Wednesday, February 15, 2017

Electric vehicle demand powers cobalt's recent price rise


Investors are buying up physical cobalt anticipating that shortages of the metal, a key component of lithium-ion batteries used in electrical cars, will spur prices to their highest levels since the 2008 financial crisis.

Prices for cobalt metal have climbed nearly 50 percent since September to five-year peaks around $19 a lb as stricter emissions controls boost demand for electric vehicles, especially in China, struggling with ruinous pollution levels in some cities. 

Consultants CRU Group say electric car and plug-in hybrid vehicle sales could hit 4.4 million in 2021 and more than six million by 2025, from 1.1 million last year.

By 2020, 75 percent of lithium-ion batteries will contain cobalt, whose properties allow electric cars to extend their range between charges, according to eCobalt Solutions, which produces battery grade cobalt salts.

Some 98 percent of cobalt is produced as a by-product of copper and nickel output, so for investors pure equity exposure to cobalt is tricky.

It is very difficult to invest directly in cobalt because as the article indicates most cobalt production is a result of mining nickel and copper where cobalt is a byproduct. I am taking advantage by buying long term puts in Tesla. The puts are cheap as volatility is way down. I just think that not having a reliable source of cobalt for batteries is just one of many problems Tesla has going forward.

No comments:

Related Posts Plugin for WordPress, Blogger...