Cobalt is a base material used in manufacturing. Usually a byproduct of refining copper or nickel, this element is used in items that include electric vehicle (EV) batteries, industrial equipment parts, and paints.
Particularly due to rising demand for lithium-ion batteries in electronic devices and electric cars, cobalt prices rose steadily in 2021 and 2022. Mining companies increased output in response, leading to a cobalt surplus.
| Name and ticker | Market cap | Current price | Dividend yield |
|---|---|---|---|
| BHP Group (NYSE:BHP) | $159.5 billion | $64.40 | 3.50% |
| Vale (NYSE:VALE) | $59.3 billion | $14.14 | 1.04% |
| Glencore Plc (OTC:GLNCY) | $73.6 billion | $12.62 | 1.59% |
| Freeport-McMoRan (NYSE:FCX) | $84.3 billion | $59.18 | 0.51% |
| Wheaton Precious Metals (NYSE:WPM) | $58.3 billion | $130.88 | 0.51% |
| Cmoc Group (OTC:CMCLF) | $61.5 billion | $2.83 | 1.23% |
1. BHP Group
NYSE: BHP
Key Data Points
One of the world's largest mining companies, BHP Group (BHP +2.54%) is an Australian-based company with operations all over the globe. The company mines metals, base materials, and energy. Copper and nickel are among its top products, so cobalt (one of the byproducts of refining these two metals) is naturally mined by BHP.
In 2021, BHP signed a partnership agreement with AI computing start-up KoBold Metals, which uses algorithms to make decisions on land purchases and exploration. The agreement, which counts Bill Gates and Jeff Bezos among its investors, is designed to help BHP obtain metals, such as cobalt and nickel, used in the manufacture of electric vehicle batteries and other renewable energy projects.
Although mining is a cyclical industry, BHP Group is consistently profitable and tends to generate operating profit margins well into the double-digit percentages.
2. Vale S.A.
NYSE: VALE
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Vale (VALE +1.69%) is another top producer of metals and base materials. Based in Brazil, it is one of Latin America's largest companies. It is the world's top producer of iron and nickel, as well as a top producer of other metals used in battery manufacturing, such as manganese and copper.
As a miner of nickel and copper, Vale is also an ancillary supplier of cobalt. It isn't a significant revenue generator for Vale, but the company is nonetheless worth mentioning, given its status as a top miner of basic metals used in all sorts of industries.
Like BHP Group, Vale also benefits from its massive scale. Historically, it has consistently generated some of the best operating profit margins in the mining industry. However, recent volatility in commodity prices has put pressure on its margins.
3. Glencore
OTC: GLNCY
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NYSE: FCX
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Freeport-McMoRan (FCX +0.79%), based in Arizona, is another global mining and energy company. Freeport-McMoRan is one of the largest producers of copper, which is used throughout the global economy. As a copper miner, cobalt is part of the company's portfolio of assets.
In 2019, Freeport-McMoRan reached an agreement to sell part of its cobalt venture for $200 million. The company retains partial ownership of the cobalt refining business. Like some other global mining companies, Freeport-McMoRan has historically generated very high operating profits from its mining assets.
5. Wheaton Precious Metals
NYSE: WPM
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As its name suggests, Wheaton Precious Metals (WPM +1.91%) is an investment in elements like gold and silver. However, it is not a mining company. Instead, Wheaton is a commodity "streaming" company, meaning it enters into an agreement with a mining company to prepurchase all or a portion of the miner's production at a predetermined discounted price.
In addition to precious metals, Wheaton acquires significant amounts of cobalt. Although not directly involved in the production of base materials like cobalt, Wheaton harbors a valuable niche in the global mining space. It's also very profitable and pays a dividend for investors seeking investment income.
6. CMOC Group Ltd.
OTC: CMCLF
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How to invest in cobalt stocks
- Open your brokerage app: Log in to your brokerage account where you handle your investments.
- Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Features to look for in a cobalt stock
If you're considering an investment in a cobalt stock, here are some features to look for:
- Exposure to other metals. Few pure-play cobalt stocks exist because cobalt is overwhelmingly mined as a byproduct of copper and nickel. The primary metals a company mines are more likely to drive profits than cobalt alone.
- Geographic diversity. Almost three-quarters of the global cobalt supply was mined in the Democratic Republic of Congo, a country rife with geopolitical instability. While cobalt mining operations in countries like Canada, Australia, and Finland are relatively minuscule, investing in companies that are exploring mining sites in more stable regions of the globe could reduce risk and offer greater upside.
- Cost efficiency. Investing in companies with low production costs on primary metals can offer some insulation from volatility due to oversupply or falling cobalt demand.
- Partnerships and offtake agreements. Cobalt miners that have secured key partnerships with EV makers, battery manufacturers, or other companies that rely on cobalt often have more stable and predictable sources of revenue.
- Transparency. Because cobalt is often a minor source of revenue, some mining companies don't break out figures like production volume or margins specific to the metal. But if you're interested in investing in cobalt, look for companies that provide such information in detail.
Why invest in cobalt stocks?
Cobalt remains a vital component in rechargeable batteries and semiconductors. Investing in cobalt stocks could have a substantial upside if long-term demand for EVs and clean energy remains strong.
However, cobalt prices tend to be more volatile compared to other metals for several reasons. The global market is relatively small, and it's mined almost entirely as a byproduct, which means supply is less responsive to changes in prices or demand. Moreover, the bulk of the supply comes from the Democratic Republic of Congo, a country with a long history of conflict and turmoil.
Investing in cobalt stocks could pay off in the long run, but it's best-suited for those with a high risk tolerance and a long time horizon. If you need more predictable returns or steady dividends, you're better off putting your money elsewhere.
How to choose the right cobalt stock
Investing in commodity production, such as cobalt, can be challenging. Commodity prices can fluctuate wildly; supply and demand change from month to month and year to year. Stocks of companies that produce such commodities can also fluctuate wildly in price.
Focus on investing in established businesses with a track record of generating healthy profit margins, especially if you are an investor seeking more stable returns or investment income.
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The future outlook for cobalt stocks
The Democratic Republic of Congo recently replaced its temporary ban on cobalt exports with an annual quota that caps exports at 96,600 metric tons of cobalt for 2026 and 2027. By comparison, the DRC exported roughly double that amount in 2024.
As a result, analysts forecast a cobalt deficit for 2026 and 2027, which would push cobalt prices higher if demand holds steady. Though there's still strong demand for cobalt, particularly in the EV industry, many battery makers are shifting toward lithium iron phosphate (LFP) batteries, which don't require cobalt. That creates a fair degree of uncertainty about cobalt prices in the long term.
Keep in mind, though, that very few pure-play cobalt mining companies exist. Cobalt is typically a byproduct of copper oe nickel refining and usually accounts for a small share of revenue for most mining companies. Changes in cobalt prices or global demand are unlikely to be a game-changer, particularly for well-diversified companies.
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