Top 5 Cobalt Stocks to Buy in 2022

Cobalt is a metallic chemical element found in the earth’s crust. While cobalt is nothing new, it will be more in-demand in the coming decades. Its primary use is in lithium-ion batteries, which are used in electric vehicles (EVs). And as EV production grows, so, too, will lithium-ion batteries. Thus, cobalt output should also increase in the years ahead.

With an increase in demand comes opportunity, both for companies and investors. This list will take a look at some of the best cobalt stocks to buy today as the EV race continues to heat up.

Top 5 Cobalt Stocks to Add to Your Portfolio

Cobalt production will need to scale up to meet the growing demand in EVs. These five cobalt mining stocks are already leading the way:

• Glencore (OTC: GLNCY)
• Vale (NYSE: VALE)
• Wheaton Precious Metal Corp. (NYSE: WPM)
• Cobalt Stock #4
• Cobalt Stock #5

Let’s take a closer look at each of these stocks. You’ll see why they are some of the top cobalt shares on the market today.

Glencore

Glencore, is an obvious choice here as it is one of the largest producers of cobalt in the world. This makes it an excellent cobalt stock. The Anglo-Swiss multinational produced 20.7 kt of cobalt across Q1 and Q2 2022. That accounts for significant portion of global production. Most of this production is a by-product of its Katanga and Mutanda copper mines.

According to Glencore’s 2021 annual report, its revenue for the year was $203 billion and its net income was just under $5 billion. Which is a strong recovery from the net loss of $1.9 billion suffered in 2020. This will certainly be one of the top cobalt mining companies to watch if it can maintain its revenue growth.

Vale

Brazilian multinational mining company Vale S.A. is the largest producer of iron ore and nickel in the world. While those are the biggest parts of its business, it is also engaged in the production of manganese, copper, kaolin, and yes, cobalt. In 2021, Vale produced over 2,500 metric tons of Cobalt. Its cobalt is a by-product of its nickel production at mines in Sudbury, Thompson and Voisey’s Bay in Canada as well as other areas.

Vale is also one of the most valuable companies in Latin America. Its revenue in 2021 topped $54 billion with around $22 billion in net income. Currently, only a small percentage of Vale’s revenue comes from cobalt, but that may increase as cobalt demand increases worldwide, making it a top cobalt stock to watch.

Wheaton Precious Metals

Vancouver, Canada-based Wheaton Precious Metals is another non-direct cobalt stock. It actually specializes in gold and silver.

Although Wheaton has not produced much cobalt in the past, it recently purchased cobalt production from Vale. As a result, it will claim 42.4% of the cobalt production of the Voisey’s Bay mine in Canada. This will continue until 31 million pounds of cobalt, and then it will receive 21.2% of the production thereafter.

Wheaton’s revenue in 2021 was $1.2 billion with a net income of $755 million. Currently, it has 14 “streams,” which allow it to produce various metals. It also has over 20 operating mines and several development projects currently in the works. This up-and-comer could be a top cobalt mining stock to watch going forward.

Why is Cobalt So In-Demand?

As mentioned above, cobalt is seeing increasing demand because of its use in lithium-ion batteries. These batteries are used in electric vehicles. But, of course, there are other metals, so what makes cobalt special?

It’s special because it helps increase the energy density of battery packs. This is important in EVs because, without sufficient energy density, batteries get too heavy and aren’t feasible to use in consumer vehicles.

Energy density has long been a problem with batteries. For all its problems, gasoline is about 100 times more energy-dense than a standard lithium-ion battery. Thus, increasing the energy density of batteries is a must. EVs are more energy-efficient than internal combustion engines. Still, manufacturers have to make up for the lower energy density of batteries.

Are There Alternatives to Cobalt?

Keep in mind that while cobalt is expected to grow in production, that isn’t entirely certain. And this could pose a risk for these top cobalt mining stocks. As mentioned earlier, the largest source of cobalt globally is the DRC. That has led some to raise questions about potential human rights violations around cobalt mining. Cobalt also happens to be a toxic metal, further complicating things.

However, researchers are working to not only improve the energy density of Li-ion batteries but to reduce or even drop cobalt. For instance, a team of researchers at the University of Texas recently tested a new cathode chemistry that is cobalt-free.

The chemistry used a nickel-rich cathode and an experimental lithium-ion pouch cell. Energy density was slightly reduced, but charge times were not. Importantly, the battery maintained its life well over 1,000 charge cycles – another purpose cobalt often serves.

Other projects, such as cobalt-free solid-state batteries, are also promising. While this is all early-stage research, for now, it does have the potential to change how lithium-ion batteries are made and the future demand for cobalt.

Cobalt Mining Stocks: The Bottom Line

At the moment, the future looks bright for cobalt, with demand expected to double by 2030. Countries around the world have set ambitious targets to either increase electric vehicle sales or phase out internal combustion engine vehicles entirely. Cobalt is also rare, meaning those that own the means of production are now well-positioned for this spike in demand going forward.

However, that is not to say there aren’t risks for cobalt. Questions about its toxicity and its source in central Africa have raised concerns about an increase in production. While cobalt is key to battery production today, research is ongoing that aims to reduce or even eliminate its use in batteries. Cobalt production is likely to increase for the next several years, but whether it will continue to grow forever is less certain.