Cobalt: The Bass Player in the Tesla Band – by Peter Clausi ( – May 16, 2016)

Numbers are numbers and facts are facts: we make serious money when we figure out how those statistics could affect the future. For the past year, we’ve been haranguing about the global shortage of cobalt. We’re not alone in this. See John Petersen‘s series of beautifully analytical data-driven articles and Chris Ecclestone‘s thesis. The key facts you need to know:

1. roughly 97% of the world’s supply of cobalt is produced as a by-product of nickel or copper production. Fact;

2. the spot prices for copper and nickel have plummeted to and have stayed at levels that make many deposits uneconomic. Fact;

3. as a result of these economics, the owners of some of those copper and nickel mines are closing the mines, putting those mines on care and maintenance in a Hail Mary that someday the commodity price will recover enough to someday make these mines economic. Fact;

4. if those mines are shut in, the supply of cobalt will fall in tandem. Fact;

5. geographically, roughly 53% of the world’s supply of cobalt comes from nickel and copper mining in Conflict Africa. This supply is at risk on the best of days. Even worse, there are ethical concerns involving child labour. Read this article from Wired magazine, and understand why there is a global movement to impose an ethical supply chain on cobalt out of that area. Fact;

6. the experts who specialize in this area are anticipating a 10 – 15% decrease in cobalt supply in 2016, resulting from a combination of ethical controls on the supply chain and mines being shut in. Fact;

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