4 Commodities Ready To Shock Investors – #4: Demand Surging, Supply Uncertain for Cobalt
Submitted by EnergyTechStocks.com
As if the oil price shock that has thrown the world into turmoil isn’t bad enough, there’s reason to believe at least four more commodity price shocks may be headed straight for investors’ portfolios.
Last up: cobalt, a commodity that attracts surprisingly little media attention, given how uncertain its supply is in the face of surging demand.
Like water, cobalt isn’t traded on an exchange. But the effects of its surging prices can be felt everywhere. Cobalt is found in cell phones, laptops and car batteries. It’s also an essential component of artificial joints in people.
While the price of cobalt is up nearly 60% over the last 12 months, and now reportedly stands at a 30-year high, an even greater price shock could occur at any moment. That’s because, as recently noted on the web site of the respected magazine Foreign Policy, half of all cobalt reserves are in the “volatile” Democratic Republic of Congo.
The unsettled state of the country’s mining contracts with foreign firms including BHP Billiton Ltd. and Freeport-McMorRan Copper & Gold Inc. presumably could lead to work slowdowns or shutdowns at any time. The government wants them renegotiated, having found the contracts to be unfair to the state. Last week Bloomberg News reported that former U.S. President Jimmy Carter’s human rights organization is opposed to any renegotiation unless the rights of miners are taken into greater consideration, further muddying the outlook.
Meanwhile, demand for cobalt continues to surge, with “tech-hungry China’s cobalt consumption expected to climb at least 7%” per year through 2009, according to Foreign Policy.
The takeaway for investors here is that some companies might possibly do well with their cobalt recycling technology. Mitsui Mining & Smelting Co. Ltd. and Sumitomo Metal Mining Co. Ltd., both of which trade in Tokyo, reportedly have developed technology that can recover nearly all of the cobalt in nickel metal-hydride (NiMH) batteries.
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