The EV growth is a worldwide phenomenon and I do not see the momentum getting any weaker. The indian govt just last week asked stated owned companies to buy lithium and Cobalt mines !
Tesla may have started it but China is now the EV market leader. Some of the reasons are economical but do not forget the political one too. Thanks to almost 30y of growth a large middle class now exists in China and the govt needs to clean the air (literally) to continue enjoying popular support. From an economic side, going for EV will reduce China's dependance on the Middle east for oil. Chinese companies have quickly moved in DRC and by signing deals with miners like Glencore and or outright purchase/ devpt of mines( Huayou) would now control 85% of the Cobalt supply.
When you add that China is now the largest car market and producer in the world with 24 Million vehicles last year and is on the way to produce more vehicles by 2030 than the US + EU combined, you get a clear picture that if the No 1 car country goes for EV the others will have to follow.( see https://nolasia.net/china-the-worlds-largest-automobile-market/ ) In 2017 more EV cars were sold in China than in the rest of the world combined and there were 1.2M EV cars on the roads there, 50% more than in 2016 ( see https://www.statista.com/chart/14098/electric-car-sales-are-surging-in-china/)
-As discussed before over reliance on DRC is risky due to this country political instability, labor conditions and habit of changing the rules for investors. But customers have had little choice as DRC has provided around 65% of the world Cobalt last year.
-All the above has prompted some end customers like Apple to start looking to lock in deals directly with miners. it is very unlikely they would sign with any DRC miners but an Australian one would v likely meet their requirements.
-it is also worth noting that the supply situation of Nickel is very different from Cobalt: as of July 10th ( Infomine) there were warehouses stocks of only 600Ton of Cobalt versus 263 000 Tons of Nickel. Further ,a number of Nickel Mines have been on care and maintenance for a number of years and can resume production fast. Others are still operating and are on their way to start providing Nickel Sulphate by next year potentially depressing Nickel prices and a result jeopardising plans for new Nickel + Cobalt mines.
-The situation is different for Cobalt:it does not depend on Nickel prices to be viable and there is no idle primary Cobalt mine in the world and beside COB no new primary Cobalt Sulphate project has been identified . As demand is growing rapidly (for instance the $48B deal signed by VW with several EV battery makers including LGI in May), this scenario makes COB, a very prized target. ( PS: I correct a previous post: a US miner but listed in Canada will start producing around 1500 ton of Cobalt by 2020 but it will only be a concentrate and not the much more financially rewarding Cobalt Sulphate).
-I have no doubt a financing deal will be reached for COB : it is likely to be with current technological partner LGI .But we can't rule out others like canadian Cobalt 27 which has already signed a streaming deal in Papua in May and another in June together with Wheaton Precious Metals with Vale's mine in Canada : this last one is for $690M against 75% of the Cobalt production.( http://www.miningweekly.com/article...obalt-deals-with-wheaton-cobalt-27-2018-06-11). These streaming deals are the first ones involving Cobalt supply and show the need for this metal going forward. Interestingly the article mentioned ' Wheaton still has "lots of firepower" for additional streaming transactions and expects to announce a precious metals deal of between $300-million and $500-million in the next few months.'
-It would be very tempting for either an end customer or an EV battery maker to just proceed with a TO of COB especially with the temporary very low SP knowing now that the project is very viable after the just released PFS. It would be sad for all the LTH even with a premium on the current SP. I would very much prefer a streaming deal, would not you?
COB Price at posting:
69.5¢ Sentiment: Buy Disclosure: Held
