How these cobalt small-caps could make you rich

Shares in lithium companies have been charging. Is cobalt the next to bolt?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The price of lithium has soared over the past few years.

Demand for the mineral has surged amid plans by governments to promote the use of cars fuelled by cleaner energy sources.

But cobalt, another key battery-making ingredient, seems to have been largely left in lithium's shadow.

However, this appears to be changing as electric car makers scramble to secure supplies.

In one example, German auto giant Volkswagen recently asked cobalt producers to submit proposals on supplying the material for up to 10 years from 2019, according to Reuters.

The price of the ferromagnetic metal has soared amid rising demand.

A year ago a pound of cobalt was changing hands for about US$12.50. Today, it's trading at around US$30 a pound.

Another significant factor that must be attributed to the recent rise in the price of cobalt is the civil unrest that has this year plagued the Democratic Republic of Congo.

It's believed that the DRC accounts for more than 60% of the world's raw cobalt supply.

And China remains the world's largest producer as it refines cobalt-rich ore imported from the DRC.

But Australia has its fair share and is among the world's top ten producers.

In Australia, resources of 1 Mtonne of cobalt metal occur mainly in lateritic nickel deposits, also magnetic Ni-Cu sulphide deposits in mafic and ultramafic rock, according to a report by the South Australian government.

As such, numerous ASX companies are seeking to capitalise, or have capitalised, on the world's thirst for cobalt.

Clean TeQ Holdings Limited (ASX: CLQ), with a market cap of $920 million, owns the Syerston Nickel/Cobalt/Scandium Project in NSW. Its share price has gone from around 40 cents this time last year to close on Tuesday at $1.59, representing a gain of about 290%.

Ardea Resources Ltd (ASX: ARL), with a market cap of $83 million and developer and explorer of cobalt assets, has seen its share price rise from less than 20 cents a year ago to close on Tuesday at $1.10.

But it's not all good news for those with a hand in cobalt.

Companies such as Barra Resources Limited (ASX: BAR) and Havilah Resources Ltd (ASX: HAV) have seen their stock prices plunge over the past year.

That being said, it seems the cobalt companies are worth checking out.

And this could also be worth your time…

 

Motley Fool contributor Steve Holland has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »