- Glencore (OTCMKTS:GLNCY): Largest global cobalt producer with double-digit production growth rates and a 3.9% dividend yield
- Jervois Global (OTCMKTS:JRVMF): Recently acquired Freeport Cobalt Oy asset transforms Jervois into the second-largest producer of refined cobalt outside China
- Wheaton Precious Metals (NYSE:WPM): A precious metals streaming giant with growing cobalt exposure
- Panoramic Resources (OTCMKTS:PANRF): Recently restarted cobalt, nickel and copper production
- Sherritt International Corp. (OTCMKTS:SHERF):Rising cobalt and nickel prices could drive strong revenue growth this year
- Electra Battery Materials (OTCMKTS:ELBMF): Canada-based cobalt-refining and recycling project could commence production and start generating revenue by the end of 2022
- Canada Nickel Company (OTCMKTS:CNIKF): A speculative play on cobalt upside in an investor-friendly mining jurisdiction
Rarity and scarcity could be the best attributes for cobalt — one of the key lithium-ion battery minerals needed to power the booming electric vehicle (EV) industry. Cobalt prices rallied 118% in 2021 and some of the cobalt stocks to buy on our list today could soar as increasing government support globally pushes EV production higher and battery manufacturers scramble for lithium-ion battery materials.
Unlike manganese, copper and nickel which have relatively more abundant reserves, cobalt is usually a by-product of nickel and copper mining that is so rare that its annual production is estimated to fall behind industrial demand by 2025. Recycling is already an important source of battery-grade cobalt supply, and efforts to remove cobalt from the battery won’t eliminate its growing demand either.
Investing in cobalt stocks remains a tricky challenge for two important reasons. Firstly, as cobalt is mainly a by-product other metals mining, finding a pure-play cobalt stock is a tough challenge. Secondly, most of the global production of cobalt comes from just one country, the Democratic Republic of Congo.
The U.S. Geological Survey (USGS) estimates 170,000 tonnes of cobalt were produced in 2021. About 71% of the global supply of cobalt came from the DR Congo where disappointing and disheartening reports of human rights abuses, community health problems, unsustainable mining practices, and environmental degradation recently surfaced, not for the first time.
Navigating the DR Congo issues in an environmental, social and governance (ESG) ethos-compliant portfolio that minimizes geopolitical risks could prove nearly impossible in a market dominated by Chinese cobalt refining giants.
That said, here’s a list of cobalt stocks investors could consider buying as a global EV push drives demand higher.
|JRVMF||Jervois Global Ltd.||$0.66|
|WPM||Wheaton Precious Metals||$48.17|
|SHERF||Sherritt International Corp.||$0.59|
|ELBMF||Electra Battery Materials||$0.25|
|CNIKF||Canada Nickel Company||$2.23|
Let’s take a closer look.
Cobalt Stocks to Buy: Glencore (GLNCY)
Global mining and commodities trading giant Glencore is the largest primary producer of cobalt in the world today. The company’s cobalt production increased by 14% year-over-year to 31,300 tonnes for 2021, or about 18% of global cobalt mine production for the past year. Glencore’s cobalt production was 27,400 tonnes in 2020.
Glencore produces cobalt mainly from its African copper assets in DR Congo. Rising commodity prices in 2021 boosted revenue growth to afford Glencore a 43% year-over-year sales increase to $204 billion for 2021 — even as traded commodity volumes declined. Annual net income was a solid $4.97 billion, up from a $1.9 billion loss in 2020.
GLNCY stock is a good EV battery materials play to buy as it offers exposure to nickel, copper and zinc price growth. The firm recycles used batteries, too.
Investors could buy Glencore as an excellent EV battery stock that offers a nice 3.9% dividend yield. That said, the company is holding onto “dirty” coal assets and this frustrates investor groups with strict adherence to environmental, social, and governance (ESG) investing principles.
Jervois Global (JRVMF)
Australia-based Jervois Global is a highly promising nickel play and one of the top cobalt stocks to buy as EV battery metals demand rises. The company acquired cobalt-refining and recycling assets from Freeport-McMoRan (NYSE:FCX) in 2021, Freeport Cobalt Oy, which could transform Jervois into the second-largest producer of refined cobalt outside China.
JRVMF stock has increased nearly 55% so far this year.
The company generated $296 million in revenue from sales of nearly 5,700 tonnes of cobalt in 2021. It reported a strong 26% sequential quarterly revenue growth during the fourth quarter of last year as cobalt prices soared. Management believes the stage is well set for higher revenue in 2022.
Jervois also owns a cobalt-copper development mine in Idaho, that could begin production by mid-year 2022. The company also plans to restart the only nickel-cobalt refinery in Latin America — the Sao Miguel Paulista plant in Brazil.
Cobalt Stocks to Buy: Wheaton Precious Metals (WPM)
Wheaton Precious Metals is a Canada-based precious metals streaming company that is a world-class non-direct cobalt play.
WPM stock offers investors leverage to underlying precious metals through pre-determined long-term contract prices that shield inflationary pressures.
Gold and silver still dominate its portfolio with 98% of 2021 revenue coming from gold and silver streams and the remainder being cobalt sales. Soaring cobalt prices and increasing production rates could increase the battery metal’s share of revenue going forward.
The company purchased a 42.4% stake in Voisey’s Bay cobalt mine in Canada from Brazil-based Vale (NYSE:VALE) in 2020 to boost cobalt exposure. Wheaton’s production quota will drop to 21.2% of cobalt production once 31 million pounds of cobalt are delivered.
WPM stock price has risen 11% so far this year. The company reported record revenue of $1.2 billion and generated record operating cash flow of $845 million in 2021. Management confidently raised its quarterly dividend by 15% for 2022 to boost WPM stockholder returns.
Panoramic Resources (PANRF)
Australia-based Panoramic Resources could be a speculative stock to buy for its cobalt upside in 2022 as it restarts nickel, copper, and cobalt production at its Savannah asset in Western Australia.
Soaring nickel and cobalt prices as electric vehicle battery production induced demand could lift Panoramic Resources’ project net present value in 2022 and beyond while an offtake agreement with commodities trading giant Trafigura guarantees a strong financial partner and reliable customer.
The company has just started generating revenue from its Savannah asset and the second shipment of nickel-copper-cobalt concentrate to China was reported in February. The 9,400-tonne shipment is potentially valued at $14.6 million.
That said, cobalt still constitutes a very small component of mine reserves right now. The Savannah resource estimate includes 13,700 metal tonnes of cobalt, 209,800 tonnes of nickel, and 94,200 tonnes of copper.
However, exploration is still ongoing, and more probable resources could be uncovered. PANRF stock is an EV battery metal stock to watch closely this year.
Cobalt Stocks to Buy: Sherritt International Corp. (SHERF)
Sherritt International is a Canada-based nickel and cobalt mining and refining stock that has already started generating cobalt sales revenue. The company reported what it termed strong nickel and cobalt production during the fourth quarter of 2021 as battery metal prices soared last year.
Rising prices for both lithium battery metals could mean strong revenue growth this year. The company’s work on expanding nickel and cobalt production rates by 20% and expanding mine life beyond 2040 could be complete by 2024.
That said, Sherritt is the largest independent energy producer in Cuba where it generates significant revenue. Its power generation contract in Cuba will expire in March 2023. The agreement is yet to be renewed by the Cuban government at the time of writing.
Due to low trading volume on the OTC market, it could be best to trade SHERF stock on the Toronto Stock Exchange (S.TO). The three-month average trading volume of 1,467,633 shares on the TSX shows better liquidity and lower trade execution risks than a comparable volume of 35,669 shares on the American OTC market.
Electra Battery Materials (ELBMF)
Electra Battery Materials is a Canada-based cobalt-refining and recycling project that could commence production and start generating revenue by the end of 2022. Formerly known as First Cobalt, the company intends to become an integral part of the North American battery supply chain as it produces battery-grade cobalt and nickel sulfate, and recycles old lithium-ion batteries.
The company targets recycling lithium-ion batteries to recover cobalt, nickel, and copper and producing sufficient battery materials for up to 1.5 million electric vehicles annually. Its cobalt and copper deposit in Idaho, (the Iron Creek Project) is yet to be developed to produce a domestic supply of cobalt.
ELBMF stock is a speculative play on the cobalt growth story. Significant execution risks remain. However, its stock price is highly volatile but has returned 107% in capital gains over the past three years.
Investors seeking to buy ELBMF stock may find better liquidity on the Toronto Stock Exchange’s incubatory Venture Exchange (TSXV:ELBM.V).
Cobalt Stocks to Buy: Canada Nickel Company (CNIKF)
Canada Nickel Company is a speculative and yet potentially rewarding nickel and cobalt pure-play penny stock that investors could scoop today as shares have dipped has dipped by 23% so far this year. The company is a development stage nickel and cobalt miner whose Crawford Nickel-Cobalt Sulphide Project could produce cobalt, nickel, and iron in an investor-friendly mining jurisdiction.
CNIKF stock has returned 220% in capital gains since July 2020.
Investors seem highly interested in Canada Nickel as one of the cobalt stocks to buy right now. Management upsized the company’s CAD $25 million stock offering to CAD $45 million just a single day after its announcement of March 8, 2022, “due to significant investor demand.”
The upside potential could be high, and so could be the downside if execution fails. Investors may find better liquidity in the Canadian-traded shares of the cobalt stock (TSXV:CNC.V).
On the date of publication, Brian Paradza did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.