The rise of electric vehicles has many industry observers predicting an impending shortfall in the cobalt needed for the batteries to power them, but Cobalt 27 Capital Corp CEO Anthony Milewski isn’t buying it.
“I firmly disagree with any view that we’re going to be short cobalt,” Milewski told S&P Global Platts on the sidelines of the FT Commodities Global Summit Tuesday in Lausanne, Switzerland.
“From our perspective, there will definitely be enough cobalt. Cobalt is a commodity like every other commodity that I know of, meaning that there will be an incentive price that will incentivize not only technology [to bolster supply but miners to ultimately supply us with the cobalt that we need.”
Canada-based Cobalt 27 holds physical cobalt and is also focused on growing a cobalt-focused portfolio of streams, royalties and direct interests in mineral properties containing cobalt. Going forward, Milewski doesn’t see the company’s focus shifting toward holding more physical cobalt assets.
“I think really the focus of the company today is streaming and royalty transactions,” Milewski said. “That’s where we’ve spent all of our time. We’ve got the balance sheet and the inventory lending capability now, as well as the equity on there — the cash that we recently raised — and we’re really focused on creating the flow.”
Earlier this month, Cobalt 27 completed a C$200 million (US$152.9 million) strategic private placement, with the proceeds to be used in the acquisition of cobalt streams and royalties.
“We’re creating a cobalt mining company with an Excel spreadsheet,” he added. “These aren’t the hands of a miner.”
Milewski said such a scenario enables investors to “express a view if you’re an investor on cobalt, or by the way, we have shareholders who are in the industry who are also expressing a view long or short, so it provides that service and it also acts as a proxy for investing in cobalt.”
Cobalt prices have soared in the past 12-plus months on expectations of a sharp rise in demand from the fledgling electric vehicle sector. Platts US high-grade cathode assessment more than doubled from $15-$15.70/lb at the beginning of 2017 to $36-$37/lb by the end of the year.
Global cobalt production is currently about 100,000 mt/year and 65-70% comes from the Democratic Republic of Congo — a country wracked by conflict, questionable labor practices and corruption in recent years. Still, it’s unlikely to be displaced as the top global source anytime soon, Milewski said.
“The Congo is always going to be, in the foreseeable future, the overwhelming producer of cobalt,” he said. “Now, there are other areas that could supplement it — Russia, Australia, Cuba, Canada are all sources of additional cobalt units, but I can’t foresee any scenario in the coming decades where the Congo is not the leading producer.”