Cobalt prices, which are up about 140% so far this year, continued to climb this week, but at a slower pace compared with last week, after the market continued to digest news of Canadian investment vehicle Cobalt 27 Capital adding another 822 mt of the metal to its inventory, bringing its holdings to nearly 3,000 mt.
Toronto-based Cobalt 27 funded the purchase of the 822 mt, made over the last week, with capital raised from a bought deal share issue earlier this week, underwritten by a syndicate of banks co-led by TD Securities and Scotiabank.
Cobalt 27 paid an average price of $36.28/lb for the cobalt.
The Platts assessment for high-grade cobalt cathode rose to $36-$37/mt Thursday from $35-$36/lb December 14 and $32.50-$33.50/lb December 7, having started the year at $15.00-$15.70/lb.
Cobalt 27 describes itself as a minerals company offering a pure-play cobalt exposure. The company floated with an IPO in June and has used the proceeds of its share issues on buying physical cobalt and securing cobalt streaming and royalty deals.
In a blog posted on the company's website this week, Cobalt 27 founder and CEO Anthony Milewski said the idea behind the latest cobalt purchase was opportunistic.
He noted that Glencore's CEO, Ivan Glasenberg, had last week told investors on a conference call that there would not be enough cobalt in the world in 2030 to meet electric vehicle demand and would need additional mines.
Because of this, Milewski said, "We felt the time to act was now. We had been in discussions on a block of cobalt for some time."
He said that to his knowledge, there were no other companies that were buying and holding physical cobalt as long-term investments. "The Chinese government has a big position for military use," he said.
"This is an interesting moment because as the adoption of electric vehicles accelerate, it's reasonable to assume the OEMs and battery makers will come to us, because if you need a large cobalt position, it's very hard to go into the market to pick up 5, 10, 15 and 20 metric tons here and there," Milewski said.
Cobalt prices are at their highest level since October 2, 2018, when Platts assessed high-grade cobalt at $36.00-$37.50/lb.
He said the market could consider Cobalt 27 as an "above-ground mining company effectively."
According to Cobalt 27's website, the company holds 2,982.9 mt of physical cobalt. Last year's global cobalt market was about 110,000 mt. The company's holding comprises 2,270.3 mt of premium-grade cobalt and 712.6 mt of standard-grade cobalt.
All of the cobalt is insured and stored at secure warehouses located in Baltimore, Antwerp and Rotterdam. The company said all the warehouses were certified by the London Metal Exchange. It said its cobalt would be held on an allocated and segregated basis and not comingled with any other party's cobalt.
But cobalt prices are still below pre-2008/2009 crash peaks of $52-$53/lb seen in March 2008, when electric vehicle consumption of lithium-ion batteries barely registered in the eyes of most observers.
According to cobalt market participants, electric vehicles compete with battery demand for smartphones, aerospace (jet engines), industrial gas turbines, medical implants, high-speed steels, cutting tools, pigments, magnets and chemical applications, for the world's cobalt units.
Smartphones sales are at their highest-ever levels and the major aircraft engine manufacturers have multi-year order backlogs.
