Commentary: Navigating the cobalt supply chain

Cobalt is vital in rechargeable batteries for electric vehicles (EVs), phones and renewable energy. Challenges in the cobalt supply chain include geopolitics, sustainability issues and social concerns. To secure a sustainable supply, proactive strategies balancing economic viability, ethical sourcing and environmental stewardship are essential.

Cobalt demand is rising as clean energy technologies, such as EVs and energy storage, expand. However, more than 70 percent of cobalt comes from the Democratic Republic of Congo (DRC), posing supply chain risks arising from issues such as political instability and environmental concerns. Stakeholders must focus on sustainable cobalt sourcing to mitigate these risks in the transition to a low-carbon future.

Total global cobalt reserves are approximately 8.3 million tons. Moreover, more than 120 million tons of cobalt resources have been discovered in polymetallic nodules and crusts on the seabeds of the Atlantic, Indian and Pacific oceans.

Cobalt-based battery chemistries dominate the global EV battery market, representing 74 percent of market share. This dominance primarily is attributed to these battery chemistries’ high energy density, supported by the safety and performance provided by cobalt.

In 2021, the cobalt industry generated nearly 1 million jobs worldwide, marking a threefold increase from 2010. Three-quarters of these jobs are indirect, involving subcontracted services for mining, refining and battery production. This highlights the diverse ecosystem surrounding cobalt. The cobalt supply chain globally generated $11 billion in taxes in 2021. This figure is projected to reaching $19 billion by 2030.

The supply chain's heavy dependence on cobalt from the DRC faces risks from political instability, regulatory changes and price volatility. In 2018, soaring cobalt prices strained battery manufacturers and EV producers, highlighting the need for price stabilization to support investment in sustainable technologies.

Cobalt mining, especially in artisanal and small-scale mining (ASM) operations, can result in environmental damage such as deforestation, soil degradation and water pollution. Unregulated practices in the DRC worsen sustainability concerns in the cobalt supply chain. Artisanal cobalt mining in the DRC faces criticism for its poor labor conditions, including child labor and unsafe environments. Ethical cobalt sourcing is a growing concern for companies, investors and consumers given the reputational and regulatory risks associated with lack of transparency in the supply chain.

Building a resilient and sustainable cobalt supply chain requires a multifaceted approach that involves collaboration across industries, governments and nongovernmental organizations (NGOs). A sustainable supply chain needs diversification between domestic and international sources, investing in recycling and circular economy models, ethical and transparent sourcing, investment in cobalt research and development alternatives and strengthening of regulatory frameworks.

The cobalt supply chain is burdened with risks, but it also offers significant opportunities for innovation and leadership in sustainability. By diversifying supply sources, investing in recycling and alternative materials, adopting ethical sourcing practices and driving policy changes, companies and governments can navigate the complex landscape of cobalt procurement. In doing so, they will not only ensure a more resilient supply chain but also contribute to a sustainable future that balances economic growth with environmental and social responsibility.

As the world transitions to a cleaner, electrified future, building a resilient and sustainable cobalt supply chain will be essential for unlocking the full potential of technologies critical to this transformation.

The ability to promptly adapt to operational interruptions through flexible contingency planning and forecasting is what we mean when we talk about supply chain resilience. This includes everything from sourcing materials to logistics and the deliveries of products and services in their final forms.

Prassann Daphal is CEO of Recyclekaro, a leading e-scrap and lithium-ion battery recycling company in Mumbai, India, that extracts critical elements like lithium. More information is available at www.recyclekaro.com.