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Time To Buy Some Cobalt Miners


  • The cobalt miners strangely fell in January following the lithium miners despite very strong cobalt price gains.
  • The cobalt miner fundamentals are still very solid with a restricted supply and surging demand.
  • Electric vehicle sales accelerated in 2017 finishing with a 58% increase.
  • New punitive DRC taxes threaten to reduce profits on the DRC cobalt players.
  • A summary of the cobalt miners to consider buying now and my top picks with price targets.

Note: This article was first published on Trend Investing on Feb. 11, 2018; therefore, all data is as of that date.

The cobalt miners have had a great run since mid 2016; strongly supported by fundamentals such as the cobalt price more than tripling from about USD 10/lb to USD 37/lb. Then in January 2018 the lithium miners rout caused by lithium oversupply fears infected the cobalt miners. I find this particularly strange given cobalt is currently in deficit, and the cobalt price rise accelerated the past 3 months rising ~32%.

In February the global stock market correction of around 10% dragged down the cobalt miners further. The sector has not fallen as badly as lithium, yet bargains have started to appear in a sector that should not be cheap.

Cobalt 1 year spot price chart - Current price = USD 36.97/lb

5 Year Cobalt Prices - Cobalt Price Chart

Source: InfoMine

Cobalt miner fundamentals have been improving

Some recent news includes:

  • Cobalt prices are up ~32% in the past 3 months, due to a cobalt deficit.
  • In November 2017 Mike Beck stated he sees cobalt prices going much, much higher "in excess of USD 100/lb." (video 15.20 mark)
  • In December Morningstar reported: "BMO Capital Markets expects current cobalt prices to double in the next two years as demand for electric-vehicle batteries continues to outstrip existing supply of the metal."
  • Bloomberg - "There just isn't enough cobalt to go around - says CRU."
  • Global electric cars sales grew 58% in 2017, and H2 was very strong.
  • BYD and other Chinese car makers switch from LiFePO4 to NMC batteries as China allows Nickel-Manganese-Cobalt [NMC] to qualify for subsidies.
  • Updated January 2018 - PushEVs - "China starts replacing LiFePO4 with NMC for EVs. The Chinese Government has passed legislation that requires EV cells to soon achieve an energy density of 200

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Analyst’s Disclosure: I am/we are long GLENCORE (LSX:GLEN), KATANGA MINING [TSX:KAT], NORILSK NICKEL (LME:MNOD), HIGHLANDS PACIFIC [ASX:HIG], AUSTRALIA MINES [ASX:AUZ], FORTUNE MINERALS [TSX:FT], RNC MINERALS [TSX:RNX], ARDEA RESOURCES [ASX:ARL], COBALT BLUE [ASX:COB], AEON METALS [ASX:AML], GME RESOURCES [ASX:GME], CASSINI RESOURCES (ASX:CZI), HAVILLAH RESOURCES [ASX:HAV], CONICO LTD [ASX:CNJ], CRUZ COBALT CORP [TSXV:CUZ], BANKERS COBALT [TSXV:BANC], POSEIDON NICKEL [ASX:POS]. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The information in this article is general in nature and should not be relied upon as personal financial advice.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (83)

werthaltig profile picture
Did anybody calculate how much dividend we could expect from those two news? At first glance it looks quite exciting, however final judgement can be done only after crunching numbers. I guess "Highlands Pacific Limited" did not give the royalty stream under its real value?

1. Cobalt 27 Acquires a Cash Flowing Cobalt-Nickel Stream on Producing Ramu Nickel-Cobalt Mine for US$113 Million (C$145 Million)

2. Cobalt 27 Announces Cash Flow-Linked Dividend Policy and Intention to Adopt a Normal Course Issuer Bid
3BlackCrowes profile picture
$ARRRF has been smacked down so hard over the last couple weeks. Wish I could allocate more to it at these levels. I can't seem to find much news on this lately? Anyone else ? Its strange, so many bullish articles overall about demand, yet we sit sideways to down. The stocks get ahead of themselves....
Being long ARRRF I've been following the latest developments leading to price decline. Seems to be a less than enthusiastic response to the PFS released late March, and mainly related to the price assumptions used for Nickel and Cobalt which are both close to current pricing. The release of this PFS was long awaited as a catalyst and it may be some time before a new catalyst arrives. Of course, the longer term value of the company still remains. Additional dilution may occur to fund development and is also a risk factor for current investors. Here is a link to the PFS if you haven't seen it: http://bit.ly/2HaK5ti
If you want to follow local ASX market chatter on various stocks you can do so via HotCopper and just build a Watchlist of ASX symbols to be able to click on the discussion threads for those symbols. It's the only good way I've found to follow what's going on down under. Here's the link https://hotcopper.com.au
3BlackCrowes profile picture
I really appreciate your response and the links you sent:) Looks like we were pulled out of the trenches yesterday! I hope it continues to climb...
Trend Investing profile picture
Oharper - Yes Pacific Rim Cobalt are on my watch list. Cheers.
M. Leon profile picture
I don't see PCRCF on this list, have you heard of it? Its TNM cobalt project is located in Indonesia which is the same region that produced 32% of the world’s nickel as laterite ore just a few years back- here is some info would like some feedback http://bit.ly/2H1fAJ7
h_oliver88 profile picture
Cobalt reached 95500/t~43.3USD/lb on LME
I hope everyone stacked up fully by now!:)
The perfect storm is coming on us!
Swiss Maven profile picture
Hi Mr. Matt - Many thanks for highlighting Cobalt Blue. I jumped in straightaway and am already up 50%. Keep up your good work.
Trend Investing profile picture
Swiss Maven - Welcome.....Nice to hear you have done well. Cheers.
Paul German profile picture
Cobalt touches $90,000/ton on LME: http://bit.ly/2FN7Afc
h_oliver88 profile picture
Seeing this magnitude of price development in the past few month it wont take long till the price get to 100 000.. However honestly i dont really want to see prices much above that for some times.
wassa.h profile picture
It is 19 Aug right now. It has been good to get the big drop....seems to me you' kinda ' got your wish. Cobalt has edged up all week and is just below $30lb. down from high about $42 lb....be good to see mid 30's next week. Hell there is good buying out there!
h_oliver88 profile picture
Hahahaha Wassa what are you doing in this old thread
Hi Matt, herein a number of quotes by Glencore CEO that are extremely pertinent to anyone holding KAT shares:

"Cobalt price: Automakers 'waking up too late' as China takes control" :


As well, I just said in my comment here two days ago "Where the other Tier 1 car companies and aspirational EV wannabees go for energy metals will be the story to watch in the next year, mark my words."

I guess Mining.com Journalist Frik Els agreed or must have read my mind...

These are my views only. Thanks for reading.
The recent Glencore Cobalt forward sale is now widely reported but I feel we still need reminding why it was imperative for the battery manufacturers to get on board now as this is, and will be for the next NUMBER OF YEARS, a real, verifiable and classic Supply vs Demand conundrum where Co supply side paucity and massive forecast (exponential) EV growth can and will drive prices much, much higher.

And the answer? You absolutely have to be where the Grade and Scale are. KAT's Cu & Co assets underscore why I am long this miner.

"Glencore inks Cobalt supply deal with China’s GEM":

GEM said that “With the rapid growth of global new energy car production cobalt has become a global resource in short supply.” Consumers are now racing to secure supply.

In fact, "cobalt supply will need to reach 180,000 tonnes by 2026 from just 48,000 tonnes in 2016 to fulfill the increasing demand for electric cars" according to Benchmark Mineral Intelligence.


Where the other Tier 1 car companies and aspirational EV wannabees go for energy metals will be the story to watch in the next year, mark my words...

These are my views only. Thanks for reading.
h_oliver88 profile picture
Well written!
I felt the same way until last week.
Between the PFS results and the news out of the EPA.
EV curtailment changes everything. No demand = end of Cobalt
Car companies will no longer be required to make EVs. The only reason why they are even doing it now is to meet the requirements mandated to them from the Obama administration. But now all that ends. Pruitt n Trump rolled back those regulations so the OEMs does not need make any more EV for several years. By then many cobalt miners will be gone.
Thanks for the considered response @lovethecar, notthestock... Nice handle BTW.

As a diehard certified "Pertrolhead" and aficionado of all things "Analogue", I'm watching this EV revolution very closely.

And taking your comments into consideration, and regardless of those concerns, I still believe there is a structural, once-in-a-lifetime event taking place, that being the gradual demise of the internal combustion engine and the overtaking of it, by all things "EV".

We will not be able to stand in the way of European and Far Eastern governments mandating Clean Air policies for their cities that directly challenge (and ban), now, or by prescribed dates in the future, the burning of carbon fuels to move people.

We will also not be able to stand in the way of Mr Market's desire to back (and keep backing), the underlying technological changes (and Companies) that we now see pressuring "old industry", those that may, or may not have made their fortunes in the past out of burning carbon fuels to move people.

Have you not seen what BMW plan to do to their car portfolio in the near future?

Have you not seen what VW plan to do to their car portfolio in the near future?

Have you not seen what GM and Volvo are planning? Ford? Mercedes? Even Porsche?

And why do you think that has happened?

It's a massively huge juggernaut my friend and if you think a few "regulatory rollbacks" by the EPA will stop this structural change, then I suggest you might also believe in the tooth fairy.

Lastly, remember Analogue? Remember magnetic tape? The vinyl record? Kodak? Celluloid film?

Digital killed off whole swathes of businesses we all thought were just fine - until they weren't - because something better came along and Mr Market spoke: the Apple Mac, digital cameras, CDs - well, "digital everything"... changed everything...

That wasn't regulation. That wasn't the EPA. Those were consumer movement(s) of choice.

As I said, I'm a diehard certified "PetrolHead". As well as a big BMW bike, I currently drive a 510HP supercharged Range Rover. So, no, Tesla doesn't do it for me. I also said I'm an aficionado of all things "Analogue". I still buy vinyl from time to time (David Bowie - "Black Star"), still use my Linn Axis turntable (circa 1984) and still shoot the odd roll of film now and then, but that doesn't mean I don't also participate in where these new consumer choices took us. Last year, for the very first time, I bought a super high-end iRiver dual-DAC digital music player for the very first time (listening to it through my Sennheiser HD800's is simply incredible) and I regularly buy CDs on Amazon (like ten a month). I also own 5 digital cameras now; to my discredit, it seems like a new one everytime something (much) better happened for the consumer.

My point is, I believe the EV and Digital revolution will prevail over the internal combustion engined car also - its a just a matter of time - and just as it's taken us in the other innumerable directions we now know, so, no, sorry, we won't be able to stop that structural change.

Does that mean Porsche is going to stop making a manual, non Turbo 911, powered by petrol only? No, it doesn't. Hurrah for that!

Far, far in the future, there will always be a market for the PetrolHeads and Analogue aficionados amongst us just as we can still buy our vinyl...

These are my views only. Thanks for reading.
Latest Ardea presentation
Talks about a possible spinoff of other assets and possible byproducts of KNP zone
Possible byproducts include scandium oxide, platinoids, manganese, chromium, high
purity alumina.
Thanks for sharing the ppt - excellent presentation. Looking forward to the upcoming PFS.
h_oliver88 profile picture
It will be big!:) Cant wait to read it!
neddie 7777777 profile picture
Matt. care to comment on nmkef?
Dear Matt, would you mind sharing with us your opinion about the announced First Cobalt / US Cobalt deal yesterday, the potential implications for the North American market, and potential impacts on peers and majors? Thank you in advance for your very valuable insight.
Hi Matt, I just wanted to tell you that the Norilsk name in front of its ticker in your disclosure section has been saying Norsilk for a while.

Great articles lately!
h_oliver88 profile picture
I dont know why no body talks about this one!:
A quite significant resource upgrade at Ardea!
How people can much better compare Ardea
with Clean Teq!..:) http://bit.ly/2pfhuvZ

(althought its only put light at a different angle on the property,
but with this many investor can better understand the deep bargain
opportunity Ardea presenting today!:)
Nice report link. I'm holding an initial position in ARRRF and a significant position in CTEQF. Watching both bounce around like bingo balls but expect strong long term price appreciation once first product is produced. Thanks !
The resource upgrade is due to lowering the threshold for counting economically feasible cobalt and nickel grades, (as current market prices make the lower grade ore worth mining), not to new discoveries. Found this on page 4 of the report. Still a significant bump up in contained metals !
Swiss Maven profile picture
ARRRF is the symbol for Ardea in New York, not on the TSX.
Smylie profile picture
Hey Matt, is there any indication in what you know about when the FCC USCO share swap takes place?
hearnow1 profile picture
Thank you Matt for the information. Great timing too!
dundarr profile picture
Really enjoy your articles. I think you should get a referral link from Interactive Brokers. My experience trading some of these names with Fidelity has been god awful - $50 additional fee in some cases. My experience with Etrade was a lot better but not great, I am guessing its probably on par w/ TD Ameritrade (which ive heard good things about) However, IB can give you direct access to ASX (no US wrapper tickers) SEHK (Hong Kong equities), direct access to TSX Venture (again no US wrappers) as weel as TSE. Given your list of names for both Li and Co IB is one of the only places I know where an individual investor can get easy access to all names. Also if one was taking a large position and wanted to offset currency risk its easy as pi.
I've been thinking the same thing about going to IB for some of these direct ASX and TSX trades and the market liquidity is much greater than the existing ADRs. Thing that scares me a bit is all the tax records for the foreign exchange transactions, etc. I can barely understand the TD Ameritrade tax records that I get for rather simple transactions.
dundarr profile picture
tax isnt that bad, if taxes are withheld (which may happen in some jurisdictions) you have to file under foreign taxes paid to get credit for those taxes and not have to double pay here in the US. I used to use IB, probably going back there soon, so i cant speak to their import into tax software but for < $100 turbo tax handles the little bit of foreign taxes paid i come across easily, i just usually have to confirm a box number and manually select country but the figures have been imported correctly from both fidelity and etrade.
Paul German profile picture
First Cobalt acquires US Cobalt (from FT, cutting and pasting first 4 paragraphs), DYOR:

"Henry Sanderson AN HOUR AGO
Canada’s First Cobalt has acquired exploration company US Cobalt to create a North American-focused cobalt miner, as demand rises for the key electric car battery metal.

The combined company, which has projects in Ontario and Idaho, could provide a source of cobalt for car companies outside of the Democratic Republic of Congo, which is responsible for over 60 per cent of supplies of the metal.

The deal “strategically positions First Cobalt as a leading non-DRC cobalt company with North American projects located in proximity to infrastructure as well as electric vehicle and technology hubs such as Michigan and California,” the company said.

“We foresee a shortage of cobalt over the next five years yet there are few companies doing significant work to identify new sources of supply,” Trent Mell, chief executive of First Cobalt, said. “This transaction creates a larger platform to discover and develop cobalt projects for the growing electric vehicle market by combining high quality North American assets in two of the best cobalt jurisdictions outside the DRC.”
slvrsrfr303 profile picture
I hold shares of US Cobalt. What happens to them now that First Cobalt has acquired US Cobalt?
Swiss Maven profile picture
This acquisition of USCO by FCC will prove to have been a big mistake. If it were a bargain, eCobalt Solutions would have taken out USCO long ago (the two companies operations are 20 km apart in the same Idaho cobalt trend). Moreover, FCC is paying an ungodly 62% premium. CEO Trent Mell is coming across as an empire builder. Sad.
Swiss Maven profile picture
If the deal closes, you will receive FCC shares in exchange for your USCO shares. That's all.
Just One Lab Nerd profile picture
Nice article - and I agree that the trendline for most of these companies is likely to be good as Cobalt production remains limited.

eCobalt Solutions is a company I've been following for years, and that I continue to hold a small stake in currently. Have been thinking that I need to start adding some shares there incrementally this Spring and Summer. Will have to look into some of the other juniors that you have highlighted as well.
Bankers is getting crushed. Bought a small position at .29 now it’s .26 wow 😲
For what reason?
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