- Tesla’s cobalt-rich Megapack will provide energy for power grids
- In 2018, Democratic Republic of Congo accounted for around 64% of global mined cobalt
From large facilities to electric vehicles powered by Tesla (TSLA -3.21%) batteries, the one thing they have in common are the origins of a key component called cobalt. This metal which resides primarily in Africa is used by nearly every major tech company and automakers alike, with Tesla pushing the boundaries due to its new Megapack battery product for utility-scale projects. Can Tesla’s latest battery charge upend the future stability of sustainable cobalt supply in Africa?
Why This Matters: This new Megapack is basically a giant battery that will provide energy for power grids. Tesla tested the technology for Megapacks in a facility in Australia, which according to the company saved more than $40 million in its first year of operation. While that may seem all good, the main problem is that it’s a huge Lithium-ion battery which is mainly comprised of lithium, cobalt, nickel, manganese, and graphite as active cathode materials.
Tesla’s home battery Powerwall for example, has a cathode makeup of cobalt, nickel and manganese in equal portions
Tesla’s home battery Powerwall for example, has a cathode makeup of cobalt, nickel and manganese in equal portions. Its Model S vehicle battery has a cathode compilation of 80% nickel, 15% cobalt and 5% aluminum, according to Small Caps.
Democratic Republic of Congo accounted for around 64% of global mined cobalt production last year, according to the United States Geological Survey. Tesla’s latest battery will force the company to gain a larger portion of the cobalt supply. Also, Darton Commodities predicts cobalt use in batteries is going to jump from 50,000 tons in 2016 to more than 320,000 tons by the year 2030.
The Congolese government has increased its tax on Cobalt exports by 50% and is considering labeling the metal a strategic resource. This would increase the royalty for Cobalt from 2% to 10%, making it more expensive for companies like Tesla to use in its products.
Situational Awareness: Big tech companies are the biggest users of the metal, with Apple’s iPhone battery’s cathode at 100%. Other tech companies like Samsung and Panasonic are high end-users of the metal as well. Nonetheless, smartphones only use about eight grams of refined cobalt whereas a battery for an electric car requires over 1,000 times more. It’s important to note that child labor issues have been reported in the mining of cobalt and it’s hard to track the metal’s origination once it has reached the end of the supply chain.