When Sam Brannan, a storekeeper in Sutter’s Creek, brandished a gold nugget in 1848, he ran through the streets of San Francisco shouting “Gold! Gold! Gold from American River!”
The world is in a mad rush once again, but not for gold. There is a much more precious commodity needed.
It’s called Cobalt.
Once shunned and tossed aside as a by-product in copper and nickel mines, it’s now a vital battery material needed to power the modern world. Demand now outstrips supply, so much so that its price has more than tripled over the last 18 months.
The world is becoming more interconnected and our global thirst for energy continue to increase. Billions of people now own smartphones and cobalt is needed to power these handheld devices.
This is not however, what has driven up the price of cobalt to the dizzying heights we see today. There is a much more powerful structural trend underway that will completely transform the modern global economy we know today.
This is the rise of the electric vehicle.
This is no longer a futuristic dream or a cutting-edge trend. The electrification of all road traffic around the world is highly likely to happen in the next twenty years. At stake are aggressive emission targets that nearly all governments around the world have now signed up to.
The batteries in electric vehicles use a vast amount cobalt – far more than smartphones and laptops. It’s a development that has sent governments and automakers into a frenzy. China has aggressively secured supplies by entrenching itself politically in the Democratic Republic of Congo. It needs to if it wants to maintain its manufacturing dominance in consumer electronics, such as laptops and smartphones. It also has set itself aggressive goals to electrify road traffic because it needs to – its cities suffer from some of the worst air pollution in the world.
This resource-grab has meant that the cobalt processing industries found in Korea and Japan, have had to focus on Australia and Canada alternative supplies. All this has culminated in a global supply-side bottleneck.
There is also now fierce competition among auto makers, such a Volkswagen, Tesla, BMW and Chinese-based BYD, which Warren Buffett has a stake in.
They are all vying for an early lead in this area. Once the Tesla Giga-Factory for producing batteries has been built, there will be more to follow in Sweden and China.
Supply-side factors have also had a significant influence on price. Child labour practices in cobalt mines in the Democratic Republic of Congo are of great concern. Apple and Tesla have already announced that they will only buy cobalt from ethical sources in the future. This a significant development because the DRC produces presently 53 per cent of all cobalt. Together these demand and supply constraints have been extremely favourable for North American cobalt mines and refineries.
This is where Blackstone Resources is well positioned.
We have a significant stake in First Cobalt, which has a substantial share of the North American market. It is the largest cobalt exploration company in North America today. The company controls over 10,000 hectares of prospective land and 50 historic mines and a production facility.
It is the only permitted cobalt refinery in North America capable of producing battery material. The company has also strongly pursued acquisitions to strengthen its position in the North American market. For instance, it recently announced plans for an all-share purchase of US Cobalt. The move should ensure a strong supply of cobalt to its refineries in the future.
Link to First Cobalt: http://firstcobalt.com/investors/stock-information/
Perhaps the rush to secure cobalt differs a little to the gold rush. After all, cobalt is not meant to be a store of value. Nonetheless, it’s valuable for our future economy, just like oil is today. Some might say it’s the new blue gold. We are strongly committed and invested in this future.
Blackstone Resources is a Swiss Holding Company, with its legal domicile in Baar, Kanton Zug. It is active in acquiring and developing mining and raw material licences. In addition, it sets up, develops and manages refineries used for gold and battery metals. It also makes strategic investments in mining companies. Blackstone concentrates its activities on primary commodities such as gold, battery metals such as cobalt, manganese, molybdenum and graphite.