Miss the lithium boom last year?
Several star investors like AlphaNorth's Steve Palmer, Sprott's Rick Rule and Ivanhoe's Robert Friedland are predicting a new bubble in another battery metal, cobalt, as demand for battery raw materials grows with the advent of electric vehicles, while simultaneously end-users like Apple Inc begin to demand a conflict-free-supply.
So should retail investors jump aboard the cobalt train now leaving the station?
Not so fast say Brent Cook and Joe Mazumdar in the March 12, 2017 edition of Exploration Insights, a respected newsletter on early stage mining investments.
Here's the excerpt discussing Cobalt:
We realize that some investors are keen on the potential of cobalt and its growing demand related to rechargeable batteries and superalloys for aerospace technology. However, according to the Cobalt Development Institute (link here), “current land sources are estimated to be able to provide over 100 years of supply, so no long-term shortage is in sight.”
Furthermore, ~95% of the supply of cobalt comes as a by-product of other mining operations, predominantly nickel and copper. When a metal is a by-product, it is relatively price-insensitive as the revenue is generated by the primary product. On the other hand, any mine producing primary cobalt would be on the high-end of the cost curve.
Given this year’s multi-commodity focus, a word of caution with regards to investing in unfamiliar markets: basic knowledge of the supply and demand fundamentals of the commodity of interest can go a long way toward understanding whether it makes sense to invest in a company—you may find that its leverage to the metal you are keen on may be limited.
At the Prospectors and Developers Association Convention (PDAC) in Toronto last week, Cook and Mazumdar completed a whirlwhind media tour. Watch:
BNN Market Call Tonight: Brent and Joe take viewers questions on the Junior Mining Market while reviewing last year’s top picks and presenting this year’s, link here.
Kitco NEWS: Production is declining, and miners aren’t replacing reserves; these were two issues discussed between Daniela Cambone and Joe, link here.
Kitco NEWS: Mining Investors, Watch Out For “Alternative Facts”, says Brent in an interview with Daniela Cambone. Money is flowing back into the mining industry, but investors need to do their due diligence when picking mining companies, link here.
Minaurum Gold: Finding That Lottery Ticket Discovery; Sunny Pannu interviews Joe, and they discuss moving upstream in the precious and base metal mining sector, link here.
Commodity-TV: Expecting Deflation Until Summer, Good Opportunity Afterwards; Jochen Staiger interviews Brent, link here.
Investing News Network: Exploration-stage Gold Plays are the Place to Be; Charlotte McLeod talked with Joe about the reasons major miners’ gold reserves are declining, and they also discuss a commodity that is not in Exploration Insights radar, link here.