The phantom cobalt: the EV sector believes it has freed itself from it, but the supply risk remains intact

Context

Since 2020, EV manufacturers have heavily promoted the shift away from cobalt in favor of LFP (lithium-iron-phosphate) batteries-safer, cheaper, and less exposed to the DRC. Tesla switched its standard-range models to LFP; BYD launched its "Blade" battery. The dominant narrative concludes that the EV sector is now resilient to cobalt shocks. This is a dangerous oversimplification.

Data

• NMC (nickel-manganese-cobalt) batteries: still ~45% of the global EV cell market in 2025 (BloombergNEF, 2026)
• DRC: ~70% of global cobalt production in 2025 (USGS Mineral Commodity Summaries 2026)
• LME cobalt price: ~$33,000/t in June 2026-down 60% from the 2022 ATH (~$82,000/t)
• Global cobalt refining: ~80% under Chinese control (IEA Critical Minerals 2025)
• Premium EVs (Tesla Model S/X, BMW i7, Mercedes EQS) retain high-energy-density NMC
• Glencore’s Mutanda mine (DRC): suspended in 2019, reopened in 2022, production ~20,000 t/year

Analysis

The shift to LFP has reduced cobalt dependence for entry-level EVs, but not for three fast-growing segments: premium EVs (where NMC’s superior energy density is essential), long-duration stationary storage, and electric aviation. Moreover, extreme geographic concentration creates an underestimated systemic risk: China controls ~80% of refining, allowing it to tax or embargo refined cobalt regardless of DRC production. A cobalt shock wouldn’t take 6 months to materialize-it would take 6 weeks.

Probability-weighted scenarios

• Normalization scenario (50%)

  DRC cobalt oversupply + growth of recycled cobalt (Umicore, Redwood Materials) keeps prices below $40,000/t, no crisis through 2026-2027.

• Geopolitical shock scenario (30%)

  DRC instability (as in 2018) or Chinese export embargo cuts supply for 6-12 months, cobalt spike to $60,000-80,000/t, NMC automaker margins collapse.

• Technological scenario (20%)

  Accelerated adoption of sodium-ion (CATL Na-ion) or solid-state batteries eliminates premium cobalt by 2028-2030, structural downward pressure on prices.

Portfolio implications

The current low price (~$33,000/t) offers a window to build exposure to producers: Glencore (LSE: GLEN), China Molybdenum (HK: 3993). But DRC geopolitical risk demands a risk premium: limited positions (<3% of a diversified portfolio), defined stop-loss. Avoid premium EV manufacturers overly exposed to NMC without secured long-term cobalt supply contracts.

Risks & blind spots

The primary risk is not mining but geopolitical: a Chinese embargo on refined cobalt would be more devastating than a mining crisis in the DRC, as it would simultaneously cut battery production for all non-vertically integrated manufacturers. This risk is nearly absent from current valuation models.

To monitor

• LME cobalt price (Bloomberg, LME)-reactivation threshold for closed mines: ~$40,000/t
• Glencore Katanga/Mutanda production H2 2026 (GLEN semi-annual report, August)
• IEA Critical Minerals 2026 report (July)-revision of cobalt supply/demand projections