Identifying supply risks by mapping the cobalt supply chain

Abstract

Cobalt is considered a critical raw material. Global cobalt demand is expected to quadruple in the next four decades, due primarily to lithium-ion battery demand. Uniquely, this study provides detailed geographically explicit data on the cobalt supply chain, with the aim of both determining how susceptible primary cobalt production is to supply chain disruptions, and to evaluate possible supply risks. We conclude that the risks for supply chain disruptions are high. Firstly, the cobalt market is highly concentrated, with more than half of the cobalt mined in the Democratic Republic of the Congo, and almost half of the cobalt refined in China. Secondly, almost all cobalt is mined as a by-product of copper and nickel. Finally, political stability in production countries is considered to be medium to very weak. There are also several factors in play that reduce supply risks. The concentration of the individual mines, refineries and companies remains under the threshold of a concentrated market, and the estimated 80 artisanal cobalt mines further diversify the mined supply. A network analysis shows the important position of companies with high betweenness and degree centrality. A disruption at these companies can affect the functioning of the overall supply chain. The geographic and a network visualization provide useful insights in the supply risks. Based on the analysis, we recommend to diversify cobalt production, through the development of mines, refineries, and efforts to ensure socially and environmentally sustainable artisanal mining.