It’s no secret that cobalt has been trending over the last year, with cobalt mining companies trading up across the board. Large manufacturers of battery powered products from cell phone producers like Apple (AAPL) and Google (GOOG) to automotive manufacturers like Tesla (TSLA) and General Motors (GM) are in an interesting situation:
They need more of this finite resource…and a lot of it! The lack of supply has driven large manufacturers to secure supply directly with cobalt miners, often providing strategic capital, relationships, and helping to de-risk exploration players.
Apple is already going directly to cobalt mining companies. Concerns about the rising prices of cobalt has been causing industrial buyers to seek longer-term contracts to lock in supplies. If Apple or one of its competitors was unable to directly or indirectly access cobalt, it would be at a major disadvantage — no more batteries to power their products. Hence, cobalt has gone mainstream as an investment opportunity, despite its substantial rise in price over the years.
Pacific Rim Cobalt (PCRCF) Strategically Located Proximal To World’s Largest Cobalt Market
Pacific Rim Cobalt’s (PCRCF) Cyclops cobalt project is strategically located on the northern coast of Papua Province, Indonesia, which provides direct shipping access to China, the world’s largest consumer of cobalt.
In fact, the region produced 32% of the world’s nickel from lateritic ore in 2013. Pacific Rim Cobalt (PCRCF) is perfectly positioned in a region with abundant historical cobalt resources strategically located near China, the world’s largest cobalt buyer.
With all the hype surrounding electric vehicles, especially the lithium-ion batteries that power them it’s easy to get the misconception that these batteries are made mostly of lithium.
Limited Supply, Growing Demand
The truth is that lithium batteries only have a tiny percentage of lithium. The main metal in these powerhouses is actually cobalt. So, while everyone’s been in an uproar over lithium investments, cobalt has gone mostly under the radar — even while it’s a critical part of those batteries… and while demand has been growing steadily.
Just to put that into perspective, each Tesla Powerwall 2 has 7 kg of cobalt in it. And each Model S P90D battery has 22.5 kg of the metal. That might not seem like a lot, but when you multiply those figures by the number of Powerwalls and P90D batteries that one Gigafactory can produce, the amounts become staggering.
To meet Musk’s prediction of producing enough power cells for the equivalent of 500,000 cars by 2020, one Gigafactory will need over 11,000 tons of cobalt. That’s just for one company, Tesla.
Pacific Rim Cobalt (PCRCF) is pursuing aggressive exploration of its Cyclops project. Infrastructure is already in place, including airport, roads, and ocean port, which will allow Pacific Rim Cobalt to aggressively pursue off-take agreements and strategic partners looking to secure cobalt pending results of ongoing exploration.
And It Has Already Begun!
Pacific Rim Cobalt (PCRCF) has begun to mobilize two drill rigs to initiate a detailed exploration program at its 5,000-hectare TNM project, Papua Province, Indonesia.
Drilling will consist of shallow holes averaging 35 meters vertical depth to test historical results in respect of both the upper limonite zone as well as the lower saprolite zone. Pacific Rim has also begun to conduct topographical studies of the property to further hone exploration activities1.
Best of all, a historical estimate being referenced as a guide for Pacific Rim Cobalt’s 2018 work program indicates mineralization from surface with an estimated potential of 37 million tonnes of 0.11% cobalt and 1.31% nickel at a 0.8% nickel cut-off grade1. The company has also developed and instituted an ongoing program to identify and evaluate other Indonesian cobalt opportunities to enhance its position in the sector and is currently carrying out due diligence on a number of projects of strategic interest within the region, based on recent press.
China To Become A Global “Powerhouse”
China is now pushing for an aggressive California-style Zero Emission Vehicle program: The country, home to the world’s largest auto market, is working on a plan to ban the production and sale of vehicles powered solely by fossil fuels. Given a 1% electric vehicle adoption rate in China today, that target would equate to a 12x increase in the number of electric cars to be sold in China by the end of the decade.
Chinese-owned Volvo (VOLAF) announced in 2017 that every car it makes from 2019 onward will have an electric motor. Last year, China accounted for more than 40% of the 753,000 electric vehicles sold worldwide, according to the International Energy Agency. That’s more than twice as many as the number sold in the U.S. Furthermore, the Chinese government wants 5 million electric cars on the country’s roads by 2020.
…And Pacific Rim Cobalt (PCRCF) is well positioned to take full advantage. The Cyclops Project’s location in Indonesia is within a region that is reported to contain 1,168 billion tons of (22 million tons of Nickel) reserves and 3,565 billion tons (52.2 million tons of Nickel) of resources! The best part: Pacific Rim Cobalt’s project area has been explored since early 1950’s to 2012 – Majority of work completed by PT. Pacific Nikkel1.
According to Bloomberg, “China is leaving the West behind in the race for electric-car raw materials. China is first out of the blocks in the global race to secure raw material supplies critical for the batteries that will power the electric vehicles of the future.”
Pacific Rim Cobalt (PCRCF) could be in one of the most unique situations; with a pre-worked project area1 located proximal to a country projected to attain the highest near-term global cobalt demand! But what’s more is thatPacific Rim Cobalt (PCRCF) has gone one step further to potentially secure a strong foothold within this market. Pacific Rim has officially opened a business development office in Shanghai.
Demand From Investors Continues To Push Extreme Interest In China
China, struggling with alarming pollution levels in major cities, is aggressively pushing plug-in vehicles and has poured in tens of billions of yuan in investment, research funding and subsidies, drawing many new automakers to launch projects.
Strict quotas for electric and hybrid cars are set to come into effect next year in China, home to the world’s biggest auto market, in line with Beijing’s efforts to make the country a world leader in new-energy vehicles and related technologies.
And now Chinese investors are starting to get a taste for alternative energy in a big way! Earlier this year China’s securities regulator has approved the 13.1 billion yuan ($1.97 billion) initial public offering of Chinese battery giant Contemporary Amperex Technology Co Ltd.
Contemporary Amperex said the funds from the listing on the Shenzhen will help drive the company’s expansion at a time when demand for electric car batteries is expected to soar! With competition heating up in the East, growth and further demand from companies like Tesla in the west could create a huge opportunity for any company related to the electric vehicle boom…and Cobalt is in the sights of investors.
Government Regulation Creating Short & Long Term Cobalt Opportunity
Even though cobalt miners & the industry at large could have their hands full for a while, India, France, Britain, Norway, Germany and many others want to ditch gas and diesel cars in favor of cleaner vehicles:
India: The government said earlier this year that every vehicle sold in the country should be powered by electricity by 2030.
Britain: The U.K. said in July that it would ban sales of new gasoline and diesel cars starting in 2040 as part of a bid to clean up the country’s air.
France: The government says that it wants to end sales of gas and diesel-powered vehicles by 2040 as it fights global warming.
Germany: Angela Merkel, who is seeking a fourth term as chancellor, was asked if it would make sense for Germany to set a deadline to end sales of cars fitted only with gas or diesel engines. “I cannot name an exact year yet, but the approach is right because if we quickly invest in more charging infrastructure and technology for electric cars, a general changeover will be structurally possible,” she told weekly tabloid Super Illu.
Austria, Denmark, Ireland, Japan, the Netherlands, Portugal, Korea and Spain have set official targets for electric car sale
Markets Responding To Cobalt Demand
Major producers of cobalt and cobalt companies have seen significant traction in their stock performance and capital raises.
Vale S.A.: $2.49 a Year Ago with 2018 Highs of $15.24 – 512%
Glencore Plc: $1.34 a Year Ago with 2018 Highs of $5.91 – 341%
Cobalt 27: Raised over $400MM for cobalt purchases and stream since June 2017
The simple reason for this market traction? Industry sources indicate demand is outpacing supply!
“There just isn’t enough cobalt to go around,” George Heppel, a CRU consultant, said in an interview. “The auto companies that’ll be the most successful in maintaining long-term stability in terms of raw materials will be the ones that purchase the cobalt and then supply that to their battery manufacturers.”
Cobalt will be the next dominant investment trend related to the critical components of lithium-ion batteries and Pacific Rim Cobalt (PCRCF) is in one of the hottest regions of the world for both production and distribution with its close proximity to China.
Cobalt is currently in a global supply deficit, has a vulnerable supply chain, and is part of an emerging sector with extraordinary potential. Pacific Rim Cobalt (PCRCF) has a real opportunity to be a leader in the cobalt development space.
How Will You Play a Potential Cobalt Boom?
Investors have become keenly interested in cobalt stocks in recent years as a play on battery production and electric vehicles, applications for which the material is a key component. That’s not a bad bet, either. A global scramble among battery manufacturers looking to secure long-term supply has resulted in cobalt prices more than tripling since 2016.
These same investors have already seen how the first wave of interest in renewable power had triggered many lithium stocks to take off to new all time highs in 2017. When the average investor comes to understand that materials like cobalt are a critical component in the battery-powered ecosystem, the next wave of investment opportunity has started to form. Cobalt is shaping up to be one of these materials.
Small cap companies like Pacific Rim Cobalt (PCRCF) present an opportunity to invest in a first mover, exploring for cobalt in an attractive, safe and strategic jurisdiction. This is not only based on the company’s location and proximity to demand from China but also the well developed infrastructure that could be ideal for quick off-take and enhanced production capabilities.
Pacific Rim Cobalt considers the cobalt and nickel tonnage and grade estimates contained herein to be historical estimates. The historical estimates are contained in the Summary Geologic Investigations, PT. Pacific Nikkel Indonesia 1969 – 1979 (Reynolds 1979). These historical estimates do not use categories that conform to current CIM Definition Standards on Mineral Resources and Mineral Reserves as outlined in National Instrument 43-101, Standards of Disclosure for Mineral Projects (“NI 43-101”) and have not been redefined to conform to current CIM Definition Standards. These estimates were prepared in the 1980s prior to the adoption and implementation of NI 43-101. A qualified person has not done sufficient work to classify the historical estimates as current mineral resources and Pacific Rim Cobalt is not treating the historical estimates as current mineral resources. More work, including but not limited to, drilling, will be required to conform the estimates to current CIM Definition Standards. Investors are cautioned that the historical estimates do not mean or imply that economic deposits exist on the Company’s project. Efforts to obtain any additional information regarding relevant historical work is ongoing, although there are no assurances that this original data will be found. Pacific Rim Cobalt believes that the historical estimates are relevant to continuing exploration on the project. For more information please refer to our technical report, filed on SEDAR on December 8, 2017 and available under the Company’s profile at www.sedar.com.
Mr. Garry Clark, P. Geo., Independent Director of Pacific Rim Cobalt, is the qualified person as defined in NI 43-101, who has reviewed and approved the scientific and technical content in this presentation.
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