In a move that will shed light on all sources, Apple is reportedly looking to buy cobalt directly from the miners that produce the stuff, mostly in the DRC where about two-thirds of cobalt is sourced.
Cobalt focused companies already moving to increase supplies of the mineral include Freeport-McMoRan (NYSE: FCX), Glencore (OTC: GLCNF), China Molybdenum (OTC: CMCLF) and Bankers Cobalt Corp. (OTC: NDENF) (TSX.V: BANC).
Considered a by-product of copper and nickel mining used to harden steel, cobalt became a heavy focus last year as prices surged. The metal’s efficiency in conducting electricity has made it a go to resource for rechargeable batteries used in high tech devices like iPhones and tablets, as well as electric vehicles produced by companies including Tesla Inc., Toyota, BMW and Volkswagen AG.
However, there are many sourcing problems associated with scarcity of reserves and ethical issues relating to the production of the blue mineral.
Meanwhile, major mining companies are also focusing on developing new ethical sources of cobalt including Freeport-McMoRan (NYSE: FCX), Glencore (OTC: GLCNF), and China Molybdenum (OTC: CMCLF).
Some junior miners are looking to work around the question of sourcing by seeking only socially responsible sources. Bankers Cobalt Corp. (OTC: NDENF) (TSX.V: BANC) has taken the advance steps of putting the appropriate policies and procedures in place to manage the risks of operating the DRC.
WHY APPLE IS GOING ALL THE WAY ON COBALT
Cobalt is mainly extracted as a by-product of copper, and there are many competing industries including steel production, airlines and construction.
The Democratic Republic of Congo (DRC) contributes about 60% of global production, but there remain many concerns about child labor and slavery in the country’s cobalt mines. Due to a global outcry by human rights activists over the condition, many socially conscious companies are looking to bypass cobalt from DRC.
Intense criticism has been directed at major electronics manufacturers, who consume most of the global cobalt production, for enabling the human rights abuses through the purchase of tainted cobalt.
Apple is reportedly looking to buy cobalt directly from the mines. This not only highlights the company’s concerns about future supply problems, but also looking to ensure that the metal is ethically sourced.
Currently Apple relies on partnerships with battery manufacturers who in turn have little interaction with suppliers, many of who get their cobalt from Africa.
By engaging with the supply chain at the bottom, Apple gets more clarity on the process used to produce it.
While Apple is the leader in the race to cleanse the cobalt market, competitors like Samsung, Sony, and HP have also shown intent by joining China’s Responsible Cobalt Initiative, which seeks to create more transparency in the cobalt production process.
Enough Project, a non-profit organization which lauded Apple’s commitment has seen them redirect funds towards restructuring of the supply chain in Congo.
BANKERS COBALT SOCIALLY RESPONSIBLE
Bankers Cobalt Corp. is one of the new breed of Cobalt Resource companies looking to help solve the cobalt conundrum.
The company is focused on the acquisition, exploration and development of cobalt and copper mineral properties in the DRC to world-class Canadian standards.
Bankers holds rights to 26 separate mineral concessions strategically located in the southern DRC Copper belt with a total area of more than 391 km².
What’s important to note in their case, is that all concessions were obtained as either new grants or through reputable DRC partners and have clean title with no government involvement, making Bankers one of the few, and perhaps only, junior public mining company in the DRC to have 26 concessions capable of being currently explored and developed.
This will address the supply chain custody and verifiable sources of ore issue being imposed on processors in the DRC by consumers.
Investors appear to be sold on Bankers Cobalt’s capabilities and approach. At the end of 2017, the company closed on a private placement of $7 million to help fund its explorations of cobalt– a placement which was oversubscribed due to heavy demand.
A STEP IN THE RIGHT DIRECTION
The price of cobalt has shot up exponentially in the recent past as demand for batteries also rose. Between 2016 and 2018, the metal’s price rose $20,000.
Currently global demand stands at 110,000 metric tons per year, but that could multiply by 30 times by 2030. The EV market, which is heavily reliant on lithium and cobalt, will drive demand in the coming decades.
Many governments around the world have been pushing their car companies and users to switch to EVs, and it appears only a matter of time before they replace combustion engines on the road.
This will translate into millions of li-ion batteries that use significant amounts of cobalt. The competition for the metal will be intense.
Aside from the altruistic side to Apple’s new sourcing approach, the company is making a strategic move to secure its own future. The arrangement is therefore a mutually beneficial to Apple and Congolese communities in the mine regions.
Many tech companies will undoubtedly join in Apple’s disruption of the supply chain with the good of the community in mind.
Tesla has bypassed the DRC completely and partnered with Panasonic, who source their cobalt from the Philippines.
POTENTIAL COMPARABLES
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.
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.
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 BANC you can view the in-depth report at USA News Group: http://usanewsgroup.com/2017/12/17/energy-metals-prices-will-continue-to-grow-past-2024-junior-miners-are-the-catalyst/
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