The Cobalt Sector – Down But Not Out

I have followed a small group of ASX stocks whose main, or an important, focus is cobalt. This is by no means a definitive list and does not include those companies that may have cobalt interests that are subordinate to other commodities in their portfolio. I started investing in the cobalt sector a year ago, but am currently on the sidelines, expecting to reenter. Read more on cobalt here.

An example of the latter is Artemis Resources Limited (ASX: ARV). The company has intersected high grade cobalt but has significant gold and base metal interests. The share price is substantially off its highs, but I think there is a lot of potential for further discoveries. It is definitely worth watching.

The chart below shows the share price performance of a small group of lithium stocks over the past 12 months. Highs were typically reached in early 2017. While average share price performance has been poor over the period, some companies (such as ARL, CFE, EUC, CLQ) do stand out and are worth watching.

The cobalt market looks to have a more interesting future than other energy materials such as lithium and graphite (except for vanadium, read more on vanadium here). For example, there is abundant lithium and graphite in the world but cobalt is quite supply constrained (read about lithium here and graphite here). This is in part reflected in the cobalt price, having risen strongly during 2017.

Further, a large part (over half in 2016) of the world’s supply of cobalt is from DR Congo (Democratic Republic of Congo). The country has had a recent history of civil war and corruption, it could not be considered a stable source of supply.

In sum, do continue to follow the sector.

NOTE

References to particular companies are in no way a recommendation to buy or sell shares. The reader is advised to do their own research and/or consult with their broker.