Electric vehicle boom changing equation
Investors have renewed their interest in a historic Canadian cobalt play amid a recent boom brought on by the adoption of electric vehicles.
Toronto-based First Cobalt Corp. has seen its stock price double in value since announcing last week that it had received shareholder backing for a three-way merger with fellow juniors Cobaltech Mining Inc. and Cobalt One Ltd. The deal includes past-producing mines near Cobalt, Ont., a town named after the metal and located approximately 500 kilometres north of Toronto.
With its acquisitions expected to close in the coming week or so, First Cobalt says it now controls 45 per cent of the land in the socalled “Cobalt Camp,” in addition to owning the only permitted cobalt refinery on the continent that can produce battery-grade materials. While the camp is still in its exploratory stage, shares of First Cobalt are up nearly 280 per cent for the year, trading at $1.47 at close Wednesday.
“We are the biggest (in the camp) and we’ll probably seek to grow from there,” said Trent Mell, president and chief executive of First Cobalt. “The reason you’re seeing the interest in our stock right now is we were the first to consolidate.”
Cobalt is used in batteries, and First Cobalt is consolidating its grasp on the Northern Ontario camp as electric automaker Tesla Inc. and other car manufacturers are planning to boost production of their battery-powered vehicles. According to the London Metal Exchange, one metric ton of cobalt on Monday was priced at US$64,000, nearly double the price at the start of 2017.
That Canada is a stable regime with a strong human rights record is also playing in the company’s favour.
Caspar Rawles, analyst at London-based Benchmark Mineral Intelligence, noted that 64 per cent of the world’s supply of cobalt last year came from the Democratic Republic of Congo, a country plagued by political instability and human rights abuses.
Amnesty International reported earlier this month that major electronics and electric vehicle companies “are still not doing enough to stop human rights abuses entering their cobalt supply chains.”
Now Canada, along with Australia, is seeing a “boom” in interest for the exploration and development of cobalt, Rawles said.