U.S. to Spend $500M on 7,480 Tons of Cobalt Over Five Years

The United States is undergoing a strategic shift in its approach to a critical metal: cobalt. The Department of Defense, in collaboration with the Defense Logistics Agency (DLA), has announced plans to procure approximately 7,480 tons of alloy-grade cobalt over the next five years. This procurement, with a potential value of 500 million dollars, is part of a broader effort to enhance the nation's strategic reserves and ensure a stable supply of critical metals.

This move is significant as it marks the first time since 1990 that the DLA has sought to purchase cobalt. Historically, the DLA accumulated large reserves of cobalt during the Cold War and has been a seller of the metal for many years. The latest procurement signals a strategic pivot by the U.S. government, recognizing the importance of cobalt in various high-tech industries, including electric vehicles and advanced batteries.

Cobalt is a crucial component in the production of rechargeable batteries, which are used in military applications such as aircraft engines, gas turbines, and ammunition. The DLA's tender document specifies that the procurement will focus on alloy-grade cobalt, which is particularly important for military uses. The agency is currently seeking supply quotes from three major producers: Vale of Canada, Sumitomo Metal Mining of Japan, and Nikkelverk, a Norwegian factory under the Glencore Group. The DLA also requires suppliers to provide a fixed price for a period of five years, indicating a strategic approach to sourcing this critical metal.

The procurement process is expected to be competitive, with the DLA evaluating bids based on factors such as quality, reliability, and cost. However, the success of the procurement remains uncertain, as there are few suppliers capable of meeting the DLA's requirements. This strategic shift in cobalt procurement reflects a broader trend in the United States' approach to critical minerals. In recent years, the country has taken steps to reduce its reliance on foreign suppliers, particularly in the context of rare earth elements and other strategic metals.

The 500 million dollar investment in cobalt procurement is a clear indication of the government's commitment to securing a stable supply of critical materials for both defense and civilian use. This move is not only a strategic decision but also a response to the evolving geopolitical landscape. As the demand for electric vehicles and renewable energy technologies continues to grow, the importance of cobalt as a critical metal has become increasingly apparent. By securing a substantial reserve of cobalt, the United States aims to position itself as a leader in the global transition to clean energy and advanced technologies.

In addition to the cobalt procurement, the Trump administration is considering reallocating at least 2 billion dollars from the CHIPS Act to support critical mineral projects. This further underscores the government's commitment to enhancing the domestic production of key minerals and ensuring a secure supply chain. The strategic shift in cobalt procurement, along with other initiatives, reflects the United States' determination to strengthen its position in the global market for critical metals and technologies.