The demand for new electric cars is experiencing a decline as the predicted slowdown of the economy makes its way through the system. No doubt the effects in it’s supply chain for these cars will experience those effects too.

Part of the supply chain is the mining of those minerals associated with the batteries for those electric cars, among other things. The two key minerals for the batteries are Cobalt and Lithium.

Cobalt has seen a drop in the price offered to buy this mineral. Most of the worlds supply of cobalt is mined in the Congo. The Congo has been long known as a questionable source of any mineral mined in this country. This would make other alternatives more attractive in times of civil strife in the Congo.

More stable sources are always being considered. As an example one Northern Canadian mine, Fortune Minerals Nico mine, is reacting to pricing and adjusting it’s production downward. Fortune is putting on hold its expansion plans. In addition to pricing, Fortune was impacted by the fact that they were unable to find a strategic partner. Generally, investors are sitting on the sidelines and this source is on hold.

With a slow down in mining production worldwide, ultimately concern about supply comes up. The largest inventory of cobalt is rumoured to be held by Cobalt 27 Capital Corp. The firm itself is in the middle of an offer whereby it would have its shareholders sell their equity to Pala Investments Ltd. Pala is the largest shareholder of Cobalt 27 and this move indicates confidence in cobalt markets in the longer term. This move by Pala further consolidates its holding in this commodity market.

The extraction of cobalt is coincidental with the mining of other minerals such as silver and gold. The efficiency of recovery becomes an issue in a low price market. A newer processing method is being offered through Canada Cobalt. This suggests that any issues on supply can be eased. Efficiency never is as critical as in a lower priced product environment. 

The other battery dependent mineral is lithium. It too is feeling the market forces squeezing their world. The combination of lower demand, a tariff war between China and the United States, and other headaches in starting up new mines have cooled investors in this space. The availability of supply is ample and demand is easily satisfied. New supply sources will be difficult to develop as profitability is questionable in this arena until political winds ease.

The big question is always will it make money? The answer is yes, but is the drop over and the good times in sight? Some believe that it is showing a little bit of price recovery now. An article from September in Mining Journal seems to think so.

It certainly is worth considering cobalt or lithium as an investment depending on your taste for adventure. Is now the time? This depends on how your nerve and risk tolerance.