If you thought lithium was the hottest commodity on the planet because of its role in powering our EV revolution, you would be right-almost. Cobalt is even more critical because lithium-ion batteries-despite their name-require more cobalt by weight. The Democratic Republic of Congo which produces half of the world’s Cobalt supply now has a bigger and rare opportunity.
The difference between cobalt and Lithium this time around is that no one’s been paying attention to cobalt and while a flurry of new explorers got in on lithium at the right time, they ignored cobalt, leaving the playing field wide-open for first-in investors.
Also, there is a massive opportunity for first-in investors in cobalt, as major hedge funds start hoarding the physical metal to gain exposure, and this long-overshadowed resource is poised to be more explosive than lithium.
Analysts are already predicting a 500 percent deficit increase starting next year, and the tight supply figures have caused a panic to breakout. Watching the Cobalt developments include: Rio Tinto PLC, Hudbay Minerals Inc., AES Corp., Johnson Controls, Sociedad Quimica y Minera de Chile.
There is a developing scenario that major buyers of cobalt now find themselves scrambling to secure new supply, as hedge funds such as Swiss-based Pala Investments and China’s Shanghai Chaos start stockpiling the metal because it’s a surefire way to gain exposure to the coming price surge. So far, these hedge funds have scooped up 17 percent of last year’s global production.
The electric vehicle (EV) revolution has made cobalt one of the most critical elements of our time. Cobalt makes up some 35 percent of the lithium-ion battery mix, but there isn’t enough new supply and what does exist flows through a very controversial and uncertain supply chain.
EVs have hit the mainstream and production is moving forward at breakneck speed. Along with this, we’ve got at least 12 battery gigafactories in the works-in addition to Tesla’s Nevada gigafactory that started production in January. All of them will be competing for cobalt supply that we don’t have. And more than half of what we do have comes from the Democratic Republic of Congo (DRC), where it is unethically mined by children.
With giant companies that include everyone from Tesla, Apple and Google to automakers Toyota, General Motors and Ford all fighting over cobalt, nothing would be better-or more valuable-right now than an all-American, ethical source of the metal.
This is where US Cobalt comes in, with a pure play cobalt project that could put the U.S. on the cobalt map for the first time in history.
The dream team behind US Cobalt has already hit a home run with lithium, when the panic over future supply drove prices up over 400 percent. Now it’s got its sights set on cobalt, and it’s a good bet because the price explosion looks set to be far bigger than lithium. In 2016 alone, lithium rose 80 percent. Cobalt prices have already risen 70 percent in 2017-and this is just the start.
Now, EV and battery producers find themselves dependent on a supply chain that is already broken, bottlenecked and, in the future, might not even exist without new exploration to keep up with voracious demand growth year-on-year.
The battery industry is already using up some 42 percent of global cobalt production, while the rest is used in industrial and military applications. The competition to secure new supply lines is becoming extremely intense.
Tesla launched its $5-billion battery gigafactory in Nevada in January, and by the end of this year already it will have doubled the entire global battery production capacity. But that’s just this year. By next year, Tesla will be pumping out more batteries than the rest of the world combined. [ESMEA plans to cover this further].
Against this backdrop, there is phenomenal growth in EV production. Last year alone, it grew over 40 percent, with sales up more than 60 percent year-on-year. Between 2011 and 2016, this market grew 72 percent annually , and this year it should gain another 26 percent.
There has also been a run on cobalt, and we’re just breaking out of the starting blocks. So a small-cap explorer like US Cobalt could be a major beneficiary with its offering up of a pure cobalt play that is all-American, right at home and ethical.
Traders already see a ‘complete vacuum’, according to the Financial Times, so this is a golden opportunity for a savvy junior explorer like US Cobalt.
In 2005, the copper deposits in the Katanga Province (former Shaba province) of the Democratic Republic of the Congo were the top producer of cobalt with almost 40% world share, reports the British Geological Survey. By 2015, DRC supplied 60% of the world production of 32,000 tons at prices of $20,000 to $26,000 per ton, including artisanal mining which supplied 10 to 25%. The political situation in the Congo influences the price of cobalt significantly.
The Mukondo Mountain project, operated by the Central African Mining and Exploration Company in Katanga, may be the richest cobalt reserve in the world. It is estimated able to produce about one third of total global production of cobalt in 2008. In July 2009 CAMEC announced a long term agreement under which CAMEC would deliver its entire annual production of cobalt in concentrate from Mukondo Mountain to Zhejiang Galico Cobalt & Nickel Materials of China.