The need for larger rechargeable batteries and more energy storage for 5G technology is expected to drive a significant increase in demand for cobalt in the coming years and could potentially pit the sector against electric vehicle manufacturers.
5G phones require larger batteries that use lithium cobalt oxide chemistry (LCO) because the antenna used to transmit and receive radio waves requires more power than 4G phones.
The base station antenna for 5G also requires significantly more power, straining the power grid, necessitating the use of energy storage systems now being built in China with lithium-ion batteries containing cobalt .
China leads the way in 5G sales, which have slowed in recent months, but growth is expected to improve after the COVID-19 crisis.
“5G will be a major source of cobalt demand in the coming years,” said CRU analyst Georg Heppel, who expects cobalt demand for portable devices to increase from 45,000 tons this year to 73,000 tons by 2025.
“Down the road we’re likely to see some aggressive bidding for cobalt from electric vehicles and mobile phones, where there really isn’t a chemical that can compete with LCO.”
Electric vehicles typically use cathodes made of nickel, cobalt and manganese, but there are alternatives such as lithium iron phosphate that do not require cobalt.
Estimates for cobalt demand mostly vary between 100,000 and 130,000 tonnes for this year, doubling to between 200,000 and 260,000 tonnes in 2025.
Analysts expect a balanced cobalt market this year and losses from 2022 as sales of electric vehicles and 5G phones pick up.
“As the global transition to 5G technology picks up pace, growth in non-EV markets has significant potential to expand on two fronts: portables and energy storage systems,” analysts at Benchmark Mineral Intelligence said in a note.
“The growth in demand for energy storage systems has already outpaced that of electric vehicles, albeit starting from a very low base, and Benchmark estimates demand for stationary storage to grow 35 percent per year through 2020 “
© Thomson Reuters 2020
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