The company retains partial ownership of the cobalt refining business. Like some other global mining companies, Freeport-McMoRan has historically generated very high operating profits from its mining assets. Since cobalt is obtained from mining other metals, no ETF focuses solely on the metal. However, investors can access this essential element via a number of mining stock and base materials ETFs. While China produces only a fraction of global cobalt supplies, the country is responsible for refining more than half of the world’s cobalt.
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Although mining is a cyclical industry, BHP Group is consistently profitable and tends to generate operating profit margins well into the double-digit percentages. Consider working with a financial advisor as you evaluate your asset allocations and consider new sectors to invest in. how to buy alchemy pay Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns. The Vanguard Materials ETF offers a modest dividend yield of 1.6%, making it ideal for investors in search of passive investment income.
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- The lithium-ion battery sector in particular has become a major source of cobalt demand, and analysts expect that this sector will drive the cobalt market going forward.
- Good ways to invest in cobalt stocks can involve buying into the producers of the metal.
- Producers and their shareholders have made some real money off of this blue gold rush.
- To investors, natural resources are known as the “commodities” market.
The DRC put out 170,000 metric tons (MT) in 2023, far ahead of runner-up Indonesia’s 17,000 MT. Russia (8,800 MT) and Australia (4,600 MT) were the third and fourth largest, respectively. There are also some significant problems, most of which have to do with the production of cobalt. These companies make the building blocks of everything we use and consume.
Best cobalt stocks
In fact, via its copper mining assets in the Democratic Republic of Congo, China Molybdenum is the world’s second-largest producer of cobalt (which it derives as a byproduct from refining copper). Among its energy, recycling, and mining assets are the production of base metals such as copper, nickel, and, of course, cobalt. In fact, Glencore boasts being one of the world’s top producers of cobalt, primarily as a byproduct from its copper mines in the Democratic Republic of Congo. While long used as an industrial metal, cobalt has also been a relatively niche material. Few mining companies have ever looked for natural deposits of the ore, instead generating more than enough to meet demand by filtering it out of copper and nickel deposits. This process involves using toxic chemicals and practices that make cobalt mining an environmental disaster.
What factors impact cobalt supply and demand?
It’s also used in batteries and electronics, steel and alloy smelting, chemical engineering, medical devices and even art. Cobalt blue, made from powdered cobalt metal, has also long been a prized color for paints and glazes. Although the Congo is the top location for sourcing cobalt, China owns 15 of the 17 cobalt operations in Congo, according to the Australian Strategic Policy Institute.
Glencore PLC’s adjusted earn crypto while learning about crypto earnings before interest, taxes, depreciation and amortization (EBITDA) for 2020 was $11.6 billion. The company operates in over 35 countries and employs 135,000 people. Glencore’s partnership with DRC-based Katanga Mining Limited gives Glencore a reliable source of cobalt. Glencore stock ADRs also currently qualify for our stocks under $10 per share category and could be a good fit for your portfolio if you’re looking to invest in a cobalt miner.
“Falling cobalt prices may lead OEMs in certain markets to reconsider lower nickel NCM batteries, with higher cobalt content, due to the potential cost how to buy mft savings,” notes Fastmarkets in its report. As of early 2024, cobalt was in a supply overhang as increased production out of the DRC and Indonesia has not been taken up by demand, which took a hit in 2023 on the back of sliding sales for EVs. Fastmarkets analysts are “forecasting an ongoing and widening surplus in the global cobalt market in 2024”. Given those factors, many investors are now wondering how to invest in cobalt.
It isn’t a significant revenue generator for Vale, but the company is nonetheless worth mentioning, given its status as a top miner of basic metals used in all sorts of industries. Cobalt is a relatively common metallic element with physical properties broadly similar to nickel and iron. It is hard and (unlike iron) brittle, and generally nonreactive to common environments like air and water. It can be toxic when inhaled or otherwise ingested and has a very potent lab-created radioactive isotope. Cobalt is often found as a byproduct of copper and nickel production, and is mined in much of the world. Three are Wheaton Precious Metals (WPM), Carpenter Technology (CRS), and Vale (VALE).
After surprising to the upside in 2021, prices for the commodity stabilized in the first three months of 2022 and then took a breather in the second quarter. Even with this slowdown, experts have positive long-term expectations for cobalt. Click here to read more about manganese investing and manganese stocks.
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Vale S.A.’s stock has had a yearly range of $9.28 to $23.02 thus far, and it currently trades just outside of our stocks under $20 category. Investing in cobalt stocks has recently become popular among hedge funds due to the numerous industrial applications of this transition metal. The main drivers for the cobalt mining industry continue to be the metal’s use in lithium ion batteries for the growing EV market. Particularly due to rising demand for lithium-ion batteries in electronic devices and electric cars, cobalt prices have been steadily rising during the COVID-19 pandemic. Investing in cobalt stocks is worth considering for investors wanting to bet on increased use of battery technology and renewable energy.
Overall, the US Geological Survey states that around 85 to 90 percent of global manganese output is used for the production of steel and cast iron. In the long term, graphite demand is expected to become more dominated by the battery sector, although it’s worth noting that not all types of graphite can be used in this industry. Investors might also want to understand the differences between synthetic and natural graphite, and the influence this has on the overall graphite market. A native element mineral that’s the most stable form of carbon, graphite is known to be a dry lubricant. As the only non-metal element that’s a good conductor of electricity, it can be used in lithium-ion batteries, as well as in nuclear reactors and the refractory and steel industries.
As of early 2023, cobalt stocks comprised almost 9% of the fund’s investments. It also counted notable cobalt producers BHP Group and Glencore among its top five holdings. One of the world’s largest mining companies, BHP Group is an Australian-based company with operations all over the globe. Copper and nickel are among its top products, so cobalt (one of the byproducts of refining these two metals) is naturally mined by BHP. Cobalt production has been a promising investment in recent years.
Your investment style can dictate which kind of fund is best for your portfolio. But it isn’t possible to get exposure to every single type of asset. For example, if the company goes bankrupt, the value of your shares will remain unchanged. A share broker acts like a middleman between you and the company. This has led to a number of companies looking into expanding their operations in countries like Canada, Australia, and Chile. It is also an important component of superalloy materials that are used in jet engines, turbine blades, and other industrial machinery.