The Best Cobalt Stocks to Watch
Cobalt is a metal which is poised to play a key role in the global energy transition, due to its use in lithium-ion batteries. So, how can investors gain exposure to this metal? In this article, we will examine 2 top cobalt stocks for investors to consider and demonstrate how to invest in cobalt stocks.
Table of Contents
Why Invest in Cobalt?
Cobalt has a number of uses, but its application as a key component in lithium-ion batteries is what has brought the metal into focus in recent years. Not only are these batteries used in smart phones and laptops, but also in electric vehicles and for renewable energy storage.
In order for the world to meet its targets for net zero emissions, electric vehicle ownership and renewable energy production need to increase over the coming years. It follows then that, if demand for both of these increases, so too should demand for the materials needed for their production, such as cobalt.
Indeed, as lithium-ion batteries have become a necessity in many of our modern products, we can observe a significant increase in demand for cobalt over the last couple of decades. In 2022, an estimated 190,000 metric tons of cobalt was mined around the world, this was more than double the 89,500 metric tons mined in 2010 and more than five times the 33,300 metric tons mined in 2000.
Risks of Cobalt Investing
Nevertheless, as is always the case with investing, there are risks associated with investing in cobalt stocks. One of the largest risks of cobalt investing is to do with the location where much of the metal is mined.
Approximately 70% of the world’s cobalt is mined in the Democratic Republic of Congo (DRC), with the country also accounting for almost half the world’s reserves of the metal. This has the potential to be problematic.
The DRC has historically struggled with political instability, which does not make it an ideal place for the vast majority of the world’s cobalt mining to be taking place. Such issues can threaten to disrupt supply chains and increase volatility in global cobalt prices.
Furthermore, cobalt is an expensive component for batteries. In an attempt to make battery production and, consequently, EVs more affordable, producers are aiming to minimise and eventually eliminate cobalt from the process. However, the alternative, iron phosphate batteries, are currently less efficient and offer a shorter range for EVs, meaning that cobalt is likely to remain in demand in the near future.
Top Cobalt Stocks to Watch
So, for those looking to gain exposure to this important metal, what are the top cobalt stocks to watch in 2024? In the following sections, we will take a brief look at two different cobalt mining stocks.
Glencore
Although it represents only a small part of their mining portfolio, Glencore is the largest producer of cobalt in the world.
As well as cobalt, Glencore also produces copper, zinc and nickel – all of which are likely to play an important part in the global energy transition. This could make Glencore an option for those who are looking to gain exposure to a commodities which will be used in the growing EV industry, without putting all their eggs in one basket.
However, it’s worth noting that, despite producing these metals which will help the world transition to net zero, coal still accounts for a large part of Glencore’s business. In fact, Glencore is actually the world’s largest shipper of coal, which is the most polluting of all the fossil fuels. In 2022, coal production accounted for more than 35% of the cobalt mining company’s total revenue.
Vale SA
As with Glencore, cobalt only accounts for a small portion of Vale SA’s total sales, and the cobalt mining stock also mines other metals crucial to the energy transition, namely nickel and copper.
Nevertheless, in 2022, these energy transition metals accounted for just 19% of net operating revenue. Vale SA’s biggest source of revenue was iron ore, which accounted for more than 60% of net operating revenue.
Consequently, those considering investing in Vale SA will need to bear in mind that the company is heavily exposed to iron ore prices. This can be beneficial when iron ore prices are high, such as in 2021, when Vale generated $38 billion from iron ore sales. However, it can have a negative impact when iron ore prices fall, such as in 2022, when Vale generated a significantly lower $28 billion from iron ore despite production remaining relatively flat.
How to Invest in Cobalt Stocks
With an investing account from Admirals, you can invest in both cobalt stocks highlighted in this article, as well as more than 4,500 other stocks from around the world. Learn how to invest in cobalt stocks by following these steps:
- Open an Invest.MT5 account and log in to the Dashboard
- Click ‘Invest’ next to your account details to open the web trading terminal
- Search for the cobalt stock you want to invest in and click the symbol to open a price chart
- Press ‘Create New Order’, enter the number of cobalt shares you wish to purchase and click ‘Buy’ to send the order to the market!
Investing with Admirals
With an investing account from Admirals, you can invest in over 4,500 stocks and more than 200 Exchange-Traded Funds (ETFs) from around the world. Click the banner below in order to open an account today:
Investing in Cobalt – FAQ
Are Cobalt Stocks a Good Investment?
Cobalt stocks can be a good investment for those looking to gain exposure to cobalt. However, there are risks associated with this type of investment. In particular, as with any commodity, cobalt prices can be very volatile, something which is not helped by the fact that the majority of global production takes place in one location.
Who Is the Largest Producer of Cobalt?
The Democratic Republic of Congo is the world’s largest producer of cobalt, accounting for roughly 70% of global production.
What Company Mines the Most Cobalt?
Glencore is the mining company which accounts for the largest production of cobalt in the world.
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