Dear Reader,
Everyone knows about how hot the lithium market has been. It is, perhaps, THE commodity of the 21st century… so far, at least.
And the reason why isn’t hard to deduce. With every new lithium-ion battery produced, and with every new device requiring such a battery, be it a smartphone or an electric car, more of the metal needs to be mined, refined, and manufactured into a power source.
It’s the reason Tesla’s (NASDAQ: TSLA) chief and founder, Elon Musk, invested more than $5 billion into a factory focused solely on the production of these portable, rechargeable batteries.
And lithium prices, right along with this burgeoning market, have been rising in step.
Like I mentioned, that part of the story isn’t hard to figure out — even for a novice.
What few people know is that lithium-ion batteries contain a second metal — one just as important as lithium, and perhaps even more so, as it is the element that gives lithium-ion batteries the power density that makes them so appealing for the consumer device applications so familiar to us today.
Long run time, among other things, make this the chemistry of choice for such products as phones and cameras, not to mention cars and even domestic storage units such as the Tesla Powerwall.
That second metal is cobalt, which is pictured below in its refined form.
Just about every lithium-ion battery in use today relies on cobalt the same way it relies on lithium, making the “lithium-ion” designation a bit of a misnomer in and of itself.
The strange thing is, while lithium prices have been growing steadily for the last decade, right along with the demand for the batteries, cobalt prices have stayed almost flat over the course of that same period.
Cobalt demand, however, has been on the rise at the same rate — creating a potentially historic inefficiency in the market.
One of the starkest illustrations of this inefficiency is where today’s biggest cobalt supplies can be found.
As one of the 21st century’s most vital industrial metals, one would expect the highly developed, modern nations of the world to be hording the reserves, but, as it stands, it’s the Democratic Republic of Congo that takes first place — by far — in annual cobalt production.
63,000 metric tons — compared to the number two spot, China, with just 7,200 metric tons as of 2014 — makes the Central African nation the world’s most fertile source of the metal.
With barely a 75% literacy rate and an average life expectancy of less than 50 years, the DRC falls well within the Third World category, and yet its mines are the lifeblood of an essential component of the modern consumer electronics industry.
This, however, is all set to change in the next few years, as investment strategy is quickly awakening to the realities of cobalt demand.
Right now, a number of companies are starting to diversify their lithium mining operations to include cobalt as well — many of them based in Canada and developing projects across North America.
Keep your eyes on this story, as cobalt, the lesser-known sibling of lithium, may soon take over as the most sought-after commodity of the modern age.
Until next time,
John Peterson
Pro Trader Today