Cobalt technology, cobalt supply and demand...dungac et al:
I acknowledge that a lot of effort is being made to reduce the percentage of cobalt in EV batteries.
But my opinion is that these efforts will take a pretty long time to get from lab to production line; 3-5 years, as I have said several times.
Further, in my opinion, the increase in EV and grid storage will far outstrip the reductions in formulations that reduce cobalt. In other words, if you cut cobalt useage in half, but EV useage triples,
there is still a substantial net increase in cobalt useage.
Third, the reductions in cobalt percentage in battery formulations, if they result in demand reduction,
will make migration to new formulations less imperative. There will be a natural ebb-and-flow to
cobalt prices...lower prices will encourage use, and since the overall demand is still higher, there should still be a solid floor of demand underpinning cobalt pricing.
We are reacting strongly to our imaginations and herd mentality, because there is a correction in cobalt and nickel prices and our stocks are reacting strongly. We forget we bought these stocks because they are highly leveraged to cobalt and nickel pricing.
To give you an example, everyone subliminally imagines DRC cobalt supplies to go to zero.
They are not going to zero. In fact recent DRC exports for the quarter are up, year over year.
But I think if you do the math just on EV's, and give DRC production full historical production so that we start with 100-120 KT per year world-wide, there is still reason to think the supply/demand equation for cobalt will be favorable.
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So why all the negative press on cobalt ? My opinion is that is a deliberate mega-downramp. The users want to take positions. This is borne out by the Tesla-Panasonic contradiction...Musk says "cobalt to zero", while Panasonic increase commitments. They want to buy cheap.A press release costs nothing and the short-termers panic. The cap of the sector is tiny...easy to get a friendly bank or two to short and help out.
Same thing in DRC. Scare the crap out of everybody, then buy assets cheap.
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Of course in 8 or 10 years, anything can happen. But nickel sulfate is the main product at Sunrise, and the nickel we are worried about is class 1 nickel, which is only maybe half of world output.
If nickel prices go up reasonable amounts it will cover shortfalls from our dream cobalt pricing.
Further, I believe scandium will be very important. Remember that world production is tiny, and future applications are enormous. The out years on this trend could last decades....and the metallurgy is known. The only issue is supply.
CLQ's competitive position in scandium is tremendous.The universe of competitors is even smaller than cobalt, and supply is currently 10 tons per year. Think about that.
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I do worry about cobalt. But not too much. It does makes a difference to the published economics.
But we have two aces in the hole on scandium and nickel pricing. And the cobalt sulfate premium.
In addition to an assortment of kings and queens in water, vanadium, copper, zinc, germanium, gold, uranium, and god-knows-what-else.
Tell you what. If SK doesn't exercise at AUZ this year, and CLQ doesn't have financing by December,
and China revises their plans on EVs, then maybe I will look at it more closely.
So I see an article that some research is being done to reduce cobalt. I yawn, and turn the page.
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