How To Invest in Cobalt, One of the Worlds Most Valuable Resources

Cobalt production has been a promising investment in recent years. However, like any other commodity, cobalt prices can be highly volatile. Additionally, since cobalt is a byproduct, there aren’t really any pure-play cobalt stocks within the metal mining industry. The biggest advantage to investing in cobalt right now is its surge in demand.

The iShares MSCI Global Metals & Mining Producers ETF has top holdings in some of the world’s largest cobalt producers. Notable names included Glencore (GLNCY 2.45%) and China Molybdenum (CMCLF 1.61%). Top copper producer BHP Group (BHP 1.73%), which obtains cobalt from its nickel- and copper-refining activity, was by far the top holding as of early 2023 at 13.8% of the fund. If you’re wondering how to invest in cobalt futures, you may do so under the London Metal Exchange under the ticker CO.

Cobalt is still not considered a conflict mineral today, but several human rights groups are already lobbying for it to receive this distinction. Most of DRC’s cobalt mines and operations are poorly managed and dangerous, and these human rights groups believe that end-users should source their metal elsewhere. While the rush for cobalt is steadily rising, the supply may be riddled with issues.

  1. Although it’s not a pure play on cobalt, this ETF is lower risk because it offers broader exposure to the entire materials sector.
  2. Producers and their shareholders have made some real money off of this blue gold rush.
  3. The company retains partial ownership of the cobalt refining business.
  4. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services.
  5. The growth of the cobalt market has also been held in check because of geographic monopolies.

Investing in cobalt is a strategy that involves purchasing cobalt assets or stocks in companies that mine or use cobalt. Cobalt is a critical element in the production of lithium-ion batteries, which are used in a wide range of applications, including electric vehicles and mobile devices. Particularly due to rising demand for lithium-ion batteries in electronic devices and electric cars, cobalt prices have been steadily rising during the COVID-19 pandemic. Investing in cobalt stocks is worth considering for investors wanting to bet on increased use of battery technology and renewable energy. Amplify’s offering has a diverse list of stocks involved in the development of lithium-ion battery technology and manufacturing. It also holds metal mining and production stocks that provide the raw materials used in making batteries.

While DRC and China play significant roles in the production and refinement of cobalt, there are notable issues. Due to power outages, water shortages, and political and economic instability, DRC can be margin trading in cryptocurrency inconsistent with production. There are also some significant problems, most of which have to do with the production of cobalt. These companies make the building blocks of everything we use and consume.

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In recent years, purchase orders for this metal have skyrocketed as companies push to build next-generation batteries and devices, including electric vehicles. With governments taking climate change increasingly seriously, demand for these devices will only grow. In particular, since cobalt is an essential element in lithium-ion batteries, this has pushed the price significantly up. Producers and their shareholders have made some real money off of this blue gold rush. Good ways to invest in cobalt stocks can involve buying into the producers of the metal.

Today’s cobalt is produced in around a dozen countries around the world. As mentioned, most of the world’s cobalt reserves are located in the Democratic Republic of Congo (DRC). Known as a DRC copper belt, this region holds nearly half of the globe’s cobalt reserves. It consistently generates some of the best operating profit margins in the mining industry.

If battery technology continues to advance and demand for electric cars and renewable energy projects increases, producers of the element could have a lot to gain in the decade ahead. Like some other global mining companies, China Molybdenum is not listed on a U.S. stock exchange. As an alternative to buying the stock, funds such as the Amplify Lithium & Battery Technology ETF have China Molybdenum as a holding in their portfolio. Although not directly involved in the production of base materials like cobalt, Wheaton harbors a valuable niche of the global mining space. It’s also very profitable and pays a dividend for investors looking for some investment income. Cobalt as a commodity has grown more valuable in recent years particularly due to its uses in batteries and turbines.

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You can also invest in companies that use cobalt heavily in their products, such as electric car battery manufacturers. This is a way of investing against the price of cobalt, as those firms will typically how to buy philcoin do better when the commodity is cheaper. “Looking at the full fiscal year 2023, we achieved revenue of $590 million with company record revenue shift in the aerospace and industrial gas turbine markets.

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As the Founder and Owner of The Impact Investor, Kyle fervently advocates for increased awareness of ethically invested funds, empowering individuals to make judicious investment decisions. Metal analyst CRUGroup expects a small surplus in cobalt over the next few years before it drops again. As more electric vehicle manufacturers demand cobalt, its value is projected to increase. In 2019, the DRC produced the most cobalt at around 100,000 metric tons. Eastern Europe followed second in the same year, followed by Australia and the Philippines as third and fourth-largest, respectively.

BATT ETF invests in publicly listed companies dealing with these metals and companies researching these materials. Some ETF investments include Umicore China, Lithium Americas Corp, and Glencore, among others. Regardless, such a solution is still years away from mass production, and industry experts believe 9 places you can spend bitcoin in the uk 2020 that electric vehicle manufacturers will still continue to rely on cobalt. From 219,679 tonnes by 2023, this will grow to 276,401 by 2028 at full battery capacity. The general opinion seems that cobalt’s current supply and demand dynamics will push the material into a deficit in the next couple of years.

As electric vehicles rise in demand, several manufacturers are already developing new electric power methods that either eliminate or reduce the need for cobalt. In 2021, BHP signed a partnership agreement with AI computing start-up KoBold Metals, which uses algorithms to make decisions on land purchasing and exploration. The agreement is designed to help BHP obtain metals such as cobalt and nickel used in the manufacture of electric vehicle batteries and other renewable energy projects.

Another massive, untapped reserve exists under the mountains of Afghanistan, where the second-largest deposit of copper on Earth has been found. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns. Cobalt is essential for many commercial, industrial, and military applications.

It’s a tiny fund with minimal assets under management, making it very risky. However, it’s the first ETF to only invest in companies mining metals for batteries. It’s most heavily weighted towards specialty chemicals (25.7% of the fund’s holdings) and industrial gases (20.3%). However, it offers exposure to copper producers (5%), which also tend to produce cobalt.

The company retains partial ownership of the cobalt refining business. Like some other global mining companies, Freeport-McMoRan has historically generated very high operating profits from its mining assets. The Amplify Lithium & Battery Technology ETF also isn’t a direct investment in cobalt.

Batteries that power these electronics account for 50 percent of the world’s cobalt consumption. Since cobalt is obtained from mining other metals, no ETF focuses solely on the metal. However, investors can access this essential element via a number of mining stock and base materials ETFs.

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