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Cobalt Frenzy: Prices Surge 150% As Tech Giants Battle For Supply
This super-metal is the hottest commodity on the market right now—and it’s NOT lithium.
It’s a metal that early investors are eyeing as a massive opportunity.
Supply is already in deficit – and that’s before the anticipated 500 percent increase in demand.
It’s a metal that is critical to the future stock price of everything from Google (NASDAQ:GOOGL), Apple (NYSE:AAPL), Tesla (NASDAQ:TSLA) Amazon (NASDAQ:AMZN), UPS (NYSE:UPS) and many more.
Welcome to the supply crisis that is all about Cobalt
Cobalt is a metal that few investors know much about – it is critical to the electric vehicle (EV) revolution because it makes up some 35% of the lithium-ion battery mix.
That’s 30% of batteries that are the backbone of EVs, EVs that are now mainstream. To meet demand for EVs, billion-dollar battery gigafactories have been built and continue to be built. Consumer electronics are contributing to the demand and resulting shortage of supply.
And, unlike lithium, which is a fairly common commodity... we can’t source enough of cobalt as things stand today – and demand is increasing quickly.
Soon this story will get out.
Analysts at Macquarie Research project deficits of 885 tons of this resource next year, 3,205 in 2019 and 5,340 in 2020. That’s a deficit increase of 503 percent.
As a first principle of investing, where there is a supply problem, there is a massive opportunity for early investors.
In the perfect storm that is the cobalt market, there are additional challenges. Currently, more than half of the world’s supply of cobalt comes from the Democratic Republic of Congo (DRC). Use of child workers in appalling conditions in the DRC means that difficult supply chain questions are starting to be asked. Apple and Tesla will not be able to ignore the awkward questions they are being asked about their supply chains. Is their cobalt ethically sourced? Generally speaking, no. This is a huge and growing problem.
This actually is a huge topic and issue. Not only is Cobalt a tenuous resource but so are many other components in the electric battery. Ethically and eco friendly sourced products will raise some serious issues, not that is stopped the like of Nike.