- Clean Energy Demand: EVs and renewable energy systems require significantly more minerals than traditional technologies. By 2040, demand for lithium, cobalt, and graphite is expected to grow 20–40x.
- Market Growth: The cobalt market alone is projected to grow at 6.7% annually from 2025 to 2030, while graphite and lithium markets are also expanding rapidly.
- Supply Challenges: Over 70% of cobalt comes from the Democratic Republic of Congo, raising ethical and geopolitical concerns. Companies are exploring alternatives like cobalt-free batteries.
- Investment Opportunities: Mining stocks, ETFs, and futures contracts offer ways to invest, but risks like price volatility and supply chain disruptions require careful management.
Quick Comparison of Key Battery Metals
Battery metals are a high-growth market, but success depends on navigating risks like supply chain instability and investing in sustainable, innovative technologies.
The True Cost Of Mining Electric Car Battery Metals
Cobalt Markets and Investment
The cobalt market hit $16.96 billion in 2024 and is expected to grow at a steady 6.7% annual rate from 2025 to 2030. This growth is largely fueled by increasing demand for EV batteries and energy storage systems.
Cobalt Market Forecast to 2030
Batteries used in electric vehicles are predicted to dominate cobalt usage, with demand projected to reach 176,000 metric tons by 2030[2]. Non-battery applications will contribute an additional 65,000 metric tons to overall demand[2]. Meanwhile, global cobalt production is expected to grow at an annual rate of 5.1%, reaching 410.9 kilotons by 2030[1].
This strong demand highlights investment opportunities, as shown by recent high-profile partnerships:
"From the mid to late 2020s, strong demand growth is expected to outstrip supply. Prices are forecast to recover to incentivise further supply investment and support rising future market demand."
– Dinah McLeod, Cobalt Institute director general[1]
Supply Chain Risks
Despite the promising growth, the cobalt market faces challenges tied to geopolitical and ethical issues. Over 70% of the world’s cobalt supply comes from the Democratic Republic of Congo (DRC). Globally, the cobalt industry supported nearly 1 million jobs in 2021 and generated $11 billion in tax revenues, a figure expected to rise to $19 billion by 2030[4].
Artisanal and small-scale mining (ASM) in the DRC presents particular concerns. In 2020, ASM made up 9% of the country’s cobalt output, employing around 100,000 people[3]. Organizations like the Fair Cobalt Association (FCA) are working to improve conditions in this sector. These challenges highlight the importance of exploring diversified sourcing or alternative technologies.
New Battery Tech Without Cobalt
To address supply chain issues, companies are developing cobalt-free battery technologies. Tesla revealed in April 2022 that about half of its new vehicles now use lithium iron phosphate (LFP) batteries, which don’t require cobalt[5]. Similarly, the U.S. Department of Energy has outlined plans to phase out cobalt in lithium batteries by 2030[6].
"For mass electrification to happen, there are lots of sentiments that cobalt needs to be eliminated or reduced to the bare minimum."
– Chibueze Amanchukwu, professor of molecular engineering at the University of Chicago[6]
However, cobalt-free options like LFP batteries come with trade-offs. They tend to have lower energy density, which can reduce driving range. As Sam Adham of LMC Automotive explains:
"There is already a viable cobalt-free battery and that is lithium iron phosphate or LFP. But the main downside of LFP is low energy density and therefore driving range."[6]
Graphite in Battery Production
The graphite market, worth $17.4 billion in 2023, is projected to grow to $27.8 billion by 2032, driven by a 5.3% annual growth rate [8]. This surge is fueled by increasing demand from electric vehicle (EV) batteries and energy storage systems.
Natural vs. Synthetic Graphite
Battery manufacturers must decide between using natural or synthetic graphite, each with distinct advantages and challenges:
"Energy consumption in synthetic graphite production far outpaces energy demands for spherical graphite production, leaving synthetic graphite producers more vulnerable to soaring costs, reduced energy availability, and forced closures" [7].
These differences directly influence supply chain strategies and regional production priorities.
Global Supply Chain Analysis
Natural graphite usage in batteries grew from 210,000 tonnes in 2021 to 300,000 tonnes in 2022 [9]. Companies are working to reduce dependency on Chinese imports by developing localized supply chains. For instance, Graphite One is linking Alaskan mining operations with an anode facility in Ohio [8]. Similarly, Northern Graphite Corp.'s Bissett Creek mine in Ontario is focusing on reducing environmental impact. A life cycle assessment revealed that producing one kilogram of anode-grade graphite results in 9.5 kilograms of CO₂e emissions [10].
Clean Production Methods
To address environmental concerns and supply chain challenges, companies are innovating to lower the carbon footprint of graphite production. Nouveau Monde Graphite's Matawinie mine, located north of Montreal, is set to introduce an all-electric mining fleet by 2028 and aims to produce 42,000 tonnes of anode material annually starting in 2025 [10]. Urbix Resources has also developed a processing method designed to reduce environmental harm.
"Investing in and building environmentally responsible processing capacity that greatly reduces these environmental risks is critical for the energy transition" [10].
"Synthetic graphite costs are high due to its energy-intensive, petroleum-based production" [10].
These advancements not only address environmental concerns but also open up new opportunities for investments in sustainable graphite production.
Other Key Battery Metals
Beyond the primary metals, several others are experiencing rapid growth and shifting market trends.
Lithium Market Analysis
The lithium market is on a steep growth trajectory, with its valuation projected to jump from $22.19 billion in 2023 to $134.02 billion by 2032, reflecting a CAGR of 22.1% [11]. The Asia Pacific region leads the charge with a commanding 66.2% market share, while the U.S. market is expected to reach $13.45 billion by 2032 [11]. A notable example of market activity is the partnership between SQM and LG Energy Solution. Their agreement, spanning from 2023 to 2029, secures over 100,000 metric tons of battery-grade lithium carbonate and lithium hydroxide [12].
Nickel in EV Batteries
Nickel's importance in electric vehicle (EV) batteries continues to grow. By July 2023, the average EV battery contained 25.3 kilograms of nickel - an 8% increase compared to the previous year [13]. This trend is reflected in the following market data:
"The major advantage of using nickel in batteries is that it helps deliver higher energy density and greater storage capacity at a lower cost." [16]
Price trends also underline nickel's evolving role. Nickel cathode prices have fallen 33% year-to-date in 2023, dipping below $22,000 per tonne, while nickel sulfate prices have dropped 18% in the same period [13].
Rare Earths and Copper Markets
The EV boom is driving up copper demand, particularly for charging infrastructure. Rare earth elements, essential for EV motors, further emphasize the importance of these materials. However, global supply chains remain complex, with new mines taking an average of 17.9 years to develop. This presents both hurdles and opportunities as demand grows [17].
Tesla showcases how the industry is adapting. The company is moving from an NMC 811 battery composition to NMC 955 (90% nickel, 5% manganese, 5% cobalt), aiming for higher energy density while reducing dependence on scarce resources [15].
"Although the capacity to produce nickel sulfate is expanding rapidly, we cannot yet identify enough nickel sulfate capacity to feed the projected battery forecasts." [14]
The global battery manufacturing market is forecasted to hit €450 billion by 2035 - a tenfold leap from 2020 levels. This surge opens up opportunities across the supply chain, from mining operations to recycling programs [18].
How to Invest in Battery Metals
Investment Options Comparison
When it comes to investing in battery metals, you have several approaches: mining stocks, ETFs, and futures contracts. Each option comes with its own set of benefits and risks, making it important to choose based on your experience and goals.
For example, the Global X Lithium & Battery Tech ETF manages $1.3 billion in assets with a 0.75% annual fee [21]. Another option, the iShares Global Clean Energy ETF, provides broader exposure, managing $2.1 billion at a 0.41% fee [21].
Mining Project Assessment
Evaluating mining projects requires a close look at several key factors: resource quality, deposit grade, stability of the operating jurisdiction, management experience, and financial health. These elements help in determining a project's potential value.
Here’s what you should analyze:
- Net Asset Value (NAV) per share: A crucial metric for valuation.
- All-in sustaining costs (AISC): Helps assess profitability.
- Jurisdiction stability: Political and economic conditions matter.
- Management team track record: Experience can make or break a project.
- Financing capabilities: A well-funded project is less risky.
According to S&P Global Mobility, lithium production will need to increase by 270% by 2030 to keep up with the demand for EV batteries [22]. However, price volatility and supply concentration are ongoing challenges, making risk management essential.
Risk Management Methods
Investing in battery metals comes with unique challenges, especially price volatility. For example, cobalt prices have dropped more than 60% from their peak as of mid-August 2024 [19]. To navigate these fluctuations, strategic risk management is key.
One effective tool is battery metals derivatives, which allow investors to hedge against price swings without holding physical inventory. This is particularly useful given the battery cell market's expected 20% annual growth through 2030 [23].
"Battery metals derivatives are valuable tools for those looking to navigate what is a highly volatile market for these critical resources." - Clarksons [23]
Geographic risks are another concern, especially with high supply concentrations in regions like the DRC. Companies that focus on vertical integration or form strategic partnerships across the supply chain can help reduce these risks [24].
Fastmarkets analysts predict a continued surplus in the global cobalt market for 2024 [20]. For smaller companies, experts suggest focusing on producing value-added products instead of raw concentrates.
"I think the key for smaller companies is to be targeting value-added products further downstream than simply a concentrate, such as cobalt sulfate, targeting the battery supply chain." - Caspar Rawles, Benchmark Mineral Intelligence Chief Data Officer [20]
Conclusion
Market Growth Forecast
The demand for battery metals is skyrocketing due to the shift toward clean energy. By 2030, electric vehicles are expected to account for nearly half of global vehicle sales, significantly boosting the need for essential materials. The lithium-ion battery market is projected to grow over 30% annually from 2022 to 2030, surpassing a market value of $400 billion [25][29].
Here are some key projections for battery metals:
In 2024, annual battery demand exceeded 1 terawatt-hour (TWh) [27]. Meanwhile, CMOC Group Limited has become the largest cobalt producer globally [26]. These trends highlight the urgency for strategic investments to capitalize on these growth opportunities.
The rapid expansion of the energy storage market emphasizes the importance of aligning investment strategies with this transformative shift.
Next Steps for Investors
Investors should take proactive steps to position themselves effectively in this evolving market:
- Diversify Supply Chains: Focus on companies operating in stable regions. For instance, Sovereign Metals Ltd's Kasiya Project in Malawi is a standout example, hosting the largest rutile deposit globally along with significant graphite resources [28].
- Embrace Technological Innovation: Support businesses that are advancing efficient production methods and next-generation battery technologies.
"The lithium‐ion battery value chain is set to grow by over 30 percent annually from 2022‐2030, in line with the rapid uptake of electric vehicles and other clean energy technologies... It is time we transition to a more circular, sustainable, and just value chain that protects our planet's biodiversity, resources, and ensures that human rights are respected globally. We can achieve the sustainable future we all desire, but only if we work together for it." [29]
