Indonesia has become one of the largest cobalt suppliers in the world. According to data released by the U.K.-based Cobalt Institute, Indonesia has taken second place as the largest producer of cobalt, after the Democratic Republic of Congo. This is because Indonesia accounts for nearly 5% of the total global production of battery materials. This position also makes Indonesia the largest supplier in Asia.
Cobalt itself is an important mining material because it is used in the production of lithium-ion batteries, which are a major component in electric vehicles, smartphones, and other electronic devices. Demand for cobalt continues to rise in line with the increasing use of electric vehicles and electronic devices around the world.
Takes the Lead as Asia's Largest Cobalt Producer
According to the Cobalt Institute, Indonesia's cobalt production has increased rapidly from 2,700 tons in 2021 to 9,500 tons in 2022, which makes it the world's second-largest cobalt producer after surpassing Australia and the Philippines.
Although Indonesia's cobalt production is still relatively new, its production potential is huge. The report also predicts that Indonesia has the potential to increase cobalt production by 10 times by 2030, and even 14 times by 2040. This increase in cobalt production is due to the country's emerging nickel projects. On the other hand, this increase will strengthen Indonesia's position as the world's second-largest cobalt producer and help the country to strengthen its economy through cobalt exports.
Cobalt Dilemma: Significant Availability and Price Impact
Indonesia's increase in cobalt supply has allegedly led to a price drop of more than 60% to around $15 over the past year. Earlier in 2022, global cobalt supply increased from the previous year by 21 % to reach 198,000 tons, while demand increased by only 13 % to reach 187,000 tons.
Cobalt prices, which experienced a sharp one-year rise since the summer of 2021, have fallen due to abundant cobalt supply, both from the Republic of Congo, as well as the emergence of Indonesia as a new producer.
The report also provides good news as it predicts that cobalt prices will remain below $20 per pound and supplies will be sufficient until the middle of the decade. However, with the massive increase in demand for electric vehicles, this could lead to a supply crunch by the end of the decade.
Indonesia's commitment
Indonesia has committed to developing its mining sector and increasing cobalt production in a bid to boost the national economy. However, this must also be balanced with sustainable resource management and environmental sustainability efforts to minimize the adverse impacts of mining on the environment and surrounding communities.
Indonesia's cobalt production still raises concerns in terms of environmental impact as it can produce a huge CO₂ impact. Therefore, it is important for Indonesian cobalt producers to pay attention to environmental issues in an effort to increase production.
Although the Indonesian government has enacted the Minerba Law that stipulates the environmental requirements that mining companies must meet before obtaining an operating license, it should still be evaluated on an ongoing basis. As Indonesia has great potential in cobalt production, it is necessary to pay more attention to responsibility for the environment and surrounding communities.
