The era of electric batteries has revolutionized the industry, placing cobalt at the heart of this transformation as an essential component. However, the collapse of prices for this metal in the market necessitates a reevaluation of its strategic place. As new technologies favor cheaper and equally effective alternatives, the traditional role of cobalt is being questioned. The Democratic Republic of the Congo, as the world’s leading producer, sees its economy impacted by this fall, raising both economic and ethical issues. Indonesia, for its part, continues to increase its production as a byproduct of nickel, accentuating the redefinition of priorities in the battery sector. Debates are heating up around sustainability and human rights associated with the extraction of this highly coveted metal.
The Collapse of Cobalt Prices
Recent months have seen a dramatic drop in cobalt prices on the international market. This decrease is mainly attributed to a global production surplus, exacerbated by the rise of new mines in the Democratic Republic of the Congo (DRC) and Indonesia. The Chinese group CMOC, as the main player in global production, has nearly doubled its annual capacity, which has led to a surplus of cobalt, thus causing a decrease in demand. A surplus of 245,000 tons is expected in 2024 for a total demand of 237,000 tons, highlighting the imbalance between supply and demand for the blue metal.
Changing Demand for Batteries
With the increase in cobalt-free battery systems like LFP (lithium iron phosphate) batteries, the role of cobalt is becoming less central. Many automotive companies are turning to these alternative solutions, which reduces the demand for cobalt in new battery technologies. In China, the world’s largest consumer of batteries, LFP batteries are increasingly being adopted, particularly for electric vehicles, as they offer more competitive prices than traditional cobalt-containing batteries.
Economic Challenges for the DRC
This drop in prices has not only an impact on companies worldwide but also significant repercussions for the Democratic Republic of the Congo. As the leading global producer, the DRC faces major economic challenges. The ongoing decline in prices exacerbates the country’s economic vulnerabilities and raises questions about the necessary diversification of its economy. The situation requires particular attention to ensure the economic sustainability of a nation whose economy heavily relies on the mining sector.
