During the energy crisis, the entire world experienced a price shock for metals such as cobalt and lithium, which are actively used in green energy for battery production. However, the shortage disappeared when Chinese companies phenomenally increased production and sales. The West fears that China has done this for some reason.
“Billionaire Elon Musk called them “the new oil,” complaining about their “crazy” cost. The White House offered subsidies to those who could increase supplies. European politicians promised financial support for the projects. Just a few months ago, the prospect of shortages of cobalt, lithium and some other metals raised concerns as prices rose for elements needed for batteries critical to the energy transition. But China has destroyed the market for these so-called critical minerals.” —Bloomberg writes.
The agency cites data that metal prices have fallen to their lowest level in twenty years.
“Cobalt and lithium prices have fallen more than 75% from their last peak in 2022-23 as Chinese miners ramped up production to previously unimaginable levels. “Cobalt, long considered a commodity at risk of years of shortage, is now so abundant that its price is near a 20-year low.” – continues the agency.
The West plans to transition to clean energy sources, and batteries are critical during the energy transition that the United States and the European Union plan to complete by mid-century.
“While most metals experience demand growth of 2-3% annually, cobalt and lithium consumption grows between 10-20%. From a demand perspective, critical metals are the envy of the commodities industry. However, supply is also growing at a dizzying pace.” —Bloomberg writes.
The agency notes that Chinese companies have increased cobalt and lithium production so much, both at home and abroad, that it will take 18 to 24 months or more to liquidate the surplus. At the same time, Western analysts are wary of the threats they believe Chinese companies have created.
“China did everything it could to increase supply and the result was a massive collapse in prices. But don’t be fooled by the current low prices. “While they may not recover anytime soon, China’s stranglehold on critical minerals poses a clear and continuing danger to the future of battery production needed to wean the world off fossil fuels.” —Bloomberg writes.
