Cobalt stocks are critical to the production of rechargeable lithium-ion batteries, which power the majority of electric vehicles (EVs) on the market today.
As the world continues to shift towards clean energy and reduce its reliance on fossil fuels, the demand for EVs and lithium-ion batteries will continue to grow.
Cobalt is also highly recyclable, making it prime for the lithium-ion battery for EVs and energy storage systems.
As a result, the demand for cobalt is also projected to increase.
Total Addressable Market for Cobalt
The total addressable market for cobalt is vast and includes a variety of industries beyond the EV sector.
According to Statista, the global cobalt market was last valued at $9.63 billion in 2022, projected to reach $17.39 billion by 2027 (Statista, 2022). This translates to an impressive 12.51% CAGR.
You can find cobalt in jet engine parts, in the medical field for prosthetics and implants, and in the defense industry for creating strong and durable materials.
However, the primary driver of demand for cobalt has been the EV industry, which relies heavily on cobalt to manufacture lithium-ion batteries.
Electric Vehicle Market
The electric vehicle market has grown significantly in recent years as governments around the world have implemented policies to reduce carbon emissions.
In the US, President Biden has set a goal of having 50% of all new cars sold in 2030 to be electric (The White House, 2021).
The shift towards EVs has led to an increase in the demand for lithium-ion batteries. This has led investors to search for the best cobalt stocks for 2023.
Lithium-Ion Batteries
Lithium-ion batteries are the primary type of rechargeable battery used in EVs.
These batteries consist of several key components, including lithium, nickel, manganese, and cobalt.
Cobalt is a critical component of the battery cathode, which is responsible for storing and releasing energy.
As a result, the demand for cobalt is closely tied to the demand for lithium-ion batteries.
Cobalt Price Volatility
In recent years, the price of cobalt has fluctuated due to political instability in the Democratic Republic of Congo (DRC), which produces approximately 70% of the world’s cobalt.
The DRC has been plagued by corruption, child labor, and human rights abuses, leading to increased scrutiny of cobalt mining practices in the region.
In addition to political instability, the price of cobalt can also be impacted by changes in the supply and demand dynamics of the market.
For example, an increase in the supply of cobalt could lead to a decrease in the price of the metal, while an increase in demand could lead to a price increase.
Best Cobalt Stocks to Consider for 2023
- Glencore PLC
- CMOC Group Limited
- Vale S.A.
- Freeport-McMoRan
- BHP Group
- Wheaton Precious Metals
- Jervois Global Limited
- Tesla
1. Glencore PLC (OTC: GLNCY)
- Ticker: GLNCY
- Dividend Yield: 6.26%
- Market Cap: $70.26 Billion
Glencore is a leading producer of cobalt, with mining operations in the Democratic Republic of Congo.
The company has taken steps to improve the sustainability of its cobalt mining operations, including partnering with local communities and implementing programs to reduce the use of child labor.
Glencore also produces copper, nickel, and other metals used in the production of EVs.
2. CMOC Group Limited (OTC: CMCLF)
- Ticker: CMCLF
- Dividend Yield: 1.80%
- Market Cap: $17.38 Billion
CMOC Group, formerly China Molybdenum is one of the world’s largest producers of cobalt, with mining operations in the DRC.
They are currently the world’s second largest producer of cobalt. In 2019, the company produced 177,956 tonnes of copper and 16,098 tonnes of cobalt.
With mining operations totalling more than 1,500 square kilometres, they are well positioned to benefit from the increasing demand for cobalt.
3. Vale S.A. (NYSE: VALE)
- Ticker: VALE
- Dividend Yield: 5.03%
- Market Cap: $61.83 Billion
Vale is a Brazilian mining company that produces a variety of metals, including iron ore, nickel, uranium and cobalt.
The company has been expanding its cobalt operations in Canada and has also been exploring opportunities in other countries.
They produce high purity electrolytic cobalt rounds, through a process known as electrowinning.
Vale has invested significantly into sustainable mining practices and has implemented a number of ESG initiatives to reduce its environmental impact.
4. Freeport-McMoRan (NYSE: BHP)
- Ticker: FCX
- Dividend Yield: 1.65%
- Market Cap: $52.40 Billion
Freeport-McMoRan is an American mining company that produces copper, cobalt, and other metals used in the production of EVs.
The company has been expanding its cobalt operations in the DRC and has been working to improve the sustainability of its mining practices.
As of May 2023, Freeport-McMoRan has a market capitalization of over $50 billion.
5. BHP Group (NYSE: BHP)
- Ticker: BHP
- Dividend Yield: 8.72%
- Market Cap: $211.84 Billion
BHP Group is an Australian mining company that produces a variety of metals, including copper, uranium, iron ore, and cobalt.
The company has been exploring opportunities to expand its cobalt operations.
In 2021, they collaborated with AI mining startup KoBold Metals, to help accelerate the decision making process of land purchasing and abundant drilling sites.
BHP has committed to reducing its carbon emissions and has set targets to achieve net-zero emissions by 2050.
6. Wheaton Precious Metals (NYSE: WPM)
- Ticker: WPM
- Dividend Yield: 1.15%
- Market Cap: $23.45 Billion
Wheaton Precious Metals is a Canadian mining company that specializes in streaming precious metals, including cobalt, from mining operations around the world.
The company’s streaming agreements provide it with the right to purchase a portion of the metals produced at a fixed price (discount to NAV), which gives the company exposure to the metals market without taking on the risks associated with mining.
In 2019, Wheaton Precious Metals acquired a cobalt streaming agreement with the Voisey’s Bay mine in Canada, one of the largest cobalt mines in the world.
The acquisition gives the company exposure to the growing demand for cobalt while also diversifying its portfolio of precious metal streaming agreements.
7. Jervois Global Limited (OTC: JRVMF)
- Ticker: JRVMF
- Dividend Yield: N/A
- Market Cap: $162.73 Million
Jervois Global is an Australian mining company that focuses on the production of battery metals, including cobalt.
The company’s flagship project is the Idaho Cobalt Operations (ICO) project, which is one of the only primary cobalt mines in the United States.
The ICO project is expected to produce high-purity cobalt, which is in high demand for the production of EV batteries.
The company has also been working to develop a cobalt-nickel-copper project in Uganda, which will be a significant source of battery metals for the electric vehicle market.
8. Tesla (NASDAQ: TSLA)
- Ticker: TSLA
- Dividend Yield: N/A
- Market Cap: $544.48 Billion
While not a traditional mining company, Tesla is a significant consumer of cobalt as a manufacturer of EVs.
The company has been working to reduce its reliance on cobalt in its batteries, but for now, cobalt remains a critical component of its battery cathodes.
This makes cobalt stocks an extremely important component of the electric vehicle supply chain for Tesla.
Therefore, demand for cobalt will increase as Tesla manufactures more lithium-ion batteries.
Best Cobalt Stocks: Final Takeaway
The demand for cobalt is closely tied to the growth of the EV market and the production of lithium-ion batteries.
As a result, the demand for cobalt is expected to rise over the next few decades.
However, the market for cobalt can be volatile due to the supply-demand dynamics of the market and political instability in the DRC.
Investing in cobalt stocks can be a great way to gain exposure to the growing EV market and the demand for lithium-ion batteries.
A more safe alternative for conservative investors looking for exposure to rapidly growing cobalt market can be considering Cobalt ETFs.
The companies listed above are some of the best cobalt stocks to buy for 2023, with strong mining operations and a commitment to sustainability.
However, as with any investment, it is important to conduct thorough research and consider the risks before making any investment decisions.
Disclosure: The author holds no position mentioned in this article. Freedom Stocks has a disclosure policy.
