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. 

Ticker Name Market Cap $m Project Locations
ACB A-CAP ENERGY LTD 28.8 WA
AX8 ACCELERATE RESOURCES LTD 1.7 TASMANIA
ADY ADMIRALTY RESOURCES NL 13.9 WA
AML AEON METALS LTD 171.6 QLD
ALY ALCHEMY RESOURCES LTD 6.2 NSW
ARN ALDORO RESOURCES LTD 4.1 WA
AYR ALLOY RESOURCES LTD 3.9 NSW
A4N ALPHA HPA LTD 59.5 NSW
ASN ANSON RESOURCES LTD 34.9 WA
AZY ANTIPA MINERALS LTD 43.4 WA
ARL ARDEA RESOURCES LTD 49.4 WA
ADV ARDIDEN LTD 5 CANADA
ARE ARGONAUT RESOURCES NL 28 ZAMBIA
ARV ARTEMIS RESOURCES LTD 37.7 WA
AOU AUROCH MINERALS LTD 6.2 CZECH REPUBLIC, SA
ANW AUS TIN MINING LTD 27.8 QLD
AUC AUSGOLD LTD 14.9 WA
AMG AUSMEX MINING GROUP LTD 49.5 QLD
AOA AUSMON RESOURCES LTD 1.6 QLD & NSW
AYM AUSTRALIA UNITED MINING LTD 3.7 NSW
AUZ AUSTRALIAN MINES LTD 74.9 QLD & NSW
BAR BARRA RESOURCES LTD 17.2 WA
BMT BERKUT MINERALS LTD 7.3 CZECH REPUBLIC, SWEDEN, NORWAY
BSX BLACKSTONE MINERALS LTD 8.8 CANADA
BMG BMG RESOURCES LTD 5.6 CYPRUS
BPL BROKEN HILL PROSPECTING LTD 2.7 NSW
BUX BUXTON RESOURCES LTD 13.6 WA
CFE CAPE LAMBERT RESOURCES LTD 28.1 ZAMBIA, DRC
CWX CARAWINE RESOURCES LTD 7.8 WA
CAV CARNAVALE RESOURCES LTD 3.3 WA
CZI CASSINI RESOURCES LTD 34.6 WA
CAZ CAZALY RESOURCES LTD 6.3 QLD, NSW, WA, NT, NAMIBIA,
CLA CELSIUS RESOURCES LTD 14.4 NAMIBIA
CTM CENTAURUS METALS LTD 13.5 BRAZIL
CML CHASE MINING CORPORATION LTD 3.3 CANADA
CLY CLANCY EXPLORATION LTD 3.5 MOROCCO, AUSTRIA
CLQ CLEAN TEQ HOLDINGS LTD 227.6 NSW
COB COBALT BLUE HOLDINGS LTD 18.7 NSW
CHK COHIBA MINERALS LTD 7.3 QLD, WA
CNJ CONICO LTD 5.3 WA
CZN CORAZON MINING LTD 3.8 CANADA, NSW
CGM COUGAR METALS NL 1.6 CHILE, WA
CDU CUDECO LTD 92 QLD
CUL CULLEN RESOURCES LTD 2.2 WA, FINLAND
DLC DELECTA LTD 4.9 WA
DGR DGR GLOBAL LTD 79.7 TASMANIA, NSW, QLD
DMA DYNASTY RESOURCES LTD 25.3 WA
ENR ENCOUNTER RESOURCES LTD 21 WA
EUC EUROPEAN COBALT LTD 15.2 SLOVAKIA, FINLAND
FEL FE LTD 5.8 DRC
FIN FIN RESOURCES LTD 4.4 WA
FCC FIRST COBALT CORP-CDI 52.6 USA, CANADA,
GAL GALILEO MINING LTD 20.5 WA
GBG GINDALBIE METALS LTD 37.5 SA
GME GME RESOURCES LTD 28.9 WA
GED GOLDEN DEEPS LTD 6 CANADA
G88 GOLDEN MILE RESOURCES LTD 5.2 WA
GBR GREAT BOULDER RESOURCES LTD 10.6 WA
GTE GREAT WESTERN EXPLORATION LT 5.8 WA
HMX HAMMER METALS LTD 7.9 QLD
HAV HAVILAH RESOURCES LTD 33.8 SA
HGM HIGH GRADE METALS LTD 3.2 AUSTRIA
HIG HIGHLANDS PACIFIC LTD 114.7 PNG
HCO HYLEA METALS LTD 2.8 NSW, WA
IPT IMPACT MINERALS LTD 9.3 WA
IRC INTERMIN RESOURCES LTD 28.2 WA
IVR INVESTIGATOR RESOURCES LTD 7.4 SA
JRV JERVOIS MINING LTD 62.5 NSW
KAI KAIROS MINERALS LTD 16.2 WA
KZR KALAMAZOO RESOURCES LIMITED 10.7 WA
KRX KOPPAR RESOURCES LTD 5.4 NORWAY
KTA KRAKATOA RESOURCES LTD 2.8 CANADA
LRS LATIN RESOURCES LTD 6.5 ARGENTINA
MAG MAGMATIC RESOURCES LTD 2.9 WA
MQR MARQUEE RESOURCES LIMITED 1.9 CANADA
MCT METALICITY LTD 6.6 WA
MLS METALS AUSTRALIA LTD 4 CANADA
MLX METALS X LTD 161.9 WA
MTC METALSTECH LTD 2.2 CANADA
MEI METEORIC RESOURCES NL 8.3 CANADA
MRD MOUNT RIDLEY MINES LTD 3.5 WA
NWC NEW WORLD COBALT LTD 6.1 USA, CANADA, WA
N27 NORTHERN COBALT LTD 3.4 NT
NVA NOVA MINERALS LTD 10.1 USA
NZC NZURI COPPER LTD 91.7 DRC
PAN PANORAMIC RESOURCES LTD 200.8 WA
PNN PEPINNINI LITHIUM LTD 2.5 SA
PIO PIONEER RESOURCES LTD 22.6 WA
PGM PLATINA RESOURCES LTD 18.5 NSW
POS POSEIDON NICKEL LTD 108.4 WA
RFR RAFAELLA RESOURCES LTD 2.7 CANADA
RDM RED METAL LTD 21.2 WA
RMX RED MOUNTAIN MINING LTD 3.9 DRC
RDS REDSTONE RESOURCES LTD 6.2 WA
RNU RENASCOR RESOURCES LTD 19.6 SA, WA
RNX RENEGADE EXPLORATION LTD 2.1 CANADA
RMI RESOURCE MINING CORP LTD 2.1 PNG
RIE RIEDEL RESOURCES LTD 3.8 SPAIN
RXL ROX RESOURCES LTD 11.3 WA
SBR SABRE RESOURCES LTD 2 WA
SFM SANTA FE MINERALS LTD 7.2 WA
SCN SCORPION MINERALS LTD 2.3 WA
SCI SILVER CITY MINERALS LTD 3.2 NSW
SI6 SIX SIGMA METALS LTD 1.4 BOTSWANA
SGQ ST GEORGE MINING LTD 46.2 WA
SLZ SULTAN RESOURCES LTD 2.5 WA
SPQ SUPERIOR RESOURCES LTD 3.4 QLD
TLG TALGA RESOURCES LTD 137.5 SWEDEN
TRL TANGA RESOURCES LTD 3.2 NAMIBIA
TAR TARUGA MINERALS LTD 5.8 DRC, WA,
TAS TASMAN RESOURCES LTD 21.1
TGS TIGER RESOURCES LTD 47.6 DRC
TNG TNG LTD 82.9 WA
TKL TRAKA RESOURCES LTD 5 WA, QLD
TKM TREK METALS LTD 2.5 NT
TSC TWENTY SEVEN CO LTD 2.7 NT, NSW, WA, SA
TYX TYRANNA RESOURCES LTD 4.7 USA
VMS VENTURE MINERALS LTD 11.5 WA
VMC VENUS METALS CORP LTD 14.6 WA
VML VITAL METALS LTD 12.2 GERMANY
WKT WALKABOUT RESOURCES LTD 50.2 IRELAND
WCN WHITE CLIFF MINERALS LTD 2.8 WA
WFE WINMAR RESOURCES LTD 58.2 CANADA
WML WOOMERA MINING LTD 3.9 SA
ZNC ZENITH MINERALS 12.6 WA

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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