Anthony Milewski: Why Cobalt Still Has a Bright Future | Summary and Q&A

TL;DR

The adoption of electric vehicles is accelerating, but the investor community's understanding of the impact on cobalt supply and the risk of human rights abuses in the Democratic Republic of Congo (DRC) is limited.

Key Insights

• 🖤 The acceleration of electric vehicle adoption is creating excitement in the industry, but the investor community's understanding of its impact on cobalt supply and human rights issues is lacking.
• 📽️ The supply of cobalt is expected to increase with upcoming projects, reducing the risk of a supply-demand imbalance.
• 🪡 Concentration of cobalt production in the DRC poses a risk to the supply chain, emphasizing the need for responsible sourcing practices.
• 🚙 The NMC battery chemistry is likely to be the dominant technology for electric vehicles in the foreseeable future, with potential advancements in the chemistry but not significant shifts.
• ♻️ Cobalt recycling is an important part of the value chain, but the supply of recycled batteries is not yet sufficient to make a significant impact until electric vehicle penetration rates increase.
• 🍉 Long-term agreements between battery makers, automobile manufacturers, and cobalt producers are expected to drive market sentiment and impact prices in the second half of the year.
• 🎏 Cobalt 27 has experienced a transformative year, becoming a streaming company with streams on two world-class assets in the nickel-cobalt market.

Transcript

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Questions & Answers

Q: What are the main takeaways from the lithium supply and markets conference?

The conference highlighted the enthusiasm surrounding the acceleration of electric vehicle adoption but pointed out that the investor community's representation was lacking. This raises questions about their understanding of the impact on cobalt supply and the future of the industry.

Q: How can the supply side keep up with the increasing demand for cobalt?

Projects in the pipeline, such as Katanga and RTR in the DRC and the Boise Bay underground mine, will bring additional cobalt supply to the market. As long as the price remains high enough to incentivize these mines, cobalt supply should not be a bottleneck.

Q: What are the risks associated with the concentration of cobalt production in the DRC?

The DRC currently produces around 65% of the world's cobalt, and this concentration is expected to increase as new projects come online. The key risk is the concentration of supply in a politically and socially difficult region, which may pose challenges in the future.

Q: How can the supply chain ensure the cobalt it sources is free of human rights abuses?

Some companies, like Cobalt 27, have chosen not to invest in the DRC to avoid the risk of supporting human rights abuses. However, for the automobile industry, which cannot completely avoid the DRC, it is crucial to establish processes to monitor the cobalt supply chain and ensure responsible sourcing.

Summary & Key Takeaways

• The lithium supply and markets conference highlighted the excitement around the acceleration of electric vehicle adoption, with the entire value chain represented except for the investor community.

• There are upcoming projects that will bring cobalt supply into the market, reducing the risk of a supply-demand imbalance.

• The DRC will continue to be the main supplier of cobalt, but concentration in the country poses a risk to the supply chain and raises concerns about human rights abuses.