Driven by the Electric Vehicle (EV) revolution, providers of cobalt used in new rechargeable battery technology are looking at every alternative, including advanced recycling to bolster supplies.
Cobalt focused companies looking to increase supplies of the highly valuable mineral include Cruz Cobalt Corp. (OTC: BKTPF) (TSX.V: CUZ), Glencore (OTC: GLCNF), Freeport-McMoRan (NYSE: FCX), and China Molybdenum (OTC: CMCLF).
As the world races to phase out hydrocarbons and becomes more and more dependent on battery power, one of the world’s most obscure metals is slowly stealing the limelight. Cobalt has a critical role in lithium ion battery components, hence its rapidly growing demand.
Lithium cobalt oxide (LiCoO¬2) is used in lithium ion battery cathodes, which is the point where the core business of electric current production occurs inside the battery.
Cobalt is now valuable enough to begin “urban mining” in order to help offset future demand.
But the bigger issue surrounding accessing cobalt resources is the ethical mining of the mineral, since most cobalt emanates from the Democratic Republic of Congo (DRC), which has been cited for child labor violations.
Companies looking to avert the cobalt issue include Canadian junior miner Cruz Cobalt Corp. (OTC: BKTPF) (TSX.V: CUZ), which is totally committed to bringing on cobalt resources from its new prospects, all of which are located in North America.
Meanwhile, major mining companies are also focusing on developing new ethical sources of cobalt including Glencore (OTC: GLCNF), Freeport-McMoRan (NYSE: FCX), and China Molybdenum (OTC: CMCLF).
EVs AND POWER STORAGE DEMAND NEW SOURCES
At the center of this clamor for cobalt is the switch to electric vehicles pioneered by Elon Musk and Tesla. This has seen the price of cobalt, along with that of lithium double over the past year.
It is estimated that by 2030, the number of electric road vehicles will exceed 25 million, rising to over 50 million by 2039. The scarcity and low quality of cobalt ore is however one of the biggest challenges that stands in the way of mass electric vehicle adoption.
Currently, over half of the cobalt mined in the world comes from a poor region in the DRC, where reserves are quickly depleting. In order to overcome this scarcity, companies are turning to a variety of sources, including recycling of cobalt from faulty discarded batteries.
By the year 2025, major EV producing companies such as Tesla and Toyota could depend on recycled cobalt for 10% of their battery material needs.
RECYCLING ONE VIABLE SOURCE
Since upcoming recycling methods are exceedingly efficient and cheap, it is expected that they could contribute to a downward trend in lithium and cobalt prices. The recovered battery components yield close 100 percent cobalt, an excellent prospect compared to just 2% yield from cobalt ore.
Rather than depleting, as is the case with natural ore, battery dumps are only going to get richer as more batteries that proliferated during the current electronics boom start to malfunction.
By 2025, Bloomberg New Energy estimates that 311,000 tons of electric car batteries will stop working and be discarded. This could spawn a serious amount of recoverable cobalt.
One of the pioneer companies in cobalt recycling is Vancouver-based American Manganese, who have developed a new technique for recycling faulty batteries. They estimate that they could produce up to 4000 tons of cobalt from just a tenth of all discarded li-ion batteries, or enough to run all electric vehicles on the road today.
With cobalt prices expected to continue to rise over the coming decades, albeit at slower pace than the threefold explosion of the previous two years, recycling of this critical metal promises to be a lucrative activity.
CRUZ COBALT ON THE RIGHT TRACK
In spite of the efforts by business to capture cobalt from recycled sources, it is apparent that other new sources of cobalt will be needed to meet the soaring demand.
Smaller, forward-looking miners like Canada’s Cruz Cobalt are looking to get ahead of this curve with new supplies of cobalt.
Cruz Cobalt is taking a different approach to tackle the difficulties of cobalt sourcing. The company has strategically acquired 7 cobalt projects in Canada (BC and Ontario), one in Idaho, USA, and another in Montana, USA—all of which are very mining-friendly jurisdictions, with no mining issues regarding child labor whatsoever.
On its four Ontario cobalt prospects, Cruz recently engaged airborne surveys, which amassed additional data to uncover new cobalt targets. In total, the four prospects cover 8,725 acres, all of which are near the city of Cobalt, Ontario.
Cruz has already mobilized crews and commenced work programs on its Idaho Star Cobalt Prospect in Idaho, as well as its Chicken Hawk Cobalt Prospect in Montana—both 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.
Cruz Cobalt is a likely participant that can move into the role of cobalt producer perfectly in time to meet some of the new demand for cobalt and profit from its early mover position.
Recycling and new sources of cobalt are both going to be needed to fill the current demand increase.
Tesla and Toyota already have agreements with Brussels based Umicore in place to recycle their expired batteries in Europe. Such agreements could spell immense opportunities for similar companies and their backers.
In about a decade, the batteries used in the current wave of electric vehicles will be coming to the end of their lives and they will end up in the dumps. From environmentally conscious governments’ point of view, the disposal of these batteries will pose a logistical nightmare.
Current disposal techniques include incineration and burying, both of which pose serious environmental hazards.
With this in mind, battery recycling and ‘urban mining’ will likely become a government sanctioned initiative where those with the knowhow and resources stand to benefit greatly.
POTENTIAL COMPARABLES
Glencore (OTC: 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.
Freeport-McMoRan (NYSE: FCX)
Freeport-McMoRan Inc. engages in the mining of mineral properties in the United States, Indonesia, Peru, and Chile. It primarily explores for copper concentrate, copper cathode, copper rod, gold, molybdenum, silver, and other metals, as well as oil and gas. The company’s portfolio of assets include the Grasberg minerals district in Indonesia; Morenci, Bagdad, Safford, Sierrita, and Miami in Arizona; Tyrone and Chino in New Mexico; and Henderson and Climax in Colorado, North America, as well as Cerro Verde and El Abra mines in South America. The company was formerly known as Freeport-McMoRan Copper & Gold Inc. and changed its name to Freeport-McMoRan Inc. in July 2014. Freeport-McMoRan Inc. was founded in 1987 and is headquartered in Phoenix, Arizona.
China Molybdenum (OTC: CMCLF)
China Molybdenum Co., Ltd., together with its subsidiaries, engages in the mining and processing, smelting, deep processing, and scientific research of molybdenum, tungsten, copper, cobalt, niobium, phosphorus, and other base and precious metals in the China, Japan, Brazil, Switzerland, Singapore, Finland, Korea, and internationally. The company provides molybdenum oxide, ferromolybdenum, molybdenum and tungsten concentrates, copper concentrate, electrolytic copper, cobalt hydroxide, ferroniobium, phosphate fertilizer, gold and silver, and sulfuric acid. The company was founded in 2006 and is based in Luoyang, the People’s Republic of China.
For a more in-depth look into CUZ you can view the in-depth report at Lithium News: http://lithium-news.com/2017/12/03/cobalt-and-lithium-markets-projected-to-grow-due-to-the-demand-of-batteries-2/
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