Cobalt, not exactly the new oil on The Future, This Week

Disclaimer We'd like to advise that the following program may contain real news, occasional philosophy and ideas that may offend some listeners.

Kai So, what are we talking about?

Sandra I almost think we should be talking about NFTs again,

Kai Almost.

Sandra Almost, simply because, you know, Funko's putting out Star Trek NFTs.

Kai Okay.

Sandra I lost you at Funko. Do you know the company that makes those pop art collectibles? The things with the big heads and…

Kai Oh, yeah, and now they're going all digital?

Sandra They are going all digital, and I have to read from this Verge article which reports on Funko’s new Star Trek NFTs. "Nothing says 'post-scarcity utopia' like artificially scarce digital collectibles". This is Funko Pop with Viacom doing non-fungible tokens, collectibles. We have a whole episode on this on The Future, This Week, and we'll put the link in the shownotes. But this is basically a new series of blockchain-based cards featuring Star Trek characters. Again, I must read from this article because it says, "There's something uniquely depressing about how...", and there is, isn't there? "There's something uniquely depressing about Star Trek NFTs specifically, given the utopian ideals of the Federation, and the very intentionally post-scarcity world in which the Star Trek series is set".

Kai And so here we are, having celebrated the world of abundance that is digital, and people have written academic articles and all kinds of thought pieces about this new world of abundance, and here we are reinventing scarcity with NFTs.

Sandra

Indeed, and Star Trek NFT's I mean, that whole world is about replicators and things that make the world abundant. Most of the Star Trek world does not involve money and does not involve scarcity. So we're doing Star Trek characters as NFTs.

Kai The post-digital irony here. But speaking of replicator and NFTs, isn't there a story also about someone copying all the NFT artwork and making it available?

Sandra Yes, Australian claim to fame. This is an Australian artisan and programmer that's created a whole website, the NFT Bay, a website that claims to let you download every NFT, so probably including the 120 Star Trek Funko NFTs.

Kai My question is if you can download what is it, gigabytes, or terabytes of NFTs?

Sandra 17 terabytes of all NFTs.

Kai Are they being updated daily? Because there's, you know, daily collectibles being sold on the blockchain.

Sandra I hear you really want the Star Trek NFTs.

Kai So you can download terabytes worth of NFT's. But be sad about this because you cannot actually own them. You can have them all, but you cannot own them.

Sandra You cannot own them, but Geoffrey Huntley is showing people what they could be buying.

Kai I got nothing. I do note, however, that the logo in good old Pirate Bay fashion is a pirate ship on top of NFT Bay.

Sandra It is, and Mr Huntley does hope that, as he says, “Future generations can study this generation's tulip mania."

Kai But to make it really matter, he could put the copy of the collection or a screenshot thereof on the blockchain and sell that as an NFT recursively re-insert what he just sold into the product and sell it again, and it's turtles all the way down from here.

Sandra So we're...

Kai No, we're not keeping an eye on this one.

Sandra

Speaking of turtles all the way down, I wish we could do this climate change story from Wired, titled "The North Carolina Town Besieged By Armadillos".

Kai Armadillos.

Sandra Armadillos. Thanks to climate change now...

Kai Are they holiday armadillos? The holidays are coming up.

Sandra A Friends reference there. Thanks to climate change, armoured armadillos are besieging the north of the US, they're currently making their way into North Carolina in their relentless march for better climate.

Kai And apparently, they are wreaking havoc in the local rose gardens and veggie patches and the city has resorted to hunting them down, which apparently isn't all that easy.

Sandra No, as the name suggests, they are armoured.

Kai This seems redundant. They're armoured-dillos. it's the unarmoured-dillos that I am worried about.

Sandra And there's about 20 species of these armadillos, the nine-banded armadillo. Only three of them can roll themselves centre ball though. I wish we were doing stories like this, but we're not gonna do armadillos. What else has been happening in the news?

Kai I found an interesting story. You know how they say that the future is unevenly distributed? Like, it's already here, it's just not everywhere, like you can see glimpses of the future. The past, it turns out is also very unevenly distributed because during the pandemic, the word went cashless, right, everyone, you know, taps their phone, watch, card to make payments. But the RBA, which is the Australian central bank reports that during the pandemic record amounts of cash were taken out and stashed away by hoarders, the cash in circulation in Australia went from 80 billion to 100 billion, so $20 billion dollars in $50 and $100 notes.

Sandra And we've done stories on The Future. This Week on the cashless society, and Australia was right there at the forefront, we got rid of cash.

Kai So either people have taken to, you know, stuffing their mattresses for a rainy day, the beginning of the pandemic, no one knows what kind of Apocalypse were headed for.

Sandra So there was a lot of home renovation going on during the pandemic. So some of it might be there or people might just be scared.

Kai Yes. And so the RBA doesn't really know. So, the announcement in the ABC was to say that they are conducting an investigation and the consultation to find out where did all this cash go? And how do we take it out of circulation as we move indeed to a cashless society?

Sandra So likely not something we can keep an eye on, it seems not even the RBA is managing to keep an eye on.

Kai No! 20 billion were taken out and where did it go?

Sandra Okay, how do I get to climate change conspiracies on Wikipedia?

Kai Like that.

Sandra Maybe it's all one big conspiracy. And speaking of conspiracies, a depressing story from the BBC on climate change, well they're all depressing stories on climate change. But this one's on climate change and misinformation/disinformation. There seem to be a lot of conspiracy theories found on foreign language Wikipedia sites.

Kai And that's a story that is really concerning. Given that we do want the web to be diverse, we do want the web to be localised, we want information to be available in different languages, to be inclusive. So it's always been a good thing that Wikipedia aims to have localised versions in different languages. But there appears to be a problem that is particularly pronounced in smaller countries, or languages that are not spoken by a large number of people.

Sandra And the BBC reports on several foreign language Wikipedia sites that make these misleading claims or conspiracy theories about climate change. And they cite Belarusian pages, and Kazakh and Swahili pages, but also Croatian Wikipedia pages, all of which seem to disagree with the overwhelming consensus that global warming is caused by people, and present various other theories or presented as something that is very much on the debate where scientists cannot agree. And as you said, this is particularly concerning because we do want Wikipedia pages accessible in many languages. And we want that richness and inclusivity and localization. But it's also very concerning, because Wikipedia is currently one of the solutions that companies like Facebook put forward, as a fact check as a if you're not sure whether or not this is true, go and check it on Wikipedia. It's also the place many students, many journalists, many people end up as their first place of call to see if something is correct or not, and then follow through with additional research. So very concerning indeed.

Kai And in English speaking countries, or the German speaking countries where there is a critical mass of volunteer contributors and editors for leasing, curating, and cleaning up these pages. Wikipedia is actually an excellent source, and I have no problems recommending Wikipedia to students to do initial research and get references. With a bit of literacy, you can tell which pages are really well-researched, and others might need more work, and that's usually flagged in those pages. But there seems to be a problem in smaller countries that do not have that critical mass of volunteer contributors.

Sandra And it really is a numbers game, the English language version, and that's reported also in the BBC article, has about 40,000 people editing it every single month, but for about 150 other languages, fewer than 10 people a month regularly edit any pages of Wikipedia. Dun dun dun dun. The sheer lack of editors and contributors in these countries means that whenever something false ends up on there, it may take a very long time to get it down.

Kai And let's be clear, there have also been reports that there is a lack of diversity sometimes in the English-speaking Wikipedia, where minority views might not be as represented. But by and large, when you have a large enough crowd, you get a good baseline standard in quality in Wikipedia.

Sandra The headline that really struck us this week was...

Kai "Cobalt Is the New Oil". So, another thing is the new oil.

Sandra Oh, and we can say a few things about that. But we thought we have to do this because you know, cobalt, we know very little about it. Also, because we haven't done batteries. And since we started The Future, This Week years ago, every season, we've had stories about batteries And we're coming very close to the end of this season, so we have to do batteries.

Kai So cobalt and batteries, and EVS and climate change. Let's do it.

Sandra

Let's do it.

Intro From The University of Sydney Business School, this is Sydney Business Insights, an initiative that explores the future of business. And you're listening to The Future, This Week, where Sandra Peter and Kai Riemer sit down every week to rethink and unlearn trends in technology and business. They discuss the news of the week, question the obvious and explore the weird and the wonderful.

Sandra So, cobalt is the new oil. And there were a couple of articles on cobalt this week. But we should start our conversation in the one in the New York Times, because that was a very, very extensive research into cobalt. What is it, and what is it for?

Kai And it is worth noting that most of the stories around cobalt this week played off the original research done by reporters by the New York Times.

Sandra And we need to emphasise how big this New York Times investigation was into the global demand for cobalt and what it means as material for clean energy. And as we're looking at goals post-COP26, The New York Times put two Pulitzer Prize winners on it, and then additional investigative reporter, but they ended up doing about 100 interviews, going to Congo, going all around the world to do this. And it kind of struck us both that it was pretty much the only in-depth investigation into this that we could find in recent years. And what significant resources a newspaper would need to do such an investigation, which pretty much takes you around the world in where Cobalt is mined, and where it's processed and what it's used for.

Kai And before we get into the significance of cobalt, we wanted to point out that there's not many institutions left in the world that would have the resources to do this kind of research. The New York Times, Washington Post, maybe BBC Guardian, there's a couple of German ones that I know, DER SPIEGEL for example, a few news agencies, the ABC in Australia does a bit of that. But it really takes a lot of resources to do this.

Sandra And here, you might be wondering why we're doing cobalt on The Future, This Week. It's one of those stories that we feel we must unpack because as we do these moves towards renewable energies, as we transition to batteries, different sources for electricity, the infrastructure, and the economics behind these are changing rapidly as well. And whilst we're all quite familiar with the economics and the dynamics in oil markets, or around coal, we tend to know very little about what happens with cobalt, or lithium, or manganese, or zinc, or any of the many other rare earth minerals and things that go into renewables.

Kai And the point is that it is not only consumer markets that are transitioning from one product to another, there is also potentially an economic power shift in the world as the world moves away from fossil fuels that are dominated by one set of countries to well, what really? And that's the question, what are we moving, to what are the countries that play a big role in dominating potentially, the markets that feed the supply chains that produce the renewable energy technologies? And that's really what this is about.

Sandra So while cobalt might not be the new oil, per se, it is a very critical ingredient especially to the battery technologies that we have now. So worth reflecting on the New York Times story, and worth unpacking a little bit what the technology is about, what shortages are forecast, what happens with batteries and recycling, what the alternatives are, and really who are the big players and what are the dynamics?

Kai And by the way, one thing strikes me, I know that we've been using the 'something is the new oil', for quite a while but as we're transitioning away from oil and oil and fossil fuels are taking on a bad reputation, the sentence 'something is the new oil' might also take on a very different meaning and, you know, we also have seen quite a few things being the new oil recently so we really have to make up our mind here.

Sandra Well first off and this is you know in brackets, first off, we've unpacked 'data is the new oil'. Well data is not.

Kai Is not, no.

Sandra Is not the new oil.

Kai Not like oil at all.

Sandra It's not like oil at all, no and why would you want to be like oil in the first place?

Kai Exactly!

Sandra Isn't oil the thing we don't want to be?

Kai Tobacco? Something is the new tobacco.

Sandra Yes, well sitting is the new smoking. But just a quick search, like in the last couple of weeks, Goldman Sachs reckons copper is the new oil.

Kai Copper?

Sandra Yeah, not cobalt. Morgan Stanley reckons batteries are the new oil.

Kai The whole thing, yeah.

Sandra We're still in cobalt territory here. Foreign Affairs recommends electricity is the new oil.

Kai The new oil, okay, yeah.

Sandra The Harvard Business Review reckons tech.

Kai Just tech?

Sandra Just tech in general is...

Kai I've got nothing on that one.

Sandra Yahoo reckons semiconductors are the new oils.

Kai Chips.

Sandra And The Economist reckons vaccines are the new oil. So there you have it.

Kai That is hard to swallow.

Sandra So back to cobalt.

Kai Okay, back to cobalt, which is a mineral that plays a significant role in the production of today's electronic vehicle batteries, EV batteries. It is the ingredient apparently that gives those batteries the higher energy density that you need for longer range so that your cars can, you know, leave the confines of the city, and go for country drive. And it is also incidentally the most expensive ingredient currently that goes into those batteries.

Sandra So the point here is that as we're having this clean energy revolution and getting rid of oil and gas, these minerals and materials, of which cobalt is the most significant, the most expensive, and one of the rarest ones are needed to make the batteries that go into electric cars to make solar panels and to make other forms of renewable energies. And cobalt, as you said, is one of the main ingredients in lithium-ion batteries, which really go into kind of everything these days, not just batteries that go into electric vehicles, but also phones and laptops and helicopters that go on Mars.

Kai But it is really the transition to electric vehicles that drives the global demand for lithium and cobalt because it needs so much more in terms of just the sheer amount of these materials than, you know, phone batteries, for example. And the New York Times article points out that many of these materials come from only one or sometimes two countries that then tend to dominate supply of these materials. For lithium, by the way, it's Australia and Chile. For rare earth, it's China and the US. Nickel, it's Indonesia. Copper comes from South America, Chile, and Peru. And for cobalt, it's the Democratic Republic of Congo.

Sandra Which in effect controls about two thirds of the global cobalt supply, which is a lot more than any other country for most other minerals and resources. And it's worth also noting, since we are talking about megatrends here, we are talking about resource security, we are talking about economic power shifts, that 15 of the 19 cobalt producing mines in Congo are owned by Chinese companies, which incidentally also controls about 80% of the cobalt refining industry.

Kai China controls most of the minerals refining supply chain, you know for anything from copper nickel to lithium. And Chinese companies have for the past decade, positioned themselves and bought up a large number of the cobalt mines, as you said, feeding the processing supply chain, but also strategically positioning the country for the transition within China towards EVs and clean energy.

Sandra And today we're at this junction point where a lot of experts and a lot of analysts are predicting a coming shortage in batteries for things like electric vehicles, that very much would mirror what is currently happening in the semiconductor industry. And we've talked about chip crisis and shortage in chips quite a few times on The Future, This Week. And it's likely something that most of our listeners will be familiar with. But the really strained supply chains around that, but also the geopolitical concerns around the chip shortage crisis are very much something that analysts believe will be coming to the battery market quite soon.

Kai And the forecasts are that the global production for lithium and cobalt will have to double by 2030, which raises concerns when it comes to, for example, the environmental impact and the working conditions for mines that operate in developing countries, in particular in Congo. So the New York Times article raises some of those concerns, but also of raises concerns as to how do companies, how do corporations, how do nations around the world secure the kind of supply? How will it impact the transition of countries that happen at different speeds? European countries have made bold pronouncements as to what the proportion of cars will have to be that is electric by say 2030, 2040. And whether the global markets will actually be able to supply that number of EVs with the current technology given that cobalt, for example, comes from largely one country.

Sandra And here, it's worth noting that cobalt and other rare minerals and materials seem to be following in the footsteps of other resources that we had, in the sense that there's very few very large players competing on the global market, they're extracting these resources, usually at the expense of the local environment or local communities. So this very much seems to follow in the footsteps of resources that have come before it, albeit with different players and different countries at play, but there are some distinctive characteristics of cobalt, and that has to do with the fact that they go into batteries. And concerningly, these batteries do not seem to be easy to recycle. So whilst we have concerns at the one end, at the extraction resource end, and few players in few markets, there's also significant concerns as to what happens at the end of the lifecycle of these batteries. And that's primarily because of what these batteries are made of, or what they're like, and ordinary lithium-ion batteries are just many, many individual cells kind of packed up together. The example in one of the articles was that a Tesla Model S battery contains about 7000 of these cylindrical cells all kind of bundled up and screwed together, welded, glued together to be kind of one unit. And when one needs to recycle that one unit and extract only certain materials that are still kind of valuable, things like cobalt, that becomes not only a very, very complex job, but also quite a dangerous job. Because puncturing any of these cells or heating them up too much can cause them to catch fire or even explode. So in order for people who recycle them to get to the lithium, or the copper and the cobalt, it's an expensive, complex, and dangerous process.

Kai And there's currently three processes. One essentially involves burning all the materials at high temperature and then separating them afterwards, which comes at a loss and is also apparently quite costly. Another involves chemicals to break down what's inside of the battery. But a third process which is currently being developed and not ready for market is called direct recycling. And that would involve not having to actually destroy the compounds in the battery but recovering the materials directly, which is not only less costly, but also would allow to more directly deploy the materials into new batteries. But that might involve redesigning the batteries and producing them in a way that these materials become better accessible, not gluing together, or welding together all the cylinders, but actually designed for recycling, which is currently not being done.

Sandra And these recycling problems really add to the cobalt shortages and to the high prices, limited supply for cobalt. Hence many of the companies that use these batteries, companies like Tesla or Volkswagen or Nissan have been looking at alternatives that don't use cobalt for producing batteries that would alleviate the supply chain problems, but also maybe provide some more sustainable alternatives in the long-term. So the quest for kind of viable cobalt-free batteries, because as you've said in the beginning, cobalt allows for high energy density so the cars can go a lot further on one charge, the quest for these viable cobalt-free batteries has been on for a while.

Kai And actually the US has just passed the infrastructure bill, they are massively pushing the transition to EVs. And as part of this, they have launched a program to make batteries largely cobalt-free, to address not only the projected shortages, but also the dependence on Chinese manufacturing of cobalt, pushing the development of cobalt-free alternatives. Which as we said earlier at present do not have the same range as batteries with cobalt.

Sandra One option that's already used in industry are the lithium iron phosphate or LFP. batteries that again, don't provide that energy density and therefore the driving range but are a cobalt-free alternative. There's been research out of the University of Texas that uses new processes that again, eliminate cobalt and instead use nickel-rich battery technology.

Kai But most excitingly, you found news out of the University of Sydney.

Sandra Yes, just two months ago, the University of Sydney has spun out exciting new research into zinc-bromide batteries. So the University spun out Gelion to make next generation batteries right here in Sydney. And these are safe, low-cost batteries that promise to really shake up renewables. And they're coming out of Sydney Nano and the School of Chemistry led by Professor...

Kai Professor Thomas Maschmeyer, which is a German name, I guess.

Sandra Yes, but he is also the winner of the Australian Prime Minister's Prize for Innovation for what is really revolutionary technology to produce new batteries that allow both for energy density and are heat resistant. So definitely something to keep an eye on. And there are likely more of these innovations that do away with cobalt. However, for now, the at-scale batteries are cobalt-based. So this is a problem that's here to stay at least for a while. But down the line, cobalt-free batteries might also challenge the recycling cycle.

Kai Yeah, because at present, at least with the current technologies that dominate recycling, it's only worthwhile recycling batteries that have cobalt in them, because that's the value that makes it worthwhile recovering, because all the other materials are currently not at a price point where the current recycling technology recovers enough of the value.

Sandra So from an economic perspective, there's a disincentive to use more sustainable, lower cost materials from the point of view of recycling because you know, people will just not find it worthwhile to take these things apart.

Kai Yeah, and often these disincentives are only there at the beginning when these processes have to come online. But the market itself often doesn't have enough incentive to phase in these technologies, which is where governments are usually stepping in, and Europe has done this for quite a while, to initially subsidise the uptake of these technologies until they become economically viable when they are rolled out at scale. So maybe that is one thing that governments around the world can look at helping these emerging technologies to a point where they can have a significant impact.

Sandra From a sustainable point of view, that is.

Kai That is, yeah. When initially they're not economically interesting.

Sandra And this is why it remains so important and so interesting to have a look at the behind the scenes of how these transitions to renewable energy happen. Because the dynamics, the economics of new and renewable energies are quite different to what we're used to. And what we've seen with things like oil and gas, and provide new opportunities, but also really new and very significant challenges.

Kai So cobalt batteries, not like oil.

Sandra And I think that's all we have time for today.

Kai Thanks for listening.

Sandra Thanks for listening.

Outro This was The Future, This Week, an initiative of The University of Sydney Business School. Sandra Peter is the Director of Sydney Business Insights and Kai Riemer is Professor of Information Technology and Organisation. Connect with us on LinkedIn, Twitter and Flipboard and subscribe, like or leave us a rating wherever you get your podcasts. If you have any weird and wonderful topics for us to discuss, send them to sbi@sydney.edu.au.

Kai It's, it's cobalt, it's cobalt, not Kobold. If you Google kobold, not cobalt, kobold. There's this little fantasy figures like, you know, like lepreshauns. What?

Sandra Do you mean leprechauns?

Kai The Irish things, the green ones, yes. What did I say?

Sandra Lepreshauns.

Kai

Leprechaunnes? The French ones.

Sandra

The classy ones.

Kai Yeah, not kobold, cobalt, kobold, cobalt,

Sandra Cobalt?

Kai Cobalt. For two non-English speakers, a bit of a challenge.