The prices of cobalt and tungsten are soaring of recent due to the worries supply of these two vital metals might not keep pace with demand for them.
Both metals are critical in today’s modern world. Cobalt is needed in batteries that power cellphones, laptops and electric cars, while Tungsten is used in military projectiles, automotive machinery, drills and golf clubs.
The price of cobalt has close to doubled since the beginning of 2017 and is currently trading at $29 a pound. UBS says cobalt thus far is the best performing base metal in 2017. Its performance has been boosted for the most part by one factor – the increase in electric cars.
Electric vehicle sales have been estimated to increase exponentially during the upcoming decades, with OPEC the oil cartel forecasting recently that there would be more than 140 million full-electric vehicles in use by 2040.
However, that estimate might even be somewhat conservative. One reason is China. The largest auto market in the world, China is working on its plan to put a ban on the production of fossil fuel vehicles and countries like Britain, France, Norway and India are proposing the same.
Nearly 10% of the current production of cobalt is used for batteries in electric cars, but that demand will take off as the shift to more electric car production picks up.
Tungsten is also known as wolfram and is extremely dense which makes it durable and harder. The price of the “minor metal” has shot up by 27% since the beginning of the year due to constraints on supply. Tungsten, like cobalt, is produced predominantly in one country, China.
Beijing has clamped down on the mining of tungsten of recent to ensure the companies follow stringent environmental regulations which has knocked off line a significant amount of production of tungsten.
One senior analyst said that Chinese authorities might also have another ulterior motive and that is reduced tungsten production could increase prices and help the country’s large producers.
Some have accused China of restricting the export of the metal as well as other minerals crucial in the manufacturing of devices that are high-tech.
Beijing had to alter the export practices of rare earth in 2015 following a formal complaint filed by then President Barack Obama about restrictions on exports with the World Trade Organization in 2012.