Cobalt 101 - The Cobalt Play: High Returns, High Stakes
Hong Kong, Mar 7, 2025
By Gaia Research Team.
1. Introduction to Cobalt
1.1. The Strategic Importance of Cobalt
The Strategic Importance of Cobalt is far more than a standard industrial metal - it underpins the shift to a low-carbon economy. As electrification accelerates, cobalt’s significance continues to rise. It remains a key ingredient in lithium-ion batteries, supporting electric vehicles (EVs), energy storage, and consumer technology. With global EV adoption and grid-scale storage expanding, cobalt demand follows an upward trajectory.
Beyond energy, cobalt plays a vital role in aerospace, defense, and cutting-edge alloys. It reinforces jet engines against extreme temperatures, strengthens naval propulsion systems, and ensures the resilience of military-grade materials. Its high melting point and corrosion resistance make it an essential material across industries where failure is not an option.
Yet, the cobalt supply chain remains constrained. Unlike nickel or lithium, cobalt is rarely extracted as a primary resource. Instead, it is a byproduct of nickel and copper mining. This dependency limits production scalability, leading to price volatility and increasing geopolitical risk. While reserves have risen from 7.6 million metric tons in 2021 to 11 million in 2023, production growth struggles to keep pace with demand.

Note: The discrepancy between the trend (orange dotted line) and actual cobalt reserves occurred during the 2019–2021 period, which corresponds to a surge in global cobalt demand. This growth aligns with the rising demand for cobalt, driven primarily by its use in electric vehicle (EV) batteries. From Statista.
1.2. A Concentrated Supply Chain
The global cobalt market is highly concentrated. The Democratic Republic of Congo (DRC) dominates with 79% of global output in 2024, rising from 74% in 2021. In just three years, its production surged from 120,000 to 220,000 metric tons. However, heavy reliance on one country exposes the supply chain to political and ethical risks.

Source: GaiaMine Research; from Statista (2021, 2024), Natural resources Canadian institute (2022), Visual Capitalist (2022, 2023).
Other producers are emerging but remain secondary:
Indonesia increased its cobalt production from 10,000 tons in 2021 to 28,000 in 2024, leveraging its vast nickel reserves.
Russia, Australia, and Canada collectively contribute less than 10% of global supply, with Australia’s share shrinking from 5,600 tons in 2021 to 3,600 tons in 2024.
China dominates the refining process, handling 75% of battery-grade cobalt. Even when cobalt is mined elsewhere, it often passes through Chinese-controlled supply lines before reaching manufacturers. This dual dominance - Congo in mining, China in refining - creates a structural chokehold, heightening supply chain risks.
Western nations are investing in refining capacity outside of China, but establishing competitive infrastructure takes years. In the near term, supply chains remain fragile, and alternative sources struggle to offset existing bottlenecks.

Source: Darton Commodities (2016) and Statista (2023); GaiaMine Analysis
1.3. Applications
The Irreplaceable Role of Cobalt Despite ongoing research into alternative battery chemistries, cobalt remains indispensable across multiple sectors:
Batteries: In 2024, 68% of cobalt demand is tied to batteries, up from 25% in 2010. It improves longevity, enhances energy density, and stabilizes EV and grid storage performance.
Aerospace & Defense: Once accounting for 20% of demand in 2010, its share has declined to 12% as other industries expand.
Catalysts & Chemicals: Demand has dropped from 15% in 2010 to 8% in 2024, though it remains crucial in oil refining and industrial applications.
Magnets & Electronics: Represented 18% of cobalt consumption in 2010 but now stands at 9%, as efficiency improvements reduced cobalt reliance.
Other Applications: Once 22% in 2010, this category has shrunk to 3%, reflecting shifts toward energy storage solutions.
However, the question remains: Can cobalt supply be secured without significant market disruptions, or will structural vulnerabilities lead to prolonged instability?
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