High Voltage: Is it almost time to get excited about cobalt again?
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Each week our High Voltage column wraps all the news driving ASX battery metals stocks with exposure to lithium, cobalt, graphite, manganese and vanadium.
In early 2018, cobalt prices were peaking above $US90,000/t and countless explorers were jumping on the bandwagon.
Then prices started falling and everyone realised they had jumped the gun instead. The once-lauded battery metal quickly became a pariah.
Cobalt prices remained in the doldrums until August 2019, when multi commodity giant Glencore announced plans to mothball the globally significant Mutanda mine in the DRC from the end of 2019.
This will take a huge chunk of production out of the existing market, and so cobalt prices have been recovering at decent clip.
Cobalt hydroxide, sulphate and metal prices rose 20.9 per cent, 23.2 per cent and 17.3 per cent respectively in September, according to price reporting agency Benchmark Mineral Intelligence. This follows some big gains in August.
But is this just another dead cat bounce? Recent cobalt price increases in April and May ran out of steam quickly, but Benchmark’s Caspar Rawles says this time is different.
“With current market dynamics it is expected that prices will be more resistant to decreases as producers are more confident of a tighter market balance moving into 2020, driven primarily by the Mutanda closure,” he says.
We bet there’s a bunch of cobalt-exposed small caps (and their investors) watching this pricing action very closely.
Because, in the background, cobalt demand forecasts have remained pretty positive. Benchmark forecasts that battery makers will need 152,000t of the stuff by 2024 — up from just 75,000t in 2019.
More than $80bn was wiped off the market last week, and it shows. The small end of the resources market did poorly, unless you were a gold explorer; then you probably did ok.
Still, we found some battery metals were beacons of hope amongst all the doom and gloom.
Here’s where all this weeks’ winners came from:
Advanced copper-cobalt play Nzuri updated the market on its ongoing (and very drawn out) takeover process by Chinese firm Chengtun Mining.
The $109m all-cash offer, first announced in February, values Nzuri at 37c per share.
Last week it ticked another box in this process, which was enough to send the stock up 17 per cent.
Neometals has already developed a major lithium mine in WA, a rare and impressive feat for a junior-listed company.
To accomplish this, it partnered with big company — with deep pockets — to help with the heavy financial lifting.
Now, the cashed-up explorer wants to do the whole thing again at the Barrambie vanadium-titanium project.
Neometals has just entered into a memorandum of understanding (MOU) with big Chinese research organisation IMUMR to jointly develop the major +$600m WA project.
IMUMR’s commitment bodes well for further development of Barrambie, boss Chris Reed says. Joint test work and engineering studies will take approximately 18 months, leading to JV final investment decision around mid-2021.
Here’s a table of ASX battery metal stocks with exposure to lithium, cobalt, graphite, manganese and vanadium>>>
Scroll or swipe to reveal table. Click headings to sort. Best viewed on a laptop: