Investing in precious metals is an excellent strategy for building a diversified stock portfolio. Forward-looking investors should consider purchasing cobalt stocks to gain exposure to this valuable resource.
Cobalt stocks could be a strategic addition to your asset mix, with lithium-ion battery manufacturers needing this metal.
Here is what you need to know about investing in cobalt.
What is Cobalt and Why Would You Want Exposure to This Resource?
Cobalt is a metal with magnetic and heat-resistant properties. Traditionally, people would use cobalt to add a blue tint to ceramics and other objects.
Nowadays, cobalt is a valuable resource because it plays an important role in the composition of metallic alloys and lithium-ion batteries.
One of cobalt’s benefits includes protecting alloys from heat and corrosion.
Where is cobalt used?
You’ll find this metal in aircraft engine components, medical equipment, and batteries.
There is a wide range of uses for this resource. In medicine, a radioactive isotope of cobalt allows doctors to kill tumor tissues by exposing patients to the rays emitted by this element. Cobalt is also a valuable resource for imaging.
Thanks to a process called electroplating, it’s possible to apply a thin layer of cobalt on another metal to protect it from rusting. And because cobalt possesses magnetic properties, it’s a common element used to make permanent magnets for motors.
One of the most important applications for cobalt is the manufacturing of lithium-ion batteries. The properties of this metal improve the energy density of a battery, which makes it more effective. Cobalt can also extend battery life as a battery goes through charging and discharging.
Outlook for the Cobalt Market
The demand for cobalt is going to match the growth of EV adoption.
Experts believe EV adoption will continue to increase at a CAGR of 29% until 2030, which paints a promising picture for cobalt mining stocks. Major automakers like GM have already announced their plans to adopt an all-electric lineup in the future.
EVs aren’t the only market driving the demand for cobalt. Smartphones, laptops, and other electronics also use lithium-ion batteries.
With 1.3 billion smartphones sold worldwide in 2020, it’s a strong market. Plus, sales will likely go up as consumers purchase new phones for the transition to the 5G network.
Other markets could drive the demand for cobalt and make cobalt company stocks a great investment:
- Autonomous Mobile Robots will soon transform the industrial sector thanks to innovations in connectivity, AI, and battery technology. These robots will need lithium-ion batteries.
- EV adoption will put a strain on the current electric grid in the US, calling for a major overhaul. Utility companies will likely invest in grid-scale batteries to store power at a local level to meet the demand for EV charging. These batteries will likely use cobalt.
- EVs aren’t the only technology transforming the future of mobility. We could see a larger market for products like e-scooters and e-bikes.
Should You Invest in Cobalt Stocks?
If you want to diversify your portfolio with precious resources that will continue to be in high demand in the future, cobalt is a strong choice. However, there are a few things you should be aware of.
Is cobalt renewable? While cobalt is currently playing an important role in adopting more renewable forms of energy, this resource itself isn’t renewable. Battery makers will eventually have to find an alternative.
Cost can be an issue for the cobalt market. The current mining capacity won’t be able to meet demand from lithium-ion battery manufacturers. Cobalt is the most expensive component you’ll find in batteries.
Battery manufacturers are actively looking for an alternative to cobalt. Early research suggests that it would be possible to make cobalt-free batteries with the same level of performance or even with superior performance.
There are ESG issues linked to cobalt mining. Congo is currently the leading exporter of cobalt, and there have been issues with child labor and other human rights violations.
If you’re wondering how to invest in cobalt stocks, it’s important to do some background research on the companies you want to invest in to find out more about their ESG policies.
See Related: Best 5G Stocks to Invest in Today
11 Best Cobalt Stocks to Invest In Today
Read on to learn more about the best cobalt metal stocks to add to your portfolio.
1. Glencore (CLNCY)
Glencore is one of the top natural resource companies in the world. With a diverse portfolio, cobalt is only one of the areas of focus. Glencore has been around since the 1970s and manages over 150 different mining projects.
Glencore is an excellent investment because this company does more than mine cobalt. It plays a part at different levels of the distribution process to diversify its activities.
With a valuation of more than $76 billion, Glencore is a large-cap stock that represents a low-risk level. Barron’s analysts also believe that the stock performance will continue to improve in the future, which builds a strong case for investing in Glencore.
Lastly, Glencore is one of the companies that is advocating for building a more equitable market for cobalt.
Glencore formed a partnership with other mining companies to build a blockchain that would track cobalt to improve ESG practices for the industry.
This initiative positions Glencore as a leader for positive change, and it makes this stock a good option if your goal is to pick ESG investments for a more responsible portfolio.
2. Wheaton Precious Metals (WPM)
Wheaton Precious Metals is another giant on the precious metal market. This Canadian company specializes in metal streaming.
Metal streaming is a practice where a company agrees to purchase a certain quantity of metal produced by a mining operation. Because the two companies sign an agreement in advance, they agree on a price ahead of the delivery date.
This practice allows Wheaton Precious Metals to secure cobalt and other resources in advance, often at a discounted price given the growing demand for cobalt.
3. Vale (VALE)
Vale is a major mining company. While it specializes in iron ore production, it has a presence in 30 different countries and is actively developing its cobalt mining activities.
Vale also invests in developing the necessary infrastructure for transporting and transforming precious metals. The company also focuses on R&D projects, which is interesting since Vale could find an alternative to Cobalt as prices continue to rise and battery manufacturers look for other options.
4. Canada Nickel Co (CNIKF)
The Canada Nickel Company is a mining company that specializes in the exploration and development stages of the precious metal market.
While this company focuses on nickel, it’s been investing in other projects that include cobalt mining to diversify its activities.
Exploration consists of applying different research methods to identify potential mining sites. The next step is to assess the quantities of metals that a mining operation could extract and to determine if the project makes sense from a financial point of view.
During the development stage, the Canada Nickel Co built the infrastructure necessary to launch a mining operation.
It’s important to consider the pros and investing in cobalt stocks with a company like the Canada Nickel Co.
This company could find a major cobalt deposit and see its stock soar. However, it could fail to identify any deposits worth mining for a while, which would negatively affect its stock value.
5. China Molybdenum (CMCLF)
While US cobalt stocks can help you build a strong foundation for your portfolio, you should consider diversifying your exposure to this precious resource with foreign stocks.
It’s important to research how to buy cobalt stocks and compare different brokerage accounts since there might be additional fees when investing in foreign stocks.
China Molybdenum is a great addition to your portfolio if you want exposure to a cobalt market outside of the US.
It’s the top producer of molybdenum in China, and its investments in cobalt mining have made it one of the most popular stocks on the Hong Kong and Shanghai stock exchanges in terms of cobalt stocks performance. It’s a significant contributor to the Shanghai Composite Index.
However, China’s Molybdenum might not be a good option for ESG-conscious investors due to the high levels of carbon emission reported by this company.
See Related: Best Uranium Mining Stocks to Invest in Today
6. Eurasian Resources Group (ERG)
With a presence in 15 countries, the Eurasian Resources Group specializes in producing natural resources. This company takes a diversified approach to avoid becoming dependent on a single finite resource.
It’s a mining company that will help you get exposure to different valuable resources, including cobalt, aluminum, iron ore, and more.
The European Resources Group is currently working on a new mining project in Kazakhstan and has an active exploration department to find new mining opportunities.
Through a series of mergers and acquisitions, the parent company of the ERG also holds the assets of another mining group and of the former FTSE-100 group, a company that specialized in financial holdings.
These M&A add value to the ERG stock and have the potential of protecting it from fluctuation in cobalt stock prices since there is also exposure to the financial market.
7. Umicore (UMICY)
Umicore is a must-have stock if you’re building a portfolio with exposure to cobalt as one of your main strategies.
This company is a pioneer in the field of recycling lithium-ion batteries, which will become a costly issue as EV adoption continues to increase and more vehicles reach the end of their lives.
Umicore is one of the companies involved in the blockchain initiative for improving sourcing and transparency in the cobalt market. It’s also behind different initiatives geared toward building a more sustainable mining industry.
Plus, Umicore will give you exposure to a wide range of metals since the company has investments in lithium, copper, iridium, molybdenum, and selenium mining projects among others.
8. Sherritt International Corp (SHERF)
Sherritt International Corp is a Canadian company on a mission to build a more sustainable mining industry.
It’s also one of the most innovative cobalt mining companies, using advanced hydrometallurgical techniques to refine cobalt and nickel.
Besides delivering high-quality refined materials, Sherritt International is also the top energy producer in Cuba.
Investing in this company makes sense for ESG-conscious investors since Sherritt International is a transparent company that publishes environmental reports regularly.
Overall, the focus on innovation and on producing high-quality materials for the EV market make Sherritt International an excellent stock for investors looking to generate revenues in the long term.
9. Cobalt 27 Capital (KBLT)
Cobalt 27 Capital is a company that manages a portfolio of different cobalt products. There is no direct involvement in mining activities, which can help you build a more diversified portfolio if you’ve already purchased cobalt mining stocks.
Cobalt 27 Capital currently holds an impressive 2,160 million tons of raw cobalt. With prices rising rapidly for this material, Cobalt 27 Capital could be a good investment.
The company also manages a total of six different cobalt royalties. These royalties are contracts with different mining companies for the use of the resources they produce.
Cobalt 27 Capital has a strategy in place to keep adding to its existing reserves of raw cobalt and to continue gaining exposure to the cobalt market by investing in different cobalt mining companies and establishing additional royalties.
While investing in Cobalt 27 Capital can add diversity to your portfolio and help you gain exposure to a wider slice of the cobalt market, it’s more difficult to conduct ESG research.
You should also carefully weigh the risks you’re willing to take since the stock value depends on Cobalt 27 Capital’s ability to secure advantageous contracts and investments in the future.
See Related: Best Hydrogen Stocks to Invest in Today
10. African Battery Metals (ABM)
African Battery Metals is a company based in London. It focuses on exploration projects on the African continent to uncover new sites for mining operations.
With the Republic of Congo and Madagascar being the two leaders in cobalt production, it makes sense to focus on the African continent. This stock is also a good option if you want to gain exposure to the exploration stage of the cobalt market.
The company currently holds three different licenses to explore a total of 132 square miles in the Democratic Republic of the Congo. African Battery Metals also has an interest in a mining project in Sierra Leone.
Compared to other exploration companies, the focus is narrower. However, the Republic of Congo has been a top producer of cobalt and these licenses could become extremely profitable.
11. Carpenter Technology Corporation (CRS)
The Carpenter Technology Corporation is an innovative company that specializes in manufacturing metal alloys. Cobalt is one of the materials used to develop performing alloys that can resist rust, corrosion, and high temperatures.
If you would like to diversify your portfolio and gain exposure to cobalt beyond mining and battery technology, Carpenter Technology Corporation is an excellent choice
. You’ll gain exposure to cobalt in the context of developing alloys that have a wide range of industrial uses.
This company makes medical equipment, tools, magnetic alloys, steel for valves and gears, and more. It stands out thanks to an excellent R&D department that is exploring technologies for building better electric motors and developing new alloys.
Now that you know more about how to invest in cobalt stocks, you can do more research on the different stocks mentioned above and determine which products align with your financial goals.
You should also keep in mind that the cobalt market is currently experiencing high levels of demand and growing at a fast pace, which means that new companies are likely to emerge in this market.
Keep an eye on new stocks that you could add to your portfolio, and build a diversified asset mix by seeking exposure to other materials and other sectors.