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 June 03, 2016
Jon Hykawy examines the case for the celebrated metal and its overlooked partner
    Publisher: Resource Clips
    Author: Greg Klein

 
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Resource Clips - Friday, June 3, 2016

Looking at lithium, cobalt too

Under a $2.65-billion deal expected to close in Q4, China Molybdenum gets
majority interest in a DRC mine that's "the world's premier cobalt producer."

Even with his own "conservative" forecasts, Jon Hykawy sees a strong case for lithium. But li-ion batteries call for other commodities too, and cobalt stands out as a critical material facing uncertain supply. Hykawy, president of the consulting firm Stormcrow Capital, sees markets through a number of perspectives. That comes from being a 14-year Bay Street veteran, a physicist who conducted post-doctoral work in nuclear power, and a research scientist who's scrutinized the world of rechargeable batteries and fuel cells, as well as wind and solar energy.

Excerpts from the full article:

The lithium battery was developed in the late '70s, it really became ubiquitous in the '90s, and now you're seeing the fruit of four decades of research. Any replacement would have to go through the same degree of scrutiny. They have to be confident that battery is safe, especially, especially if they plan to sell that device in the United States, the land of the lawyer and the home of the litigious."

Additionally, li-ion has "such a lengthy head start, such advantages in scale and cost, that newcomers couldn't compete in price."

Looking at graphite, he expects rising demand from batteries "but nothing particularly wondrous. It really comes down to a cheap supply, and likely the cheapest supply is going to come out of China. There are juniors trying to bring alternate sources to the market, but they'll have to compete with Chinese pricing."

Then there's cobalt.

"It's a very important part of the battery, it helps increase the amount of energy the battery can contain," Hykawy points out. "The problem is, even with my conservative growth figures for battery use, by 2025 all the cobalt mined in the world today would be required for the battery industry. There wouldn't be anything left for steel."


For the link to the original article, please click here.

 
 May 20, 2016
Petersen critiques Tesla's cobalt, lithium and graphite disclosure for EV batteries
    Publisher: InvestorIntel
    Author: John Petersen

 
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InvestorIntel.com May 20, 2016
Petersen critiques Tesla's cobalt, lithium and graphite disclosure for EV batteries

It's been a fascinating week as one of my readers forwarded copies of a May 12 Commodities Comment from Macquarie Wealth Management that focused on China's recent efforts to shore up its cobalt supply chains and a May 16 report from Morgan Stanley that focused on expected growth in global demand for lithium, graphite, cobalt, and copper from the electric vehicle (EV) and lithium-ion battery sectors.

After studying both reports in some detail, I'm amazed at the human mind's capacity to embrace the alternative and inconsistent assumptions that, on the one hand, global demand for EVs and lithium-ion batteries can soar without, on the other, giving rise to the supply chain challenges I refer to as the "Cobalt Cliff."

Both reports have the look, feel and smell of hurried and half-hearted attempts to pad the due diligence files for Tesla Motors, which is conducting a $2 billion public offering but has not, in my opinion, fully and fairly disclosed the sources and availability of raw materials and related supply chain risks as required by SEC regulations. Instead, all we have is a generic check-box disclosure that:

"We use various raw materials in our business including aluminum, steel, cobalt, nickel and copper. The prices for these raw materials fluctuate depending on market conditions and global demand for these materials. We believe that we have adequate supplies or sources of availability of the raw materials necessary to meet our manufacturing and supply requirements."

I don't see how any company that has evaluated cobalt supply and demand dynamics and plans to become the biggest cobalt user on the planet could possibly conclude they have "adequate supplies or sources of availability" in the absence of iron clad long-term off-take agreements. I also chuckle at the absence of lithium and graphite from the list.

To read more, Click here for the full article

 
 May 17, 2016
COBALT: The Bass Player in the Tesla Band
    Publisher: InvestorIntel
    Author: Peter Clausi

 
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InvestorIntel.com May 17, 2016
COBALT: The Bass Player in the Tesla

Numbers are numbers and facts are facts: we make serious money when we figure out how those statistics could affect the future.

For the past year, we've been haranguing about the global shortage of cobalt. We're not alone in this. See John Petersen's series of beautifully analytical data-driven articles and Chris Ecclestone's thesis. The key facts you need to know:

1. roughly 97% of the world's supply of cobalt is produced as a by-product of nickel or copper production. Fact;
2. the spot prices for copper and nickel have plummeted to and have stayed at levels that make many deposits uneconomic. Fact;
3. as a result of these economics, the owners of some of those copper and nickel mines are closing the mines, putting those mines on care and maintenance in a Hail Mary that someday the commodity price will recover enough to someday make these mines economic. Fact;
4. if those mines are shut in, the supply of cobalt will fall in tandem. Fact;
5. geographically, roughly 53% of the world's supply of cobalt comes from nickel and copper mining in Conflict Africa. This supply is at risk on the best of days. Even worse, there are ethical concerns involving child labour. Read this article from Wired magazine, and understand why there is a global movement to impose an ethical supply chain on cobalt out of that area. Fact;
6. the experts who specialize in this area are anticipating a 10 -- 15% decrease in cobalt supply in 2016, resulting from a combination of ethical controls on the supply chain and mines being shut in. Fact;
7. every battery used in an electrically powered vehicle needs cobalt. Fact;
8. Tesla says it will punch out 500,000 electrically powered vehicles by 2018, each one of which will need an electric battery. Actually, each car will use many small electric batteries, each one containing lithium, graphite and cobalt. John Petersen's work, supported by others, indicates that roughly 7,000 tonnes of additional cobalt will be needed to create the batteries for these vehicles. That number could be as high as 12,000 tonnes. Fact.

To read more, Click here for the full article

 
 May 05, 2016
Formation Metals (TSX: FCO) has announced a brokered private placement with Dundee Securities
    Publisher: InvestmentPitch.com

 
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InvestmentPitch.com - May 5, 2016

Formation Metals (TSX: FCO) has announced a brokered private placement with Dundee Securities

Click on the image above for the full interview.
 
 May 04, 2016
Tesla announces new Model 3 production plans, guidance of 500,000 cars/yr by 2018, instead of 2020
    Publisher: electrec.coc
    Author: Fred Lambert

 
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electrek.co - May 4, 2016
Tesla announces new Model 3 production plans, guidance of 500,000 cars/yr by 2018, instead of 2020

Tesla's stock price (TSLA) surged by 7% in after-hour trading after the release of its first quarter 2016 financial results. The reason for the surge wasn't as much about its earnings, but because of its new Build Plan.

The automaker announced that it is advancing its 500,000 units per year guidance by two years to 2018. Tesla says that the new production plan is in reaction to the over 400,000 Model 3 reservations it received since the unveiling last month.

While it's in reaction to the demand for the Model 3, the 500,000 units per year will also account for the production of Model S and X, but the Model 3 will represent the majority of its production capacity.

To read more, Click here for the full article

 
 May 02, 2016
Farquharson confirms coming cobalt deficit, outlines Formation's mine timeline
    Publisher: InvestorIntel.com

 
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InvestorIntel.com.com - May 2, 2016

Tracy Weslowsky Interviews Paul Farquharson, President & CEO of Formation Metals on their Advanced Idaho Cobalt Project

Click on the image above for the full interview.
 
 April 15, 2016
Cheap Lithium-ion Batteries for EVs vs. The Cobalt Cliff
    Publisher: InvestorIntel
    Author: John Peterson

 
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InvestorIntel.com - April 15, 2016
Cheap Lithium-ion Batteries for EVs vs. The Cobalt Cliff

Since early March I've written five articles that focus on supply and demand dynamics in the cobalt mining sector and explain why I believe the lithium-ion battery industry is facing a raw materials shortage of epic proportions. Today I'll drill down into market dynamics within the lithium-ion battery industry and explain why I believe cheap lithium-ion batteries for electric vehicles (EVs) will be the first casualties of the Cobalt Cliff.

I want to begin with an explanation that I've derived most of the numbers in this article by digitizing graphs from Avicenne Energy's presentation at AABC 2016 in Mainz, Germany, a process that's inherently imprecise. While I believe my estimates are close enough to offer a good overview, digitization is dependent on the visual acuity of the human being running the software and like most humans I'm imperfect on my best days.

Based on a careful analysis of Avicenne's graphs I've estimated that in 2015 the lithium-ion battery industry manufactured cells with 61,500 MWh of capacity and generated $17.2 billion in revenue, which works out to an industry-wide average revenue of $280 per kWh at the cell level. Total battery sales to automakers were roughly 15,000 MWh and total revenue from those sales was roughly $5.4 billion, which works out to an average revenue of $360 per kWh. That average will seem high to readers who are accustomed to an endless stream of EV hucksters' happy-talk about $150 per kWh batteries, but it's pretty accurate when you factor in the more costly cells used in PHEVs and HEVs.

To read more, Click here for the full article

 
 April 12, 2016
Ecclestone on the "very big" cobalt niche
    Publisher: Investor Intel
    Author: Christopher Ecclestone

 
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InvestorIntel.com - April 12, 2016
Excerpts from the InvestorIntel Article

Ecclestone on the "very big" cobalt niche

The "Blue Metal" is sometimes the term used to describe cobalt. While Cobalt has had the blues in the recent past its worst days seem behind it. Like many other specialty metals it has a poor supply prognosis as its tailwind at the current time and for the foreseeable future.

Overall, cobalt demand is projected to grow from 87,383 tonnes to 113,725 tonnes between 2014 and 2018. Cobalt supply is projected to grow from 91,577 tonnes to 100,778 tonnes over this same time frame. Rechargeable batteries and superalloys comprise 46% and 18% respectively of the total refined cobalt demand. It's important to note that most rechargeable battery users require cobalt in chemical form (sulfate and oxide), while superalloy manufacturers require metal.

[Later in the article, they state:]

Formation Metals Inc. (TSXV: FCO) is ahead of the pack amongst the juniors. This company has the advantage, strategically, that its project is located at Salmon in Idaho and thus could potentially provide the US with an onshore source of Cobalt.

To read more, Click here for the full article

 
 March 30, 2016
Tech metal update: blackmarket cobalt, flake graphite caution, and tin's energy future
    Publisher: InvestorIntel
    Author: Robin Bromby

 
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InvestorIntel.com - March 30, 2016
Excerpts from the InvestorIntel Article

Tech metal update: blackmarket cobalt, flake graphite caution, and tin's energy future

Here are two facts to know about the cobalt business. One, that up to 35% of the cobalt produced in the world comes from mining operations that are losing money (mainly from the nickel they also produce). Two, that some 10,500 tonnes a year (of the total 110,000 tonnes mined last year) is pulled out of the ground by artisanal miners in the Democratic Republic of Congo.

[Later in the article, they state:]

The good news for those companies, such as Formation Metals (TSX:FCO) in North America and Broken Hill Prospecting (ASX:BPL) in New South Wales, is that CRU estimates that increased government restrictions, increased regulation by end-user companies and variations in metal prices that inhibit buying by international traders, could see the output by Congolese artisanal miners decrease by up to 30% by 2020

To read more, Click here for the full article

 
 March 23, 2016
China Co producers investigate supply chain
    Publisher: ArgusMedia.com

 
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Argusmedia.com - March 23, 2016
Excerpts from the Argus Media Article

China Co producers investigate supply chain

Beijing, 23 March (Argus) --- China's cobalt producers have been asked to provide evidence to show that their products and raw material supply chains are free of child labour.

This comes after a report from human rights campaigner Amnesty International that China's cobalt producer Huayou Cobalt bought cobalt concentrate from mines in the Democratic Republic of Congo that use child labour in dangerous working conditions.

Huayou Cobalt is still investigating this issue and trying to track which parcel of its concentrate imports was bought from the mines.

China's trade chamber CCCMC has taken the lead in assisting cobalt producers to identify potential liability risks in the supply chain. The chamber has also called on global cobalt suppliers to be serious about their roles and responsibilities in the cobalt supply chain and carry out due diligence.

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