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Cobalt Demand to Soar +4,500% by 2030

Written by Luke Burgess
Posted November 22, 2017 at 7:00PM

OK, so unless you live under a rock, you know electric vehicles are the future of transportation. In the same way the combustion engine replaced the steam engine, the fully electric motor is the next evolution. 

And you know EVs will depend on lithium-ion batteries to store energy. A fully electric vehicle without a lithium-ion battery is essentially a traditional car without a gas tank.

So invest in lithium, right?

No doubt. Next to cryptocurrencies, lithium is one of the hottest investments right now. Global X Lithium ETF (NYSEArca: LIT) is one of the best-performing ETFs of the year, gaining almost 70% with inflows of nearly $400 million. In my Secret Stock Files portfolio, we have one lithium stock that's returned over 125% in four weeks. It will be one of the biggest monthly returns for us for the year.

But the rechargeable lithium-ion batteries everyone is speculating on aren't simply solid hunks of lithium. There are a few other critical metals needed to create rechargeable batteries that are very often overlooked.

And among them is one that might be a better investment than lithium itself.

I'm talking about cobalt.

Cobalt is one of the many metals with natural properties that will react with lithium in a way needed produce rechargeable batteries. It's used in the electrodes of lithium-ion batteries.

But forget the science or engineering behind it... the demand for cobalt is set to absolutely soar due to the EV revolution. In fact, between now and 2030, forecasts show a +4,500% surge in demand for cobalt. And for investors today, that spells out the promise of massive returns. 

cobalt demand 11%2F17

Cobalt is actually used in many rechargeable batteries for several different consumer products. In fact, there's no doubt you have some in your house right now. But while a laptop might have about an ounce of cobalt in it, an average EV battery contains over 30 pounds of the stuff. So the industry is going to need every ounce it can get its hand on.

But for manufacturers of EV batteries, securing cobalt resources poses a bit of an issue...

Global EV Demandev demand 11%2F17

You see, most of the world's cobalt resources are located in one single country: Democratic Republic of Congo.

By some estimates, there are over $20 trillion worth of cobalt resources in the DRC. And today, over 50% of the global supply currently comes from the country. But that's a growing problem.

Blood Cobalt

On top of geopolitical instability and corruption that can (and has in the past) halt supplies overnight, there are now active investigations into child labor and human rights violations within the DRC cobalt mining industry.

This has put pressure on electronics and EV manufacturers to find other sources. Amnesty International recently published an article calling out industry leaders such as Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), and Tesla (NASDAQ: TSLA) to do more about these claims.

ai 11%2F17

All this is pushing investors to look elsewhere for cobalt resources in more mining-friendly countries like Australia and Canada.

In an interview with Quartz magazine, junior explorer First Cobalt (TSX-V: FCC) CEO Trent Mell said, "The DRC remains very appealing geologically but the investment climate has deteriorated since the strategic alliance was announced and we have significantly expanded our footprint in Canada. With the signals we’re getting, why would we invest our scarce dollars in a country that may not respect our investment rights?"

The price of cobalt has more than doubled in the past 12 months. But rising demand and supply issues still point to much higher pricing.

My colleague Keith Kohl is all over the cobalt story right now. He's ahead of the game with several cobalt miners and explorers already in his portfolios. And he's discovered many with cobalt projects outside of the DRC.

Right now, this stock is flying under the radar. But that won't last. I highly urge you to get the full story on cobalt from Keith. This is truly a once-in-a-lifetime opportunity. After the mass media really starts talking about the need for cobalt and the market truly understands the problem with resources, prices are going to soar, and it's going to be too late.

Don't delay. Check out Keith's most recent cobalt presentation now.

Until next time,

Luke Burgess Signature

Luke Burgess

follow basic@Lukemburgess

As an editor at Energy and Capital, Luke’s analysis and market research reach hundreds of thousands of investors every day. Luke is also a contributing editor of Angel Publishing’s Bubble and Bust Report newsletter. There, he helps investors in leveraging the future supply-demand imbalance that he believes could be key to a cyclical upswing in the hard asset markets. For more on Luke, go to his editor’s page.


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