Wondering how to invest in cobalt? This brief guide covers supply, demand and different investing options for this critical 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 car batteries, energy storage systems, metal alloys and more.
The battery sector in particular has become a major sector 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.
How to invest in 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.
The DRC produced 120,000 metric tons of cobalt in 2021, far ahead of runner-up Russia’s 7,600 metric tons. Australia (5,600 metric tons) and the Philippines (4,500 metric tons) were the third and fourth largest, respectively. Cobalt is currently produced in about a dozen countries worldwide.
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 and poorly managed, and 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 for the metal 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 electric car purchases. Lithium-ion batteries are used in other electronics as well.
The consensus seems to be that these factors will push the market into deficit in the coming years. Researchers at the Massachusetts Institute of Technology forecast that global cobalt demand will rise to between 235,000 and 430,000 tonnes by 2030. That figure is at a minimum 1.6 times the world’s current cobalt-refining capacity.
How to invest in cobalt: Futures and stocks
These circumstances have left many investors interested in cobalt investing. For those who want to jump in, there are two main ways to invest in cobalt: cobalt futures and cobalt stocks.
Cobalt futures 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 tonne. Contracts range over a span of 15 months, allowing investors to make bets on the metal over varying time periods.
Another option to get exposure to the critical metal is to invest in cobalt-mining companies. Benchmark Mineral Intelligence Head of Price Assessment 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.
From Your Site Articles
- Cobalt Outlook 2022: Rapid EV Growth to Drive Demand, Resilience ... ›
- Top Cobalt Reserves by Country | INN ›
- 5 Largest Cobalt Mines in the World | INN ›
- 5 Top Cobalt-mining Companies | INN ›
- Top Cobalt Production by Country | INN ›
- Cobalt Uses: Batteries and More ›
- Top 3 Canadian Cobalt Stocks of 2022 ›
Related Articles Around the Web