Glencore's Investor Update Confirmed My Analysis Of Tesla's Cobalt Supply Chain Risk

Dec. 14, 2017 2:06 PM ETTesla, Inc. (TSLA)GLCNF295 Comments
John Petersen profile picture
John Petersen


  • Glencore, the world’s largest cobalt producer, recently predicted that increased demand for electric vehicles will quadruple global cobalt demand over the next 13 years.
  • Even under highly optimistic cobalt production assumptions, demand will exceed supply by 42% in 2025 and 170% in 2030.
  • Currently, the time required to convert exploration success into a new mine is about 30 years.
  • Without relevant scale solutions that can be quickly implemented, the cobalt cliff will be an existential threat to Tesla and the EV revolution.
  • The only project I’ve seen that approaches relevant scale is a Hail Mary effort to harvest cobalt rich manganese nodules from the ocean floor around the Cook Islands.

In March 2016, I penned an article titled “Tesla: Another Thing To Worry About” that described an evolving supply chain dynamic in the battery industry that represents an existential threat to Tesla (NASDAQ:TSLA) and its lofty ambitions for an EV revolution. Since then I’ve published nine more articles that examine the issue in greater detail, including:

On December 12, 2017, Glencore (OTCPK:GLCNF) included this slide in its Investor Update to explain the expected impact of the EV revolution on the mining industry in general and Glencore in particular. It’s an amazingly stark confirmation that without relevant scale solutions that can be quickly implemented, the cobalt cliff will be an existential threat to Tesla and the EV revolution.

Since the Glencore slide focuses on incremental demand for copper, nickel and cobalt from the EV industry, it’s important to remember that while the EV industry will be an important driver of cobalt demand over the next 13 years, it also will be the most price sensitive cobalt user and its access to cobalt supplies will be limited to metal that other users don’t need.

The following table combines Glencore’s cobalt demand forecast for the EV sector with recent

This article was written by

John Petersen profile picture
I'm a lawyer and accountant who's devoted the last four decades to advising entrepreneurs on corporate finance, SEC registration and reporting, and corporate governance matters. All of my client projects have involved high levels of uncertainty, compressed timelines, and urgent financial needs that demanded unparalleled responsiveness. I know how to get major projects completed on time and within budget. I'm a 1979 graduate of the Notre Dame Law School and a 1976 graduate of the W.P. Carey School of Business at Arizona State University. I was admitted to the State Bar of Texas in 1980 and subsequently licensed to practice as a CPA in 1981. While I don't hold myself out as a practicing accountant, I regularly use my in-depth knowledge of accounting methods, processes, and procedures to offer nuts and bolts counsel to clients who need integrated advice on finance-driven legal matters.As general counsel for the C Change Group, I'm involved in all of that company's domestic and international initiatives.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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