Cobalt was the battery metal market darling in early 2018, hitting a record $US95,000 ($133,877) a tonne before starting its steep descent.

After hitting a bottom of $US29,000 a tonne in February 2019, wiping off very close to 70 per cent of its value, things are starting to look up again and the price is again on a northward trajectory.

Despite the falling price, the outlook for cobalt didn’t change — commentators still forecast strong growth in demand and a tightening in supply.

In this guide we’ll explain the factors that have been driving ASX cobalt stocks and what could drive demand – and stock prices – into the future.

What is cobalt?

Cobalt, which has the periodic symbol Co, is a hard, lustrous, silver-grey metal.

It can be magnetised and alloyed with aluminium and nickel to make particularly powerful magnets, as catalysts for the petroleum and chemical industries, and as drying agents for paints and inks.

But its importance in stopping batteries from blowing up has seen its use in lithium-ion batteries increase significantly.

Cobalt demand by industry. Image courtesy of Taruga Minerals.
Cobalt demand by industry. Image courtesy of Taruga Minerals.

Cobalt is used to stabilise the chemistry in the cathode of a lithium-ion battery.

Batteries include an anode (positive) and a cathode (negative) and the electrical current flows between the two.

The typical electric vehicle (EV) battery requires up to 9kg of cobalt and a standard laptop requires around 30g of the mineral.

This rising demand for cobalt in batteries was a big contributor to the price getting as high as it did.

Mining and production

There is very little primary production of cobalt, with 98 per cent of supply coming from either copper or nickel mines.

The copper belt in the Democratic Republic of the Congo (DRC), Central African Republic and Zambia yields most of the cobalt mined worldwide.

The Bou Azzer mine in Morocco is currently one of the world’s only operating primary cobalt mines and has been in operation since the 1930s.

Cobalt has been declared a critical mineral by the EU. Globally, only around 100,000 tonnes is produced each year.

Infographic courtesy of Cobalt Institute
Infographic courtesy of Cobalt Institute.

How cobalt is mined has become a major consumer issue because of the use of child labour in countries like the DRC, which supplies nearly 60 per cent of the world’s cobalt.

Major players like Apple and Ford are putting pressure on suppliers to prove they only buy cobalt from ethical miners.

In 2017, the London Metal Exchange launched its own investigation into whether or not any of the cobalt it was trading came from unethical sources.

This responsible sourcing of cobalt further impacted an already tight market, with end users refusing to buy cobalt that is mined by hand in the DRC.

Other factors that have contributed to lower supply include Glencore’s problems at its operations in the DRC.

In early 2019, Glencore told investors that a wave of supply from its subsidiary Katanga would be deferred until at least 2020 because the DRC government wasn’t convinced by the miner’s plan to remove radioactivity from the cobalt.

Glencore then reportedly slashed workforce numbers at the 27,000 tonne-a-year Mutanda mine, also in the DRC, amid rising production costs and an “uncertain political climate”.

The Mutanda and Katanga mines together were expected to contribute around 50,000 tonnes of mined supply in 2019, CRU senior analyst George Heppel said.

That’s about 30 per cent of global cobalt supply, and more than 40 per cent of DRC production.

“Given the expected reduction in output from Mutanda (as well as the halting of shipments from Katanga), we expect to see about 15,000 tonnes less output from the DRC in the first half of 2019,” Mr Heppel said.

Demand driving ASX cobalt stocks

The cobalt market was impacted in 2018 because of a widespread push by battery and car makers to reduce the amount of cobalt needed in batteries. This was because it was so high cost and hard to come by.

American car giant Tesla and Japanese electronics company Panasonic were the first to say they wanted to eventually stop using cobalt in their batteries altogether.

This sent ripples through the market, but battery metal price analyst Benchmark Mineral Intelligence weighed in saying that despite these bold promises, it expects the use of cobalt in lithium-ion batteries to triple by 2026.

“While efforts are being made to reduce cobalt dependency, the order of magnitude of electric vehicle (EV) growth sales will far outweigh this,” Benchmark Mineral Intelligence said.

In September 2018, the number of EVs sold throughout the world passed 4 million — and sales are increasing at an exponential rate, say researchers at Bloomberg New Energy Finance.

This is a drop in the bucket compared to recent worldwide car sales of about 88 million cars and light vehicles.

“We need to remember there are not many electric vehicles out there yet,” S&P Global Platts analyst Marcel Goldenberg said.

“Electric vehicles are the driver. That’s where the disruption is coming from, and that’s where you will see raw material demand coming from.”

But that could soon change. 2019 marks the start of an expected EV ramp-up for the world’s biggest carmakers.

For example, Volkswagen Group — which owns Audi, Bentley, Bugatti, Lamborghini, Porsche, SEAT, Škoda and Volkswagen — says it plans to spend more than $68.5 billion in the coming five years on EVs, autonomous driving, new mobility services and digitalisation.

Electric car makers are focusing on two battery technologies: nickel-cobalt-aluminium (NCA) which has been favoured by Tesla and nickel-manganese-cobalt (NMC or NCM).

The NMC chemistry is much more popular among Tesla’s rivals.

Cathode chemistries. Image courtesy of Taruga Minerals.
Cathode chemistries. Image courtesy of Taruga Minerals.

NMC batteries will account for about 70 per cent of the total lithium-ion battery market by 2026, Benchmark predicts.

Benchmark predicts Tesla will not be able to further reduce the use of cobalt in its NCA technology.

“There is little room left for Tesla to manoeuvre and further reduce the cobalt in its cells.

“Any new technology that could usurp NCA or NCM is on a 10-year horizon [and] cobalt’s use in lithium-ion batteries is here to stay.”

Materials technology company Umicore also believes cobalt could be tough to replace in batteries, with substitutes possibly leading to reduced performance.

“There isn’t a better element than nickel to increase energy density, and there isn’t a better element than cobalt to make the stuff stable,” Umicore chief Marc Grynberg said.

At least 10 per cent cobalt is needed in batteries for safety and longevity reasons.

Cobalt has a higher density – the measure of how much energy a battery can store – than most other battery metals.

Investing in ASX cobalt stocks

There are over 120 small cap explorers that have exposure to cobalt, but not too many in production.

Here’s a list of ASX stocks with exposure to cobalt:

Swipe or scroll to reveal the full table. 

TickerNameMarket Cap $mProject Locations
ACB A-CAP ENERGY LTD28.8WA
AX8 ACCELERATE RESOURCES LTD1.7TASMANIA
ADY ADMIRALTY RESOURCES NL13.9WA
AML AEON METALS LTD171.6QLD
ALY ALCHEMY RESOURCES LTD6.2NSW
ARN ALDORO RESOURCES LTD4.1WA
AYR ALLOY RESOURCES LTD3.9NSW
A4N ALPHA HPA LTD59.5NSW
ASN ANSON RESOURCES LTD34.9WA
AZY ANTIPA MINERALS LTD43.4WA
ARL ARDEA RESOURCES LTD49.4WA
ADV ARDIDEN LTD5CANADA
ARE ARGONAUT RESOURCES NL28ZAMBIA
ARV ARTEMIS RESOURCES LTD37.7WA
AOU AUROCH MINERALS LTD6.2CZECH REPUBLIC, SA
ANW AUS TIN MINING LTD27.8QLD
AUC AUSGOLD LTD14.9WA
AMG AUSMEX MINING GROUP LTD49.5QLD
AOA AUSMON RESOURCES LTD1.6QLD & NSW
AYM AUSTRALIA UNITED MINING LTD3.7NSW
AUZ AUSTRALIAN MINES LTD74.9QLD & NSW
BAR BARRA RESOURCES LTD17.2WA
BMT BERKUT MINERALS LTD7.3CZECH REPUBLIC, SWEDEN, NORWAY
BSX BLACKSTONE MINERALS LTD8.8CANADA
BMG BMG RESOURCES LTD5.6CYPRUS
BPL BROKEN HILL PROSPECTING LTD2.7NSW
BUX BUXTON RESOURCES LTD13.6WA
CFECAPE LAMBERT RESOURCES LTD28.1ZAMBIA, DRC
CWX CARAWINE RESOURCES LTD7.8WA
CAV CARNAVALE RESOURCES LTD3.3WA
CZI CASSINI RESOURCES LTD34.6WA
CAZ CAZALY RESOURCES LTD6.3QLD, NSW, WA, NT, NAMIBIA,
CLA CELSIUS RESOURCES LTD14.4NAMIBIA
CTM CENTAURUS METALS LTD13.5BRAZIL
CML CHASE MINING CORPORATION LTD3.3CANADA
CLY CLANCY EXPLORATION LTD3.5MOROCCO, AUSTRIA
CLQ CLEAN TEQ HOLDINGS LTD227.6NSW
COB COBALT BLUE HOLDINGS LTD18.7NSW
CHK COHIBA MINERALS LTD7.3QLD, WA
CNJ CONICO LTD5.3WA
CZN CORAZON MINING LTD3.8CANADA, NSW
CGM COUGAR METALS NL1.6CHILE, WA
CDUCUDECO LTD92QLD
CUL CULLEN RESOURCES LTD2.2WA, FINLAND
DLC DELECTA LTD4.9WA
DGR DGR GLOBAL LTD79.7TASMANIA, NSW, QLD
DMADYNASTY RESOURCES LTD25.3WA
ENR ENCOUNTER RESOURCES LTD21WA
EUC EUROPEAN COBALT LTD15.2SLOVAKIA, FINLAND
FEL FE LTD5.8DRC
FIN FIN RESOURCES LTD4.4WA
FCC FIRST COBALT CORP-CDI52.6USA, CANADA,
GAL GALILEO MINING LTD20.5WA
GBG GINDALBIE METALS LTD37.5SA
GME GME RESOURCES LTD28.9WA
GED GOLDEN DEEPS LTD6CANADA
G88 GOLDEN MILE RESOURCES LTD5.2WA
GBR GREAT BOULDER RESOURCES LTD10.6WA
GTE GREAT WESTERN EXPLORATION LT5.8WA
HMX HAMMER METALS LTD7.9QLD
HAV HAVILAH RESOURCES LTD33.8SA
HGM HIGH GRADE METALS LTD3.2AUSTRIA
HIG HIGHLANDS PACIFIC LTD114.7PNG
HCO HYLEA METALS LTD2.8NSW, WA
IPT IMPACT MINERALS LTD9.3WA
IRC INTERMIN RESOURCES LTD28.2WA
IVR INVESTIGATOR RESOURCES LTD7.4SA
JRV JERVOIS MINING LTD62.5NSW
KAI KAIROS MINERALS LTD16.2WA
KZR KALAMAZOO RESOURCES LIMITED10.7WA
KRX KOPPAR RESOURCES LTD5.4NORWAY
KTA KRAKATOA RESOURCES LTD2.8CANADA
LRS LATIN RESOURCES LTD6.5ARGENTINA
MAG MAGMATIC RESOURCES LTD2.9WA
MQR MARQUEE RESOURCES LIMITED1.9CANADA
MCT METALICITY LTD6.6WA
MLS METALS AUSTRALIA LTD4CANADA
MLX METALS X LTD161.9WA
MTC METALSTECH LTD2.2CANADA
MEI METEORIC RESOURCES NL8.3CANADA
MRD MOUNT RIDLEY MINES LTD3.5WA
NWC NEW WORLD COBALT LTD6.1USA, CANADA, WA
N27 NORTHERN COBALT LTD3.4NT
NVA NOVA MINERALS LTD10.1USA
NZC NZURI COPPER LTD91.7DRC
PAN PANORAMIC RESOURCES LTD200.8WA
PNN PEPINNINI LITHIUM LTD2.5SA
PIO PIONEER RESOURCES LTD22.6WA
PGM PLATINA RESOURCES LTD18.5NSW
POS POSEIDON NICKEL LTD108.4WA
RFR RAFAELLA RESOURCES LTD2.7CANADA
RDM RED METAL LTD21.2WA
RMX RED MOUNTAIN MINING LTD3.9DRC
RDS REDSTONE RESOURCES LTD6.2WA
RNU RENASCOR RESOURCES LTD19.6SA, WA
RNX RENEGADE EXPLORATION LTD2.1CANADA
RMI RESOURCE MINING CORP LTD2.1PNG
RIE RIEDEL RESOURCES LTD3.8SPAIN
RXL ROX RESOURCES LTD11.3WA
SBR SABRE RESOURCES LTD2WA
SFM SANTA FE MINERALS LTD7.2WA
SCN SCORPION MINERALS LTD2.3WA
SCI SILVER CITY MINERALS LTD3.2NSW
SI6 SIX SIGMA METALS LTD1.4BOTSWANA
SGQ ST GEORGE MINING LTD46.2WA
SLZ SULTAN RESOURCES LTD2.5WA
SPQ SUPERIOR RESOURCES LTD3.4QLD
TLG TALGA RESOURCES LTD137.5SWEDEN
TRL TANGA RESOURCES LTD3.2NAMIBIA
TAR TARUGA MINERALS LTD5.8DRC, WA,
TAS TASMAN RESOURCES LTD21.1
TGSTIGER RESOURCES LTD47.6DRC
TNG TNG LTD82.9WA
TKL TRAKA RESOURCES LTD5WA, QLD
TKM TREK METALS LTD2.5NT
TSC TWENTY SEVEN CO LTD2.7NT, NSW, WA, SA
TYX TYRANNA RESOURCES LTD4.7USA
VMS VENTURE MINERALS LTD11.5WA
VMC VENUS METALS CORP LTD14.6WA
VML VITAL METALS LTD12.2GERMANY
WKT WALKABOUT RESOURCES LTD50.2IRELAND
WCN WHITE CLIFF MINERALS LTD2.8WA
WFEWINMAR RESOURCES LTD58.2CANADA
WML WOOMERA MINING LTD3.9SA
ZNCZENITH MINERALS 12.6WA

Panoramic Resources (ASX:PAN) restarted production at its Savannah nickel, copper and cobalt mine in Western Australia late in 2018.

The project was mothballed in mid-2016 following the decline of the nickel price.

At full production the mine will supply 10,800 tonnes of nickel, 6100 tonnes of copper, and 800 tonnes of cobalt each year over an initial mine life of eight years.

Meanwhile, others are getting closer to production.

Australian Mines (ASX:AUZ) plans to start building its Sconi battery metals project in Queensland this year, with the first nickel-cobalt exports to Korean offtake partner SK Innovations’ European EV battery plant slated for 2022.

Following a 2-year construction period — followed by a 2-year ramp up — the $1 billion processing plant will produce 9,898 tonnes of cobalt sulphate and 70,894 tonnes of nickel sulphate each year.

Clean TeQ (ASX:CLQ) is aiming for first production in 2021 at its advanced Sunrise nickel-cobalt project in New South Wales. The project is fully permitted and development ready.

At full production, Sunrise would deliver 19,620 tonnes of nickel and 4,420 tonnes of cobalt each year for the first 10 years.

Clancy Exploration (ASX:CLZ) has acquired an initial 20 per cent stake in Atlas Managem S.A.R.L, which holds three Moroccan licences adjacent to the famous Bou Azzer cobalt mine.

The company can acquire up to a 100 per cent of Atlas in stages.

In the latter part of 2018, Carnavale Resources (ASX:CAV) repositioned itself as a battery metals player, picking up some promising projects that are highly prospective for nickel, cobalt and tin.

The company has a nearly 15 million tonne resource containing 110,000 tonnes of nickel and 7200 tonnes of cobalt at its Grey Dam project.

Carnavale is evaluating the potential for a shallow, low strip ratio open pit at Grey Dam.

CuDeco (ASX:CDU) is primarily a copper producer, but with its self-imposed suspension of operations at its flagship Rocklands mine in Queensland it is now looking for other ways to make money.

One of the things the miner is looking at is monetising the cobalt at its project. The company has partnered up with Cobalt Blue Holdings (ASX:COB) to assess the potential of using Cobalt Blue’s processing tech to recover cobalt from the tailings of the Rocklands mine.

Cobalt Blue is also a partner in the Thackaringa cobalt project in New South Wales with Broken Hill Prospecting (ASX:BPL).

The project hosts a resource of 111 million tonnes at 889 parts per million (0.09 per cent) cobalt-equivalent for 79,500 tonnes of contained cobalt.

Delecta (ASX:DLC), meanwhile, is an unusual entrant to the cobalt sector. The company started out as a sex toy seller.

But now it has acquired a cobalt and copper mine in Nevada, US that hosts high grades of up to 3.5 per cent cobalt and 36.7 per cent copper.

In general, anything over 2 per cent cobalt and 1.5 per cent copper is high grade.

The mine, which sits next to projects held by Aussie small cap explorers New World Cobalt (ASX:NWC) and Tyranna Resources (ASX:TYX), was a small-scale producer between 1917 and 1921.

Jervois Mining (ASX:JRV) is merging with eCobalt Solutions and M2 Cobalt to establish itself as a bigger cobalt player with greater scale, liquidity and diversification.

The tie-up will give Jervois a pipeline of cobalt projects in Australia, East Africa and the US.

Tiger Resources (ASX:TGS) is already a copper producer, but it wants to produce cobalt as well from its Kipoi mine in the DRC.

The company plans to build a water treatment plant so it can treat water and recover the cobalt from the mine.

At Stockhead, we tell it like it is. While Australian Mines and Carnavale Resources are Stockhead advertisers, they did not sponsor this article.
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