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Cobalt is a by-product of the extraction of nickel and copper. In recent years, cobalt has become one of the world’s most sought-after raw materials due to its use in semiconductor chips and lithium-ion batteries used in electric vehicles (EVs), smartphones and other devices. electronic.
More than half of the world’s cobalt supply comes from the Democratic Republic of Congo (DRC). The other major cobalt producers are Russia, Canada, Australia, the Philippines and Cuba.
Cobalt must be processed before it can be placed on the market. While China produces only a fraction of the world’s cobalt supplies, the country is responsible for refining more than half of the world’s cobalt. China also dominates the use of cobalt due to its status as the world’s largest electronics manufacturer.
Due to the growing interest in electric vehicles and the use of cobalt in semiconductors, the demand for the metal is is expected to grow at a compound annual growth rate of 9% through 2026. Investing in cobalt mining stocks therefore makes a lot of sense both as a hedge against inflation and for long-term capital gains.
Sneak peek: the best cobalt stocks
Investing in cobalt stocks has recently become popular among hedge funds due to the many industrial applications of this transition metal. The main drivers of the cobalt mining industry remain the use of the metal in lithium-ion batteries for the growing electric vehicle market.
Cobalt also plays a role in superalloys used to make turbine engines, as well as in cancer treatment with radiation from cobalt-60 and in the sterilization of medical equipment. Cobalt is also used in dental, orthopedic and prosthetic medical implants. Other applications of cobalt include the manufacture of tooling materials, catalysts, pigments and permanent magnets.
Best Online Brokers for Cobalt Stocks
One of our picks, Vale SA, has its American Depository Receipts (ADRs) listed on the New York Stock Exchange (NYSE), so any major stockbroker who fills orders on the NYSE can execute your order. However, since most of our picks are traded in the over-the-counter (OTC) market, you should check with the brokers you want to use to see if they can execute client orders in that market.
Features to look for in the cobalt stock
- Mine: Since cobalt is normally a by-product of nickel and copper mining, the mines a company owns or invests in are one of the most important factors for a cobalt inventory. For example, Glencore’s cobalt mines are primarily located in the DRC, which produces much of the world’s cobalt, although political upheavals could destabilize the country and impact Glencore’s share price.
- Fundamentals: As with other stocks, you need to assess the fundamentals of the business and see if they are currently profitable or if they have a good outlook for the future that will eventually make them profitable. Statistics such as the stock’s earnings per share and other major indicators of a company’s financial health can give additional insight into the stock’s potential performance.
- Partnerships: Since many mining companies are based outside the countries where their cobalt mines are located, international mining companies often form partnerships with local miners. Such partnerships can have an impact on cobalt production and are often the primary business framework for junior mining companies.
Are cobalt stocks a good investment?
With the growing popularity of electric vehicles and the growing demand for other industrial applications of cobalt, investing in cobalt stocks makes perfect sense both as a long-term investment and as a hedge against inflation.
Cobalt is increasingly used in advanced technologies which can show impressive future growth. This trend suggests that investing in cobalt stocks from large miners to companies in the mine development stage could produce considerable returns over time for a patient investor.
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