Canada has the seventh-largest Cobalt reserves in the world, and the top producer (Domestic Republic of Congo) has more reserves than the next ten countries combined.
This skews the market a bit, especially if you consider the fact that Cobalt is the most expensive part of Lithium-Ion batteries and makes up about a quarter of the total cost.
And with EVs on the rise, an essential ingredient like Cobalt might be an asset worth investing in, if not directly, then through the best cobalt stocks in Canada.
Cobalt – Market Dynamics
Cobalt prices have seen a drastic shift in the last decade.
The price is per ton of Cobalt, and it has experienced two spikes in the last decade, going up as much as 400% from the lowest to the highest point.
This indicates volatility and massive scope for growth, both of which can be very attractive traits if you can capitalize on them properly.
The EV boom is expected to be the largest catalyst for driving up Cobalt demand around the globe, and the current projections suggest that the demand is going to outpace supply, driving up the prices.
Another reason the prices are up so much is that China is buying up as much as it can, which is understandable since it’s leading the charge in EV manufacturing.
In 2020, it spent twice the amount on Cobalt imports than the next four countries combined.
Things become even muddier if you start looking into China’s influence (both economic and political) in the Democratic Republic of Congo, where the bulk of the entire world’s cobalt supply comes from, which might give it more ready access to Cobalt.
What Companies Mine The Most Cobalt?
Switzerland-based Glencore and Chinese China Molybdenum mine more Cobalt than any other company globally. Among the top five, there is also the US-based Vale and the Congo’s own Gecamines.
Currently, Glencore is taking the lead, but there are strong indications that China Molybdenum might surpass it in the next few years in Cobalt production.
Who Produces Cobalt In Canada?
Sherritt International is a major cobalt producer in Canada. In 2020, it produced almost 40% of the entire country’s cobalt production. Canada Silver Cobalt is another major Cobalt producer in Canada. US-based Vale also produces Cobalt in Canada.
10 Best Cobalt Stocks In Canada
It’s important to note that there are few (if any) dedicated cobalt producers in Canada. Most Canadian cobalt companies are primarily nickel or silver companies that produce Cobalt as a by-product.
The list includes other companies associated with Cobalt than simply the miners. The stocks are listed by market cap.
1. Wheaton Precious Metals Stock
Industry Niche: Precious metal streaming
Wheaton is a streaming company that usually buys part or all of the metal produced by the mines/mining companies it finances, usually at a discounted price.
And since its stake is purely financial, there is relatively low risk, and the portfolio is significantly more diverse and spread out than a miner’s. It has access to Cobalt through its contract with Vale.
Only a small portion of its revenue comes from Cobalt (4% in the next five years expected), but the amount of Cobalt it gets from the producers/have access to is massive.
Wheaton is a decent cyclical growth stock and a modest dividend stock. You need to buy the dip (as deep as you potentially can) to get the best of both worlds.
2. Jervois Global Stock
Industry Niche: Nickel and cobalt production and refining
Jervois is headquartered in Australia and cross-listed in Canada in 2017. The company has operations in multiple countries, including the US, Finland, and Brazil, and it aims to become one of the largest suppliers of Cobalt to the global EV industry.
It owns the largest Nickel and Cobalt refinery currently in existence in Latin America. The US operation (Idaho) will be the first operational Cobalt-only mine in the country.
The company generates a decent portion of its revenue from the battery market though the chemical market still retains the top spot.
The stock has performed quite well in the post-pandemic market, and at its best, it rose about 650% in a little over two years.
3. Anglo Pacific Group Stock
Industry Niche: Essential metals royalty and streaming
The UK-based Anglo Pacific is a royalty and streaming company that focuses on a variety of metals, including Cobalt.
Its extensive portfolio of royalty and streaming includes two cobalt-based projects, one in the production stage and one in development.
The company’s exposure to Cobalt is akin to Wheaton’s exposure to it, though Anglo Pacific’s heavy lean towards base metals, many of which are used in batteries, offers it a higher degree of overlap with the battery industry.
The stock is a relatively slow mover, so the potential for loss and profit both is relatively muted.
To date, its best growth phase returned over 440% in roughly three years. Its performance is tied to more than just Cobalt’s price and demand cycles.
4. Sherritt International Stock
Industry Niche: Cobalt and nickel producer
Sherritt is one of Canada’s largest producers of high-purity nickel and Cobalt. Its main production facility is in Moa, Cuba, and the mined (and partly processed) raw material is refined in Canada.
The reserves in Cuba are significantly higher than in Canada, with relatively fewer competitors due to the disputed nature of the region. This gives Sherritt a significant competitive advantage.
And even though the company is more oriented toward nickel, its Cobalt production capacity ensures that a spike in Cobalt demand may reflect in the company’s financials and stock as well.
In the last five years, the stock has seen three major growth phases and appreciated 120%, 600%, and 100%, respectively.
5. UEX Corporation Stock
Industry Niche: Uranium projects/responsible cobalt discovery
Unearthing energy metals – That’s the UEX motto, and it’s focused on two metals, for now, uranium and cobalt, each with very distinct market cycles and demand projections.
The difference is that in the Uranium business segment, it’s already counted among the major cost-competitive resource developers, whereas cobalt production is a long way off.
However, out of its five major projects, two 100% owned ones are poised for Cobalt production at scale. One of them is a dedicated Nickel-Cobalt project.
The performance potential of the stock is mostly tied to its status as a penny stock, as it hasn’t once grown over $1 per share in the last decade.
This also comes with its own set of benefits. In the last five years, the stock has grown over 100% at least three times.
6. Electra Battery Materials Stock
Industry Niche: Battery materials park
Electra has a vision – North America’s first sustainable battery material park, and as the most expensive battery metal, Cobalt has an important place in that vision. In the first step of its positioning in the EV battery supply chain, the company has commissioned a battery-grade cobalt sulphate plant (local extraction).
And Cobalt is one of its six primary planned products. Once functional, it will be the only refinery of its kind (and capacity) in North America.
Electra’s prospects are quite promising, and the primary optimism around its potential was one of the catalysts that pushed the value of the stock up 9,500% from its lowest to the highest point.
It has seen two major growth phases in the last five years alone, growing beyond 200% and 350%, respectively.
7. Nickel 28 Capital Stock
Industry Niche: Nickel and cobalt production and royalties
Nickel 28 focuses on the two most precious and expensive battery metals – nickel and cobalt, and it’s well-positioned for the production of both.
And through its four royalties (out of 13), it also stands to gain a lot (financially) from the price upswings of Cobalt.
Through just one of its projects (Ramu Nickel-Cobalt Operation), where it has a relatively small stake, the company has a production capacity of around 800,000 pounds per annum.
The company was listed on the junior exchange in 2019, and thanks to the virtue of its timing, the stock has mostly gone up since inception (over 300% till April 2022).
8. Fortune Minerals Stock
Industry Niche: Development stage mining
Fortune Minerals is a fraction of what it used to be in its glory days. It’s a Canadian development stage mining company that is currently focused on one project (NICO), which holds reserves for multiple metals, including Cobalt.
It has rights on some other projects as well, and the financials are not as tightly tied to Cobalt as most other companies on this list.
Despite being a nano-cap penny stock, the growth potential of Fortune Minerals is quite subdued. It only showed one promising growth spurt in the last five years and grew 260% in under a year.
Though if you buy low and wait a while, you may get lucky with this stock and see higher growth.
9. Namibia Critical Metals Stock
Industry Niche: Exploration
As the name suggests, this mining company focuses primarily on Namibia. It has a portfolio of projects there that it has been developing since 2005.
It acts as a regional partner to mining companies and other metal-related businesses that wish to extract critical metals from Namibia.
The company is currently positioning itself as a major exploration partner for cobalt producers entering the region. And even though none of its active projects are focused on Cobalt, this may change in the coming years.
This prospective nano-cap cobalt stock has proven to be a very profitable cyclical growth stock. In the last five years alone, the stock has seen five major growth phases (appreciating 100% or more), the largest of which pushed the value up 800%.
10. Canada Silver Cobalt Works Stock
Industry Niche: Exploration and development
Canada Silver Cobalt’s primary focus is exploring and developing silver resources in Canada, and Cobalt is the major by-product.
It has multiple projects in place with decent inferred resource quantities. Even though silver is its primary production and the financials and the stock are more likely to sway with silver prices, the company already has started positioning itself in the cobalt space, thanks to its decent production capacity.
The penny stock hasn’t been above $1 per share since 2011. The benefit is high volatility and rapid growth potential.
So if you can buy low and wait, your chances of doubling your capital (at least) within three years are quite high (considering its history).
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Cobalt is just one secondary commodity/market tied to the EV boom. But it has strong demand even beyond batteries for EVs, and thanks to the cost and supply limitations, the future of this metal look quite promising.
It might even be a decent investment from an ESG perspective (at least environmental) as EVs are an important part of a green future, and Cobalt is an important part of EVs.
So the best cobalt stocks in Canada are an asset pool definitely worth considering. You can always look into the EV stocks in Canada as well to make your portfolio even greener.