If it hits the mark, and selling prices average a conservative $40,000 MT in a few years, then cobalt production would generate $2.7 billion in annual revenue. It expects to ramp cobalt production to 68,000 MT by 2021, representing 74% growth from 2018 levels. Growing pains aside, Glencore thinks it can address the uranium impurity by adding an additional processing unit at Katanga and believes it can work out its contract issue. Separately, a Chinese battery customer has stopped purchasing cobalt from the miner after market prices dropped below those outlined in the three-year supply agreement. That's not as unusual as it sounds, as many metals are found together (gold and silver, gold and lead, copper and cobalt, nickel and cobalt, and the like), but it's an unacceptable impurity for battery customers. More worrisome, Glencore had to halt cobalt exports after finding uranium in the finished cobalt hydroxide product produced from a part of the Katanga facility. Nonetheless, my picks for the top two cobalt stocks to look at for 2019 are mining giant Glencore (NASDAQOTH: GLCNF) and precious metals streamer Wheaton Precious Metals (NYSE: WPM).
Given the concentrated production profile, there aren't many great investment opportunities for individual investors. The supply insecurity has forced some lithium-ion battery manufacturers to search for alternative materials and chemistries, but cobalt is likely to remain an important material for the 21st century in niche applications regardless. Fifty-eight percent of the world's output comes from the Democratic Republic of Congo, which isn't exactly known for stability or a robust regulatory environment. While the Northern Hemisphere contains 68% of the planet's land mass and most of its advanced economies, it's home to just 17% of the planet's cobalt production. Cobalt is an important component of lithium-ion battery chemistries used in on-the-move applications, such as electric vehicles, but the metal has limited production sources. That's a big drop, but it still leaves cobalt as one of the most expensive metals on the market, and it could remain that way for the foreseeable future. After soaring past $83,500 per metric ton (MT) in March 2018, cobalt prices began this year at $55,000 per MT.
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