Technology has changed our lives and the economy. Looking ahead, renewable energy will be a critically important part of the immediate future. Cobalt stands to play a key role in renewable energy and the world economy, that along with the little-known metal palladium. And that possibility really tantalizes investors.7
The market for cobalt is expanding rapidly, but it needs ethically sourced suppliers to sustain its upward momentum. In our review of mining companies and due diligence, one junior company, 21C Metals Inc. (CSE: BULL; OTC: DCNNF), stands out for seeking a way to bridge the gap between supply and demand. We urge readers to explore the emerging market for energy metals and 21C Metals’ unique approach to developing ethically sourced supplies of two leading components: Cobalt and Palladium.
Cobalt, and to a lesser degree, palladium are becoming key metals in the growing application of renewable battery technology.
Already, cobalt is in demand for the lithium-ion batteries that live in our phones and laptop computers. These batteries store solar and wind energy. Demand for the lithium-ion batteries is expected to increase as consumers seek green energy to power our beloved technological gadgets.8
Cobalt also figures heavily into the move toward electric vehicles, which are gaining favor with car buyers. Stephen Gardner wrote in Bloomberg on Nov. 21, 2018, that the number of electric vehicles in the world could grow from 3 million in 2017 to 130 million by 2030.9
In mid-2018, a AAA Survey quoted in Consumer Reports magazine as showing that 20% of Americans would consider purchasing an electric car. That was up from 15% a year earlier.10
While sales of electric cars speed up, the availability of two key components is slowing down. Supplies of cobalt and palladium are in jeopardy for different reasons. What’s the same, though, is each metal is key for a different component of motor vehicles. The cobalt is critical for the batteries that power these cars while the palladium is needed for the catalytic convertors.
Political tensions and human rights violations in Russia and Africa could make it difficult for car manufacturers to get their hands on the quantities of cobalt and palladium needed to meet the growing demand for electric vehicles.
The problems plaguing cobalt and battery metals
Difficulties in the Democratic Republic of Congo (DRC) – where about two thirds of the world’s cobalt is mined – jeopardize the supply. Political instability, corruption, and egregious human rights violations discourage companies from operating on the African continent. In recent years, the Congo has been the site of bloodshed and brutal political repression, according to numerous sources including Human Rights Watch.2
Multiple instances of security forces abducting and killing civilians have been documented. Examples exist from as recently as February 2019. The politically unstable, conflict-ridden Congo also has been linked to child labor and environmental issues.3
In addition, government-invoked taxes and royalties have artificially raised the price. Frank Holmes explained the problem in a Feb. 27, 2018 Forbes magazine article. For cobalt, taxes and royalties had raised the price by 180% at the times of Holmes’ article. It’s not a problem unique to the Congo. Many African countries have not managed their minerals well.4
As a result of all these factors, experts predict cobalt shortages and price increases, according to a Bloomberg New Energy Finance analysis from 2018.5 New mining operations could help alleviate the problem, but those take time to set up, meaning that the shortages could begin in the early 2020s, according to the analysis.
In the meantime, tension simmering between the U.S. and Russia have some concerned that Russia will restrict the supply of palladium.6 While politicians sort out their issues, palladium demand is rising. Many watching the market believe palladium prices could soar nearly as high as gold prices before it’s over.
Finding Honest Solutions to Answer the Growing Demand
Vancouver-based 21C Metals Inc. (CSE: BULL; OTC: DCNNF) is one of the few junior companies aggressively addressing the situation facing the EV market. Two company-produced presentations concisely and accurately explain the demand for electric-powered vehicles, as well as the shortages that exist in both markets.
21C Metals has shifted into high gear in 2019 looking to rebrand (the company was formerly named Declan Mining) and develop all new projects that pair perfectly with its existing cobalt / copper interests.
To that end, in February 2019, 21C acquired interest in the East Bull property nearly Sudbury, Ontario. The property has been tested recently and all permits are in place to begin exploring for palladium. Drilling has previously been conducted on the property, with a 43-101 compliant resource estimate of 11.1m tonnes of ore grading at 1.46 g/T PdEq. That equates to 523,000 ounces palladium equivalent. Palladium currently trades at roughly $1519.00 US per ounce.
The Company’s core asset prior to the acquisition of the East Bull was its copper / cobalt project, located on the border of the Czech Republic and Germany. Geologists and other recognized world experts believe the in the Tisova Property will product significant amounts of copper and cobalt. Between 1959 and 1992, a total of 25,985 meters of surface drilling was completed as well as a total of 14,299 meters of underground drilling. Grades of 0.69 percent cobalt, 17.1 percent copper, 3.7 g/t gold and 178 g/t silver have been recovered at Tisova.
21C Metals has recently completed its first exploration program on the property. The program included detailed 3D resistivity and chargeability survey, a magnetic survey, structural mapping, 3D modelling and sampling of known showings.
The area has long been mined, making logistics straightforward. The regulatory climate is favorable for mining, but more importantly, 21C Metals’ project is in the heart of an ethical mining district with excellent distribution to several EV plants in central Europe.
Experts in investments have taken notice. The Investing News Network’s battery metals channel describes the 21C Metals property as “ … specialize(ing) in the acquisition and development of copper/cobalt and palladium projects.”14
In the Investing News Network profile of the company, the management team’s experience is also praised. As the site says, “21C’s management team has an extensive background in financing publicly- and privately-traded mining and exploration companies. Their experience is complimented by their advisors and board members all of whom have extensive experience in mining and exploration. Several of the members of 21C’s board were involved in the successful exit of US Cobalt, in an all-share deal valuing USCO at $150 million. USCO and its Idaho cobalt property were sold to First Cobalt in 2018.”15
All this points to an aggressive mining exploration company seeking to take a leading role as an energy metals player. It appears that the timing is ripe.
21C Metals Inc. is a mining exploration company focused on the acquisition and development of palladium and copper/cobalt. Through its wholly-owned subsidiary, East Bull Resources Inc. has entered into an option agreement (the “Agreement”) with Pavey Ark Minerals Inc. to acquire a 100% interest in the East Bull palladium property in the Sudbury Mining Division, in Ontario, Canada. In late 2018, 21C Metals acquired all the shares of both Tisova Pty Ltd. and TGER Pty Ltd., the previous owners of 327-hectares of mineral concessions in the Czech Republic and 7,710-hectares of mineral concessions in Germany known as the Tisova Copper-Cobalt project.
Advanced Palladium, Cobalt and Copper Companies
These companies are in the palladium and cobalt mining business and have seen considerable rise in value as the demand for these vital energy metals have come into play over the last few years. They represent some of the best mining opportunities on the current horizon, but are not pure energy metal plays.
Market Cap: $20.4 billion
Glencore plc engages in the production, refinement, processing, storage, transport, and marketing of commodities worldwide. Glencore is the world’s largest miner of cobalt, responsible for some 25% of the planet’s total output in 2017 — and that was before it embarked on expansion plans that would triple production in the three-year period ending 2019.
Wheaton Precious Metals
Market Cap: $9.887 billion
Wheaton Precious Metals Corp. operates as a silver and gold streaming company in Canada and internationally. It has streaming agreements for 20 operating mines and 9 development stage projects. The company was formerly known as Silver Wheaton Corp. and changed its name to Wheaton Precious Metals Corp. in May 2017 and is headquartered in Vancouver, Canada.
Anglo American PLC.
Market Cap: $27.61 billion
The assets of Anglo-American Platinum Limited (Amplats) consist of 11 managed mines, as well as a number of joint-venture mines and associated mines across South Africa and in Zimbabwe. Most of the ore from these mines are processed at one of Amplats’ 14 own concentrators before being smelted at one of the company’s three refineries in South Africa.
Cobalt and Palladium Keep Gaining Ground
In a November 2018 article, Gardner wrote that the cobalt shortage will present car companies with challenges in producing enough electric vehicles to meet that demand. If car companies need to look for alternative materials, the transition to electric-powered cars will slow.11
Catalytic converters in electric and hybrid vehicles also require higher quantities of palladium than traditional cars did, making the crisis even more pronounced.12
It all adds up to significant cost increases. According to the Mineral Commodity Summaries 2018 written by the U.S. Department of the Interior and the U.S. Geological Survey, average annual prices of cobalt more than doubled in 2017. The report attributes the price surge to demand from consumers and the limited availability of cobalt. The report also predicts that the cobalt supply will increase at a slower rate than global consumption.13
Look for Key Moves in Energy Metals and Companies Supplying Them
Major analysts from some of the largest mining and capital groups seem to agree strongly that:
- Cobalt will move to supply deficit during 2019
- Palladium remain in supply deficit for at least three years
- The key driver for both metals is growth of the electric/hybrid vehicle market and strengthening global emissions regulations
Investors will do well to take notice of the growing demand for electric vehicles coupled with the potential for limited supplies. The batteries that power these greener vehicles also power the electronic devices we all rely on every day at work, school, and play.
In early 2019, 21C Metals positioned itself to become a leading-edge supplier of the materials to power these devices. The Investing News Network cites 21C Metals strengths as:
- Providing an ethically-sourced option for cobalt
- Extensive exploration history at its Tisova property.
- The Tisova property strategically located within 150 kilometers of several EV battery plants.
- Already, cobalt, copper, gold, and silver have been found at the property.
- Between 1959 and 1973, it’s believed that as much as 560,000 tons of copper ore came from the property.
- Members of the management team, advisory board and board of directors are strong and experienced in the industry.
Few companies are positioning to source ethical cobalt supplies, and even fewer are looking at adding key metals like palladium in order to enhance their value as a pure “energy metals” play. This makes 21C Metals a unique offering that speculators should put on their watch list now and follow with the news from the company as it emerges at http://21cmetals.com/news/.
USA News Group
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