Tuesday, June 12, 2018

Batteries: VALE Sells Forward $690 Million of Cobalt Production as the Market Rolls Over (VALE; KBLT)

We'll have more later this week but for now, Reuters via Investing.com, June 11:
Brazil's Vale on Monday unveiled a $690 million financing to expand a Canadian nickel mine, agreeing to sell unmined cobalt from Voisey's Bay as a booming electric vehicle market propels demand for the critical battery ingredient.

Vale said it would sell cobalt mined after 2021 as a by-product from the mine in Canada's northern Labrador region to Wheaton Precious Metals Corp WPM.TO and Cobalt 27 Capital Corp KBLT.V in a so-called stream financing deal.

The transaction is the world's biggest cobalt stream to date, a form of alternative financing that allows an investor to make an upfront payment in exchange for future production at a discounted price.
From an obscure minor metal and salt probably best known for dyeing porcelain blue, cobalt has stormed to the forefront of the mining industry due to its importance in prolonging battery life and providing stability to rechargeable batteries used in electric vehicles and electronics.
Cobalt prices CBD3 have soared fourfold over the past two years to close to $100,000 a tonne on expectations of demand spiking for limited supply that is mostly mined as a by-product of copper mines in Democratic Republic of Congo, a perpetually politically unstable country.

Reuters reported in January that Vale was seeking to sell un-mined cobalt worth hundreds of millions of dollars from Voisey's Bay as expectations mount that the metal is headed for a shortage. unlocking the value of the cobalt by-product at Voisey's Bay through this streaming deal, Vale has found a way to resume substantive work on the underground project," Eduardo Bartolomeo, Vale's base metals executive officer, said in a statement....MORE
On the LME prices are rolling over:

Previously on the financialization of cobalt: