Yet another commentator has added his voice to warnings that the cobalt market is becoming increasingly tight, and faces a “choke point” in the near future, due to soaring demand for lithium ion batteries. James West, producer of the Midas Letter, recently
penned an article reviewing some of the bullish fundamentals for cobalt.
The nexus of the dilemma is that cobalt is a relatively rare metal, and is generally only produced as a byproduct of other metals mining. What this means in economic terms is that the supply of cobalt is highly inelastic. For those not familiar with this economic terminology, an inelastic supply means that there is very little response to changes in price. Thus even if the price of cobalt spikes to many multiples of its present price, this would/will only produce a small change in the level of supply.
With demand for cobalt soaring, but the supply essentially flat, one does not have to be an economist to realize that this is leading to a supply crunch. Compounding this situation further, one of the world’s leading suppliers of cobalt, the Democratic Republic of Congo, is plagued by uncertainty due to its purported reliance on child labour. As noted by West, this supply conundrum is music to the ears of Canadian junior miner, Cruz Capital Corp (
TSX: V.CUZ,
OTCQB: BKTPF,
Forum), one of a tiny number of companies seeking to become a primary cobalt producer.
In the West article, Cruz Capital CEO James Nelson expanded upon the Company’s plans for becoming a producer in this increasingly lucrative market. CUZ
recently announced an increase to its land holdings, adding 36 claim units, for a total land package of approximately 1480 contiguous acres.
Nelson also sat down for a
podcast interview with West. In that interview, Cruz’s CEO provided even more details on the bullish fundamentals for cobalt, and the Company’s plans for capitalizing on this exciting opportunity.
FULL DISCLOSURE: Cruz Capital Corp is a paid client of Stockhouse Publishing.