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Wheaton locks in hugh amount of COBALT for future delivery used in Electric CARS
Apparently the Race is on for Cobalt as Apple,Microsoft and carMakers seek to lock in supplies
Why Wheaton Precious Metals Is Getting Into Cobalt Streaming
What’s cobalt got to do with precious metals?
Billy Duberstein
(Dubs82)
Jun 22, 2018 at 9:18AM
Looking to invest in precious metals? Streaming companies may be the way to go. Instead of mining metals themselves, streaming companies essentially lend to miners — but instead of collecting interest, streamers receive part of the mine’s future output at a steep discount. It’s a great business model that allows streamers to both diversify revenue streams and seize unique opportunities.
The largest streaming company in the world (by revenue, not market capitalization) is Wheaton Precious Metals (NYSE:WPM). Wheaton began as a silver streaming company in 2004 under the name Silver Wheaton, but the company began seeing opportunities in gold around 2013, and in 2017 it changed its name to Wheaton Precious Metals to signify its diversification.
Just last week the company started a new chapter, announcing its first streaming deal in a third metal: cobalt.
A bet on… electric vehicles?
“I’ve owned a Tesla (NASDAQ:TSLA) for five years and I will never own a gas vehicle again.” That’s a quote not from Al Gore or Elon Musk, but rather Wheaton CEO Randy Smallwood. His decision to stream cobalt is exactly that: a bet on EV adoption. It’s also a bet that cobalt, which currently plays an important role in today’s EV batteries and will continue to be an important component of future battery technology.
Today just 0.67% of new car sales are electric, but that number is set to grow many times over, with some analysts anticipating EVs will make up 10-16% of new sales by 2025.
Supply concerns
Cobalt is usually mined only as a byproduct of mining operations for other metals, such as copper and nickel. So even if cobalt prices go up, supply could remain constrained if the prices of nickel and copper languish. Making things even more complicated, 55% the world’s cobalt is mined in the Democratic Republic of Congo (DRC). In March, the DRC made things harder for cobalt miners, declaring cobalt a “strategic metal” and hiking royalties to 10%, up from 2% before.
Wheatons Cobalt comes from Canadas, VALES Voisey Bay nickel mines a safe jurisdiction .