The war between supply and demand continues in the market of rare earth metals and strategic mineral resources. Today, in the context of the global energy transition and growing demand for electric batteries, there is no resource more important than cobalt. Cobalt is predominantly used as a cathode and its specific content in final products is insignificant, but despite this, demand for it is growing every year.
Chinese corporations control the majority of the cobalt market: they currently own approximately 60% of the world's production capacity. In addition to controlling key production cuts, the Chinese are actively engaged in buying up processing technologies. Not resting on their laurels, Asian investors plan to de facto monopolize the global market. They intend to do this by reducing the price of cobalt as much as possible.
In practice, the scheme looks like this: Chinese producers start massively overproducing cobalt, driving down its price. Other market participants, realizing that the market will not grow, start selling off their cobalt assets en masse. The Chinese, having secured the support of their government and banks in advance, start buying up the most profitable deposits.
Now the plan is now in its first stage of implementation. For example, Chinese producer CMOC, which controls the most valuable cobalt deposits in Congo, is increasing its output by 170%-200% per year. This has already caused cobalt prices to more than halve, from $40 per pound to $15.
Many Western producers (e.g. Glencore) are already starting to shut down their operations and freeze expansion projects, so the Chinese plan is slowly starting to bear fruit. The Chinese are going to keep pressure on the market and the price of cobalt until 2028-2030. It is assumed that by that time the main players will run out of patience and whether they want it or not, they will have to start selling their deposits on the market.
