Indonesia is expected to overturn the Democratic Republic of Congo (DRC) to become the global cobalt leader by 2040 (IEA).

Cobalt production in the DRC is expected to decline by 45% by 2030 due to declining ore quality.

As a byproduct of nickel, Indonesia's cobalt production will increase by nearly 80% by 2040.

This shift may reduce the DRC's share of global supply and impact mining revenue dynamics.

According to data from the International Energy Agency (IEA), the DRC, currently the world's largest cobalt producer, is expected to cede its top position to Indonesia in the 2040s. This is part of the "Global Critical Minerals Outlook to 2025" report released by the IEA on May 21st.

Currently, the DRC accounts for more than two-thirds of the world's cobalt production. However, the IEA expects that due to declining ore quality, production will decrease by 2030. Specifically, the agency predicts that the country's cobalt production will significantly decrease by 45% by the 2030s.

In stark contrast to this trend, as the world's leading nickel producer (with cobalt as a byproduct), Indonesia is expected to see its cobalt production grow by nearly 80% by 2040. As a result, Indonesia's output will surpass that of the DRC.

This prediction aligns with the Cobalt Institute's "2024 Cobalt Market Report," which forecasts that the DRC's share of global cobalt supply will drop from 76% in 2024 to 65% in 2030. Meanwhile, Indonesia's market share should expand from 12% last year to around 22%.

While a reduction in production may mean a weakening of Kinshasa's influence on the cobalt supply chain, the impact on the DRC's mining revenues remains difficult to assess. In 2022, the Central Bank of the DRC estimated that cobalt accounted for approximately 21% of the country's exports. However, due to economic diversification over the next decade and the announcement of disinterest in metals, cobalt may become less important to the nation before it loses its leadership role.

As the main driver of cobalt demand, the electric vehicle market has already shown signs of economic slowdown. Additionally, energy storage projects are increasingly favoring lithium iron phosphate (LFP) batteries over traditional cobalt or nickel-based batteries.

We have witnessed a truly significant decline in the intensity of nickel and cobalt usage in battery demand. Martin Jackson, a commodities advisor at London-based CRU, explained.

How Kinshasa will respond to these changes remains uncertain. The government is currently working to enhance the DRC's position in downstream stages of the value chain, such as refining or battery material production, which seems to be a viable alternative to cushion the impending impact.

Source: Ecofinagency

Original article: https://www.toutiao.com/article/1832847236296768/

Disclaimer: The article solely represents the author's personal views.