Equilibrium impacts on U.S. economy of disruption to China cobalt supply

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If the U.S. and rest of the world leave all incremental new cobalt demanded from 2017 through 2030 to be supplied by China, costs could be 5-80x larger than if they maintained their 2017 shares of global production into 2030.
If the U.S. and rest of the world leave all incremental new cobalt demanded from 2017 through 2030 to be supplied by China, costs could be 5-80x larger than if they maintained their 2017 shares of global production into 2030.

CMI researchers at Colorado School of Mines conducted the research for this highlight

Achievement
Developed a general equilibrium model to assess the short-run impacts of a Chinese export restriction on refined cobalt, capturing ripple effects into U.S. vehicle production, and ultimately, the U.S. consumer. Quantifies the macroeconomic costs to the U.S. economy.

Significance and Impact

  • Illustrates channels by which the U.S./global economies might respond to a supply disruption, quantifying their impacts.
  • New methods for exploring global energy-minerals issues that can be expanded or used to inform future quantitative models.

Details 

  • A disruption to Chinese refined cobalt supply could be costly to the U.S. economy. 2017, the cost would have been small, less than 0.01% of personal consumption expenditures. In 2030, costs will be highly sensitive to regional cobalt production and vehicle substitution patterns.
  • Technological substitution could help avoid 30–90% of costs depending on the scenario.
  • International trade with non-Chinese regions plays a major cost reducing role for the U.S.