I love the tory told about VW in this video. They put out a...

I love the tory told about VW in this video. They put out a supply tender for 20,000 tones pa of Cobalt for 10 years. Now bear in mind the current world annual Co production is 100,000 tns. In the tender terms & conditions they wanted:
1. A fixed price
2. A discount to current LME price
Well guess what happened? Not one response. NOT ONE.

Now VW's stated business strategy is 25% EV production by 2025, hence the need for 20ktns pa Co. So you can imagine the internal response to what happened with the tender. It must have put them into a major "TIZZY" . The biggest car maker in the world and they didn't understand what was going on in one of their critical component markets! I suspect a little bit of corporate arrogance was involved here. Well they have had a major wakeup call and unless they can find a source for this Cobalt their entire EV strategy is at risk. The fascinating question now is, what are they going to do. Even the expert in this video was at a loss to answer this question. A story worth watching because it will be a problem about to be faced by every other car manufacturer with an EV strategy.

My view:
1. The Co price will rise dramatically over the next year.
2. Normally as price rises, more supply comes on line, supply>demand and price drops. Not so in Co market. Supply is totally inelastic so Co price will remain elevated for at least 5 yrs (Minimum time taken for new Ni/Cu mine to come on line)
3. Substitution attempts will be made. Maybe successful BUT only in long term > 10 years.
4. The only way to solve this problem it to throw substantial money at it. Say US$100b. You may laugh BUT without more Co the world's EV strategy will simply bite the dust AND this will not be allowed to happen. Now this money will not be looking for a PROJECT RETURN but for a PRODUCT (EV) RETURN so we can expect absolutely crazy prices to be paid for anything with a current or potential Co R&R. My feeling is the VW story will have sent a very serious wakeup call throughout the EV sector and this SPENDING SPREE will commence shortly.

So COB with its R&R 50tn Co will be on their radar (gold plated with diamond encrustations!)