headache for Detroit.113

The one bright spot in the United States is Tesla, whose growing market share has undoubtedly motivated everyone to improve their performance. Where some have perceived China as a threat, Elon Musk has spied opportunity. Musk is sanguine about China—“China rocks,” he says114—even though Tesla has not received the same level of support as domestic companies.

A Positive-Sum Game

At the recent COP26 summit, the spotlight was on solutions to address the climate challenge.115 Cobalt is one of the critical materials that will underpin the transition to cleaner technologies. The International Energy Agency projects that the technology improvements required to limit global warming to two degrees Celsius will result in a twentyfold increase in the demand for cobalt by 2040.116 This underscores the scale of the problem and the massive efforts that are required to meet this target. The availability of technology metals will be one of the key priorities of the 2020s.117

As everyone scrambles to secure inroads to resources and the pro­cessing capacity to turn them into salable goods, it is worth noting that we really need not just one but many countries around the globe to increase capacity in this area. This is not simply a competition between nations, but a competition against old technologies, the power of incumbency, and the socio-technical systems that we have constructed over many decades.

While many countries may have been late to recognize the urgent need to secure the materials of the future, the early gains made by indus­tries in far off lands should be a call to raise our game in the West. And this is not a zero-sum game. The more critical materials that we can lib­erate across the globe to aid us in the herculean task of reducing our de­pendency on fossil fuels, the faster we can accomplish that transition.

This article originally appeared in American Affairs Volume V, Number 4 (Winter 2021): 62–79.

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39 Don Reisinger, “Child Labor Revelation Prompts Apple to Make Supplier Policy Change,” Fortune, March 3, 2017.

40 Todd C. Frankel, “Apple Cracks Down Further on Cobalt Supplier in Congo as Child Labor Persists,” Washington Post, March 3, 2017.

41 Kate Baggaley, “These Fearsome Robots Will Bring Mining to the Deep Ocean,” NBC News, February 27, 2017.

42 Baggaley, NBC News.

43 Maddie Stone, “The Impacts of Deep Ocean Mining Will ‘Last Forever,’ Scientists Warn,” Gizmodo, June 27, 2017.

44 Maddie Stone, “The Deep Sea Could Hold the Key to a Renewable Future. Is It Worth the Costs?,” Grist, June 17, 2020.

45 Pita Ligaiula, “Pacific Island Climate Groups Demand World Leaders Halt Support for Fossil Fuel,” Pina, October 25, 2021.

46 Robin McKie, “Is Deep-Sea Mining a Cure for the Climate Crisis or a Curse?,” Guardian, August 29, 2021.

47 Maddie Stone, “The Big Tech Quest to Find the Metals Needed for the Energy Overhaul,” MIT Technology Review, August 11, 2021.

48 U.S. Geological Survey, “Trump Administration Announces Strategy to Strengthen America’s Economy, Defense,” news release, June 4, 2019.

49 Office of Efficiency and Renewable Energy, “Battery Critical Materials Supply Chain Opportunities,” U.S. Department of Energy, June 29, 2020.

50 Ernest Scheyder and Trevor Hunnicutt, “Biden Looks Abroad for Electric Vehicle Metals, in Blow to U.S. Miners,” Reuters, May 25, 2021.

51 Scheyder and Hunnicutt, Reuters.

52State of the Cobalt Market in 2020,” Cobalt Institute.

53 Lemain, Mining Global.

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55 Lemain, Mining Global.

56 Scheyder and Hunnicutt, Reuters.

57 Scott Sonner, “Tribes: New Evidence Proves Massacre Was at Nevada Mine Site,” Associated Press, October 5, 2021.

58 Sonner, Associated Press.

59U.S. Miners React to Biden’s Move to Ditch U.S. Development of Critical Minerals: China Wins,” Mining Connection, June 4, 2021.

60 Mark Moore, “Biden Looking to Import Materials Needed for Electric Vehicles,” New York Post, May 26, 2021.

61U.S. Miners React to Biden’s Move to Ditch U.S. Development of Critical Minerals: China Wins,” Mining Connection.

62 White House, Building Resilient Supply Chains, Revitalizing American Manufacturing, and Fostering Broad-Based Growth.

63 Uzodinma Iweala, “Joe Biden Has a Chance to Reshape America’s Relationship with Africa,” Financial Times, September 1, 2021.

64 Savage, Politico.

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66 Thornett, American Affairs.

67 Office of Energy Efficiency and Renewable Energy, “Battery Critical Materials Supply Chain Opportunities.”

68 McGuiness and Ogrin, Securing Technology-Critical Metals for Britain, 62.

69 Marcelo Azevedo et al., “Lithium and Cobalt—A Tale of Two Commodities,” McKinsey & Company, June 2018.

70 Ernest Schneyder, “U.S. Senate Moves Forward on Plan to Develop Electric Vehicle Supply Chain,” Reuters, May 14, 2019.

71 McGuiness and Ogrin, Securing Technology-Critical Metals for Britain.

72 Scheyder and Hunnicutt, Reuters.

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74 Erickson, S&P Global.

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77 Maddie Stone, “The US Wants to Make EV Batteries without These Foreign Metals. Should It?,” Grist, June 30, 2021.

78 McGuiness and Ogrin, Securing Technology-Critical Metals for Britain, 56.

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88 “Retired lithium-ion batteries always moves towards the highest bidder. And you will get out most from the batteries if you reuse them. Today on ebay: £15/kg for these mobile phone batteries. The cobalt in the batteries is worth around 6.50 after they have been processed.” Hans Eric Melin, Twitter, July 27, 2018.

89 Yanyan Zhao et al., “A Review on Battery Market Trends, Second-Life Reuse, and Recycling” Sustainable Chemistry 2, no. 1 (2021): 167–205.

90 Dana Thompson et al., “To Shred or Not to Shred: A Comparative Techno-Economic Assessment of Lithium Ion Battery Hydrometallurgical Recycling Retaining Value and Improving Circularity in LIB Supply Chains,” Resources, Conservation and Recycling 175 (December 2021).

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97 Sara Kiley Watson, “To Shore Up Packaging Recycling, Maine Is Making Businesses Foot the Bill,” Popular Science, August 3, 2021.

98 Bethany Halford, “Lithium-Ion Battery Pioneers Nab 2019 Nobel Prize in Chemistry,” Chemical & Engineering News, October 9, 2019.

99 David Adler, “Financing Advanced Manufacturing: Why VCs Aren’t the Answer,” American Affairs 3, no. 2 (Summer 2019): 43–57.

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