Recognizing Opportunity in Difficulty

28 June 2013

Click on the link to read the full article by Richard (Rick) Mills of Ahead of the Herd

As a general rule, the most successful man in life is the man who has the best information

Right now I’m a big fan of uranium, cobalt and silver. Here’s why…

Cobalt

UK-based trading company Darton Commodities said, in its 2012-2013 cobalt market review, that:

  • The fundamental outlook for the cobalt market improved in 2012
  • A structural price recovery is likely in 2013 as there was a five percent drop in global cobalt output in 2012
  • During 2012, refined cobalt supply dropped an estimated 3,839 mt to 76,040 mt, 4.8 percent below 2011
  • Global cobalt consumption grew an estimated 6.8 percent in 2012, reaching 73,900 mt 
  • Consumption from the battery sector saw robust growth on the back of demand for tablet and smart phone devices, with cobalt usage breaching 30,000 mt
  • Demand from the super-alloy sector continued to see strong growth from the aerospace and industrial gas turbine markets, with demand reaching 14,800 mt
  • Strong demand growth in 2012 saw significant destocking of cobalt materials in China over the year
  • Darton estimated cobalt demand in China increased 13.7 percent from 2011 to 28,900 mt in 2012 

“Demand growth led to a gradual but significant destocking of both unrefined and refined cobalt materials in China. Consequently, the overall supply and demand imbalance which has undermined the cobalt market for the past couple of years appears to have been restored resulting in a fundamentally more balanced market outlook for 2013.” Darton Commodities

The Democratic Republic of the Congo (DRC) supplies 55 percent of the world’s cobalt. With much of the world’s incremental supply over the coming years expected to be sourced from the DRC expectations might be too highhâ?

Crisis in the Congo is giving ahead of the herd investors an exciting investment opportunity.

Between an outright ban on the export of raw minerals, project ownership grabs, power shortages and armed conflict the DRC’s resource sector is imploding. Most of the DRC’s cobalt goes straight to China who refines it and sells it to the world, a major amount — 20 percent – goes to the U.S. which imports 85 percent of its cobalt needs, expect both countries to be screaming for cobalt as a supply crunch gets underway because of the ongoing Congo drama.

The supply sides of both cobalt and uranium are shrinking while demand increases and security of whatever supply there is, is far from assured – perfect storms that bode well for investments in both cobalt and uranium.

AheadOfTheHerd.com