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Investing in cobalt stocks

It’s rare and in high demand — before you invest, here’s what you should consider.

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By

Shannon Terrell

Updated

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Cobalt is one of the most rare, expensive and sought-after metals on the market. But an investment in cobalt is far from foolproof. Investors should be wary of the dangerous and violent conditions that contribute to instability in cobalt acquisition before investing.

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 Cuba, Russia, Australia and the Philippines.

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

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. Most cobalt stocks require an international brokerage account to trade, as few of these multinational companies trade on US exchanges.
Of the following list, only Vale and Wheaton Precious Metals Corporation trade on the New York Stock Exchange. All others must be purchased over-the-counter or from international exchanges. See how the following stocks are performing, and view details like market capitalization, the price-to-earnings (P/E) ratio, price/earnings-to-growth (PEG) ratio and dividend yield.

Bottom line

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.

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