Cobalt is a metallic chemical element found in the earth’s crust. While cobalt is nothing new, it will be more in demand in the coming decades. Its main use is in lithium ion batteries, which are used in electric vehicles (EVs). As the production of electric vehicles grows, so will lithium-ion batteries. Therefore, lithium production is expected to increase in the coming years.
With an increase in demand, opportunities are offered, both for companies and for investors. This list will take a look at some of the best cobalt stocks that can be purchased today as the EV race continues to heat up.
Top 5 cobalt stocks to add to your portfolio
Cobalt production will have to increase to meet the growing demand for electric vehicles. These five cobalt stocks are already leaders:
- Glencore (OTC: GLNCY)
- Okay (NYSE: VALE)
- Wheaton Precious Metal Corp. (NYSE: WPM)
- China Molybdenum Co., Ltd. (HKSE: 3993.HK)
- Carpenter Technology Corporation (NYSE: CRS)
Let’s take a closer look at each of these actions. You will see why they are some of the most important cobalt stocks today.
Glencore is an obvious choice, as it is one of the largest producers of cobalt in the world. This makes it an excellent cobalt broth. The Anglo-Swiss multinational, in 2020, Glencore produced 27.4 kt of cobalt. This represents 20% of world production. Most of this production is a by-product of its Katanga and Mutanda copper mines.
According to Glencore’s 2020 annual report, its EBITDA for the year was $ 11.6 billion and its revenue was $ 142.34 million. Still, it suffered a net loss of $ 1.9 billion. It employs 135,000 people and operates in more than 35 countries.
The Brazilian mining multinational Vale SA is the largest producer of iron ore and nickel in the world. While these are the most important parts of your business, it is also engaged in manganese, copper, kaolin and yes, cobalt. In 2020, Vale produced 4,672 metric tons of cobalt. Its cobalt is a by-product of nickel production in the mines of Sudbury, Thompson and Voisey’s Bay, in Canada and elsewhere.
Vale is also one of the most valuable companies in Latin America. Its revenue in 2020 exceeded $ 40 billion, with nearly $ 5 billion in net income. Currently, only 1% of Vale’s revenue comes from cobalt, but this may increase as demand for cobalt increases worldwide.
Wheaton Precious Metals
Wheaton Precious Metals, based in Vancouver, Canada, is another non-direct cobalt stock. He specializes in gold and silver. In 2016 it produced 30.4 million ounces of silver and 357,300 ounces of gold.
Although Wheaton did not produce much cobalt in the past, he recently bought cobalt production from Vale. As a result, it will claim 42.4% of the cobalt production from the Voisey’s Bay mine in Canada. This will continue up to 31 million pounds of cobalt and will subsequently receive 21.2% of production.
Wheaton’s revenue in 2020 was $ 248 million with a net profit of $ 105.8 million. It currently has 14 “streams,” which allow it to produce various metals. In addition, it has 24 mines in operation and eight development projects currently under construction.
China Molybdenum Co.
As its name suggests, China’s molybdenum (CMOC) is the largest producer of molybdenum in mainland China. And yet it ranks first in the world in molybdenum production. Meanwhile, it is the second largest producer of cobalt in the world. This makes it one of the main cobalt values around. It is also the world’s largest producer of copper.
CMOC is very committed to cobalt. He was already the majority owner of the Tenke Fungurume mine when it was part of an agreement that allowed him to claim 80% of the mine’s production. Then, in 2021, he announced a $ 2.51 million plan that would double copper and cobalt production at the mine. This mine is located in the Democratic Republic of the Congo (DRC), which is the world’s leading source of cobalt.
In 2020, its revenue was 113 113 billion and its net profits exceeded milions 2 billion. It is headquartered in Luoyang, China, and had nearly 11,000 employees by 2020.
Carpenter Technology Corporation
Carpenter Technology is another major cobalt stock. Headquartered in Philadelphia, Pennsylvania, it develops, manufactures and distributes stainless steels and corrosion-resistant alloys. Its products also include titanium, nickel-copper and nickel-cobalt.
Currently, cobalt is not Carpenter’s largest source of income. Most of its revenue comes from the aerospace and defense industry. It is also a smaller company with a market capitalization of about $ 1.5 billion. Its revenues exceeded $ 2 billion in 2010. It also has assets of more than $ 3 billion.
Why is Cobalt so in demand?
As mentioned above, cobalt is growing in demand because it is used in lithium ion batteries. These batteries are used in electric vehicles. But of course there are other metals, so what makes cobalt special?
As mentioned, cobalt is used in the production of lithium ion batteries. But you may be wondering why cobalt is needed, as it is not even in the name of li-ion. So why is cobalt used? Mainly because it helps increase the power density of battery packs. This is important in electric vehicles because, without a sufficient energy density, the batteries become too heavy and are not feasible to use in consumer vehicles.
Power density has long been an issue with batteries. Despite all its problems, gasoline is about 100 times denser in energy than a typical lithium-ion battery. Therefore, it is essential to increase the energy density of the batteries. Electric vehicles are more energy efficient than internal combustion engines. However, manufacturers must supply the lowest energy density of batteries.
Are there alternatives to cobalt?
Keep in mind that while cobalt is expected to grow in production, it is not entirely safe. And that could pose a risk to cobalt stocks. As mentioned above, the largest source of cobalt worldwide is the DRC. This has led some to question questions about possible human rights violations surrounding cobalt mining. Cobalt is also a toxic metal, which further complicates matters.
However, researchers are working not only to improve the energy density of Li-ion batteries, but also to reduce or even drop cobalt. For example, a team of researchers at the University of Texas reported the results of tests for a new cobalt-free cathode chemistry.
The chemist used a nickel-rich cathode and an experimental lithium-ion bag cell. The energy density decreased slightly, but the charging times did not. It is important to note that the battery maintained its useful life more than 1,000 charge cycles; it often serves another purpose of cobalt.
Other projects, such as cobalt-free solid state batteries, are also promising. Although this is initial research, for now it may change the way lithium-ion batteries are manufactured.
Cobalt stocks: the end result
For now, the future looks bright for cobalt, with demand expected to double by 2030. Countries around the world have set ambitious targets to increase sales of electric vehicles or eliminate vehicles altogether. of internal combustion engines. Cobalt is also scarce, meaning those who own the means of production are now well positioned in the future.
However, this does not mean that there are no risks to cobalt. Concerns about its toxicity and its source in Central Africa have raised concerns about increased production. While cobalt is key to battery production today, there is ongoing research that aims to reduce or even eliminate cobalt from batteries. Cobalt production is likely to increase over the next few years, but it is less certain if it will continue to grow forever.
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About Bob Haegele
Bob Haegele is a personal finance writer specializing in investment and retirement planning. His heavy student loan burden inspired him to pay off his loans and he is now helping others sort out his finances. When he’s not writing, he enjoys traveling and live music.
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