How to Invest in Cobalt (Updated 2023)

Wondering how to invest in cobalt? This brief guide covers supply, demand and different investing options for this battery metal.

Cobalt has been used as a blue coloring agent in pottery, glass and ceramics for thousands of years.

However, more recently, demand from high-tech sectors has overshadowed traditional cobalt uses. Today, this critical metal is an essential ingredient in electric vehicle (EV) batteries, energy storage systems, metal alloys and more.

The battery sector in particular has become a major source of cobalt demand. Demand for lithium-ion batteries, which require cobalt, is escalating, and analysts expect that this sector will drive the cobalt market going forward. At the same time, cobalt supply could tighten substantially due to human rights abuses in the Democratic Republic of Congo (DRC), where most cobalt is produced.

Given those factors, many investors are now wondering how to invest in cobalt. To help those interested in the sector, we’ve put together a brief guide on cobalt supply and demand and different investing options.

What factors impact cobalt supply and demand?

Cobalt is mainly produced as a by-product of copper and nickel, with the DRC supplying the bulk of the world’s cobalt. Most DRC cobalt comes from an area known as the Central African Copper Belt, which accounts for nearly half of cobalt output in the DRC. The country also holds nearly half of global cobalt reserves, cementing its dominance.

The DRC produced 130,000 metric tons (MT) of cobalt in 2022, far ahead of runner-up Indonesia’s 10,000 MT. Russia (8,900 MT) and Australia (5,900 MT) were the third and fourth largest, respectively. Cobalt is currently produced in about a dozen countries.

As noted, cobalt from the DRC is facing increasing scrutiny. While cobalt is not a conflict mineral, some human rights groups are pushing for it to receive that designation. Many DRC cobalt operations are dangerous, poorly managed and involve child labor. Because of that, these human rights groups believe that cobalt end users should be sourcing the metal elsewhere.

Cobalt demand is also important to look at. It’s tough to say exactly how much demand will increase in the coming years, but many experts agree growth will be substantial. As noted, the lithium-ion battery market will be a huge driver of that demand, with battery production rising due to the expected surge in EV purchases. Lithium-ion batteries are used in other electronics as well.

“Despite the prevailing transition to lower cobalt cathode chemistries and the growing share of non-cobalt chemistries, the cobalt bearing (nickel-cobalt-manganese) chemistry will remain the dominant chemistry in the foreseeable future," said Andries Gerbens, a physical trader at Darton Commodities. "Furthermore, the sheer absolute growth in EV sales will mean that EV-related cobalt demand will continue to accelerate in the years to come."

What are the main ways to invest in cobalt?

These circumstances have left many investors interested in cobalt, and there are two main ways to get exposure.

The first option is cobalt futures, which can be found on the London Metal Exchange under the symbol CO. These futures began trading in early 2010 and are quoted in US dollars per MT. Contracts range over a span of 15 months, allowing investors to make bets on the metal over varying time periods. Typically futures trading is done by more sophisticated investors.

The second option is to invest in cobalt-focused companies. Benchmark Mineral Intelligence Chief Data Officer Caspar Rawles has recommended that any investor interested in investing in cobalt look at copper and nickel companies that are mining or exploring for cobalt, “unless (they) are lucky enough to find a (junior with a) deposit that is primarily cobalt.”

He added, “I think the key for smaller companies is to be targeting value-added products further downstream than simply a concentrate, such as cobalt sulfate, targeting the battery supply chain.”

For ideas on cobalt stocks to invest in, check out our list of the biggest producers of the metal — these are some of the largest names in the sector. You can also read our overview of Canadian cobalt companies that have seen year-to-date gains, and our list of the biggest cobalt stocks on the ASX by market cap.

This is an updated version of an article originally published by the Investing News Network in 2010.

Don’t forget to follow us @INN_Resource for real-time news updates!

Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.

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How to Invest in Cobalt (Updated 2023)

What factors impact cobalt supply and demand?

What are the main ways to invest in cobalt?

How to Invest in Cobalt:

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