Along with leading the EV revolution and bring lithium battery power into the forefront, Tesla is leading the call to source all of its cobalt supplies from socially responsible sources.
Cobalt companies are clearly focused on developing new responsible sources of cobalt including eCobalt Solutions (OTC: ECSIF) (TSX: ECS), Fortune Minerals Limited (OTC: FTMDF) (TSX.V: FT), Glencore (NASDAQ: GLCNF), and Cruz Cobalt Corp. (OTC: BKTPF) (TSX.V: CUZ).
The electric vehicle revolution is taking the world by storm, quickly gaining pace on combustion engine vehicles and soon expected to replace them on the road.
Tesla is leading the way in this revolution by mass-producing family car size EVs by volumes that few other car companies can match, as yet. This has given cause for expectations of a whole new automotive landscape, but there is also a possibility that this could come down crashing due to the availability of one crucial component: cobalt.
The manufacture of electric vehicle batteries is highly dependent on cobalt, the reserves of which are relatively hard to source. Roughly 60% - 65% of the world’s cobalt comes from the Democratic Republic of Congo (DRC), a region notorious for child labor violations raising ethics concerns.
This has also affected the price of cobalt, which has increased nearly 230% in less than a year.
Within the cobalt industry, miners are seeing their share prices increasing with future demand including eCobalt Solutions (OTC: ECSIF) (TSX: ECS), Glencore (NASDAQ: GLCNF), and Fortune Minerals Limited (OTC: FTMDF) (TSX.V: FT).
The Canadian junior miner Cruz Cobalt Corp. (OTC: BKTPF) (TSX.V: CUZ), has taken the high road to meet the issues related to DRC mining of cobalt head on and focusing completely on North American cobalt projects instead.
WHERE TESLA GOES, OTHERS WILL FOLLOW
Socially conscious companies are looking to change the way they source their cobalt supplies, with North American reserves being of particular interest.
This change in direction compounds another sensitive problem related to the metal: Cobalt is primarily produced as a by-product of copper and nickel. 97% percent of the world’s supply is produced this way.
As a result of plunging nickel and copper prices, cobalt is becoming difficult for junior companies to speculate on. This poses a conundrum for EV companies looking to disassociate themselves from the atrocious conditions in the Congo.
Tesla, which aims to produce 500,000 electric cars in 2018, has committed to sourcing all its cobalt from North America. That’s 100% of its cobalt supplies.
However, considering that the region only produces 4% of the world’s supply, the company has a tall order on its hands.
The current cobalt supply from the US and Canada would not even be enough for production of one Tesla model. 500,000 units of the Tesla Model 3 would require 7500 tons of cobalt to produce, reflecting 6 percent of global demand.
It begs the question, where is Tesla going to look for its Cobalt?
CRUZ COBALT IS 100% NORTH AMERICAN SOURCED
Cruz Cobalt is one of the innovative junior mining companies that finds itself perfectly aligned with Tesla’s cobalt sourcing initiative.
That smaller company has strategically acquired 7 cobalt projects in Canada (BC and Ontario), one in Idaho, USA, and another in Montana, USA. All of these meet the criteria perfectly and all are in very mining-friendly jurisdictions, with no mining issues regarding human rights or environmental issues.
Cruz recently engaged airborne surveys on its four Ontario cobalt prospects, which amassed additional data to uncover new cobalt targets. The four prospects cover 8,725 acres in total, all of which are near the city not so ironically named Cobalt, Ontario.
Cruz has already mobilized crews and commenced work programs on its Chicken Hawk Cobalt Prospect in Montana and Idaho Star Cobalt Prospect in Idaho. Both are 100%-owned by Cruz.
The company’s War Eagle Cobalt Prospect in British Columbia, Canada spans 4,935 acres, and covers a past producing mine. Cruz has plans to start operations on the project shortly.
Based on these promising prospects, Cruz is a likely participant that can quickly move into a producer’s role well in time to service the new demand for cobalt.
PRICE STILL A DRIVING FORCE
The scarcity of cobalt, flanked by increasing demand is in all likelihood going to drive cobalt prices up even further and this alone will incentivize junior companies to increase their efforts.
The quest to develop cobalt deposits in North America is on in earnest with many promising sites already identified. However, plans to bring them online are far behind demand progression and it is going to take an all-out effort to attain the capacity to support a respectable fraction of EV cobalt demand.
At full installed capacity, the supplies which have seen work begin would produce a total of less than 3,000 metric tons annually, a small figure compared to expected demand rise.
This doesn’t mean any gloom and doom for Tesla and other EV companies though. Improving efficiency and using a mix of battery technologies will help to ease the transition to managed cobalt, and Tesla is already walking in this direction.
Overall, the total identified cobalt reserves, including under-sea resources, are enough to last hundreds of years.
Recycled cobalt will also play an important role, with the metal being fully recyclable. Already 15% of cobalt consumed in America comes from recycled sources.
Considering these dynamics, the future of the electric vehicle under Tesla’s guiding light appears well on course.
POTENTIAL COMPARABLES
eCobalt Solutions (OTC: ECSIF) (TSX: ECS)
eCobalt Solutions Inc. engages in the exploration and development of mineral properties in Canada, the United States, and Mexico. It primarily explores for base and precious metals, and uranium, as well as copper, gold, silver, lead, and zinc deposits. The company owns 100% interest in its primary asset, the Idaho Cobalt project that includes a mine/mill site located in Lemhi County, Idaho, producing battery grade cobalt salts for rechargeable battery and renewable energy sectors. The company was formerly known as Formation Metals Inc. and changed its name to eCobalt Solutions Inc. in August 2016. eCobalt Solutions Inc. was founded in 1988 and is headquartered in Vancouver, Canada.
Glencore (NASDAQ: GLCNF)
Glencore plc engages in the production, refinement, processing, storage, transport, and marketing of commodities worldwide. It operates in three segments: Metals and Minerals, Energy Products, and Agricultural Products. The Metals and Minerals segment is involved in smelting, refining, mining, processing, and storing zinc, copper, lead, alumina, aluminum, ferroalloys, nickel, cobalt, and iron ore. The company was formerly known as Glencore Xstrata plc and changed its name to Glencore plc in May 2014. Glencore plc was founded in 1974 and is headquartered in Baar, Switzerland.
Fortune Minerals Limited (OTC: FTMDF) (TSX.V: FT)
Fortune Minerals Limited explores for and develops specialty metals, base metals, and precious metals in Canada. The company explores for gold, cobalt, bismuth, copper, silver, lead, and zinc deposits. It primarily holds 100% interest in the NICO gold-cobalt-bismuth-copper project located in the Northwest Territories. Fortune Minerals Limited was founded in 1988 and is headquartered in London, Canada.
For a more in-depth look into CUZ you can view the in-depth report at USA News Group: http://usanewsgroup.com/2017/12/18/bmw-throws-fuel-on-cobalt-price-fire-well-need-10x-as-much/
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