By 2022 we will need another additional 35,000tpa and more cobalt juniors. From 2021 onward my model suggests we will need about 35,000 tonnes pa of new cobalt supply, and hence at least 4-6 new projects of 5,000 tonnes pa.Current producers will likely have difficulty expanding supply beyond current planned supply forecasts, especially given cobalt is mostly a by-product of copper and nickel mining.My cobalt demand v supply model suggests that between now and 2020 new supply from Glencore ( OTCPK:GLCNF)/Katanga Mining ( OTCPK:KATFF) should go close to bringing the cobalt market back into balance from the current deficit.Cobalt demand to increase 3.7 fold from 122ktpa in 2016 to 453ktpa in 2026 (assumes only 12kgs of cobalt per electric car).
My model forecasts a 20 fold increase in the number of electric cars produced per annum from a penetration rate of 0.88% end 2016 to 18% by end 2026. Cobalt demand remains strong due to the electric vehicle boom.The basis for my forecast is the following:
That would mean investors have a chance of earning multi-bagger returns, given all but one of these companies currently have market caps below AUD 300m, and some below AUD 100m. These companies have massive potential to each become ~AUD3b (or CAD 3b) market caps within the next 3-5 years. My view is there are about 6 global junior cobalt miners (developers) that will be able to produce ~5,000 tonnes pa of cobalt by 2021/22, five are in Australia and one is in Canada. A plausible scenario for the top cobalt juniors/developers that can reach 5,000tpa production by 2021/2022
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