Cobalt Gearing Up For its Time to ShineLithium tends to bask in the glory brought on by the world's newfound enthusiasm for what goes into batteries. However, its fellow component in all things electrical (be they laptops, smartphones, aircraft parts, prosthetics...),cobalt is gearing up for its time to shine.
"If you look at the constituents of a battery,cobalt's the one that's hardest to solve, in terms of supply," says Julian Babarczy, head of Australian equities at Regal Funds Management.
"Even though the demand and future is there,it's quite a difficult one to play, there are very few listed entities, but the story is a good one. So we've had to look down the value curve at some companies that look like they could make it into production."
Butthose companies are few and far between.
Cobalt is mostly a by-product of nickel and copper operations, withonly 6 per cent of global supply stemming from primary cobalt mines. The Democratic Republic of Congo has the biggest operation and accounts for roughly 60 per cent of global cobalt production.
Aside from the very few pure cobalt plays, the remaining 94 per cent of global supply hinges on the developments in nickel and copper markets.
But the demand story is a compelling one, with some analysts expecting global demand for refined cobalt will exceed the 100 kt mark next year and could exceed 150,000 tonnes by 2025.
How to invest
Investors could once get exposure to cobalt through nickel and copper shares, however as those markets languish, a few opportunistic miners are plotting to exploit cobalt rich deposits.
One such play is ASX-listed Clean TeQ which has a scandium deposit in central New South Wales. The stock was bumbling along at 17¢ for most of the year before it became clear there was great potential stemming from its nickel and cobalt potential.
"We think it's the most exciting and the most advanced," says Mr Babarczy, who has invested in the Australian company. "It's not a tiny project and they've got pretty big aspirations, but there's very few projects out there in the world at this stage and the bulk of it comes from places people don't want to go to."
Billionaire Canadian investor Robert Friedman has taken an almost 20 per cent slab of the company's stock and is a vocal proponent of the cobalt story. TriBeCa Capital is also exposed to the cobalt story, but in Canadian explorer eCobalt Solutions.
"I'm n"ot sure what it is with cobalt companies and terrible names," says Mr Cleary. "But this company's Idaho Cobalt Project remains the sole primary, advanced stage and near term cobalt deposit in the US."
The company has already spent $100 million on drilling and feasibility studies and during the last cobalt commodity price rally the stock was fetching around $6.60 a share. But since then has slumped back to around 60¢ a share.
https://www.smh.com.au/business/markets/apple-samsung-hungry-for-lithium-cobalt-but-supply-an-issue-20160926-grp40c.html