Cobalt is a highly sought-after metal used to make Lithium-ion (rechargeable) batteries, blue dye for glass and ceramics, radiation therapy equipment and materials used for electroplating (coating solid items in metal). But the potential gains of investing in cobalt come with high risks as well.
Make sure you’re aware of the dangerous, violent and unstable conditions surrounding the cobalt-mining industry before you invest.
What is cobalt and how is it used?
Cobalt is a hard, metallic element used to manufacture batteries, magnets, paints and chemical catalysts. It’s rare, valuable and in increasingly high demand thanks to the rise of electric vehicles.
Over two-thirds of the world’s cobalt is mined in the Democratic Republic of Congo. Other major cobalt producers include Canada, Cuba, Russia, Australia, the Philippines and South Africa.
Why invest in cobalt stocks?
It’s no secret that the tide of vehicle manufacturing is shifting. Thanks to environmental movements worldwide, electric vehicles have become less of a novelty and more commonplace than ever before.
And what do electric vehicles need to function? Batteries.
Cobalt is an essential part of the electric vehicle manufacturing process, as it’s a key component of lithium-ion batteries. Many industry experts expect the demand for cobalt to rise in the coming years with the projected impact of electric vehicles on the automotive market.
Risks of investing in cobalt stocks
A major risk facing cobalt investors is the location of the majority of the world’s cobalt supply: the Democratic Republic of Congo (DRC). Historically, the DRC has been marked by political instability and civil unrest. Volatile political shifts have the potential to impact supply chains and security for cobalt operators in the DRC is far from guaranteed. The process of cobalt mining is also fraught with conditions that violate human rights.
As a result of the unstable and violent conditions that surround cobalt acquisition, a number of companies that rely on it, including Tesla, are actively seeking a workaround to avoid overreliance on the difficult-to-procure metal. As electric vehicles become more popular, some manufacturers are working to develop methods of electric power that reduce or eliminate the need for cobalt.
That said, such a solution is still many years from mass production. Industry experts suggest electric vehicles will continue to rely on cobalt.
Cobalt stocks
Most of the companies on this list don’t deal exclusively in cobalt — the mining and refining of cobalt is typically conducted in conjunction with another metal such as nickel and copper. Due to cobalt-mining operations in Canada, you can buy cobalt stocks on Canadian stock exchanges.
But, if you want to explore a wider range of investment opportunities, you’ll need to work with brokerages that provide access to stock exchanges in other countries. There are several Canadian-based brokerages that offer this including Interactive Brokers and Questrade.
Sherritt International (TSX: S)
Canada Silver Cobalt Works (TSXV: CCW)
First Cobalt Corp (TSXV: FCC)
International Cobalt Corp (CSE: CO)
Wheaton Precious Metals Corp (TSX: WPM.TO)
First Quantum Minerals Limited (TSX: FM.TO)
Cameo Industries (OTC Markets, PINK: CRUUF)
Glencore International Plc (OTC Markets PINK: GLCNF)
Some cobalt stocks, like Vale and Wheaton Precious Metals, are available on the NYSE. That means you can easily purchase them with any brokerage account. The table below compares some of the most popular Canadian brokers.
Cobalt plays an important role in our modern society, contributing to the production of batteries, magnets and chemical catalysts. While its primary production lines in the DRC are far from stable, experts believe we will continue to need cobalt to produce electric vehicles in the coming years.
To invest in cobalt, you’ll likely need an international brokerage account. Compare your platform options to find the brokerage that best fits your needs.
Frequently asked questions about investing in cobalt stocks
Most rechargeable lithium-ion batteries contain cobalt. This includes batteries for smartphones, tablets, laptops and electric vehicles.
Over the past 10 years, the spot price for one pound of cobalt has fluctuated between $12 and $40 USD (roughly $16-$53 CAD).
Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades. Read the Product Disclosure Statement (PDS) and Target Market Determination (TMD) for the product on the provider's website.
Shannon Terrell is a lead writer and spokesperson at NerdWallet and a former editor at Finder, specializing in personal finance. Her writing and analysis on investing and banking has been featured in Bloomberg, Global News, Yahoo Finance, GoBankingRates and Black Enterprise. She holds a bachelor’s degree in communications and English literature from the University of Toronto Mississauga.
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