Chile Getting Ready To Supply Minerals For The Upcoming Electric Car Industry: What's Next For Cobalt

In an interview on 27 August, 2017, the Executive Vice-President of Chile's Corporation for the Promotion of Production ("CORFO"), Eduardo Bitran, announced that CORFO and the National Service of Geology and Mining ("Sernageomin") are conducting surveys in the La Cobaltera area in Chile's Atacama region in search for cobalt deposits. Cobalt deposits are also known to exist in the Coquimbo region.1

Bitran cited CORFO's expectations that cobalt demand should considerably increase in upcoming years, and noted Chile's potential for developing this mineral: "If we were to produce 15,000 annual tons of cobalt by 2035, we would be talking about a business worth USD $975 million, considering the current price of this mineral".2 A report on La Cobaltera's suitability for cobalt mining is scheduled to be released later this month.3

This could be an interesting opportunity for Canadian investors, as demand for cobalt is set to increase by 34% per year until 2026, and by 2021 demand could fall short of production by up to 8,000 tons. Cobalt at the London Metal Exchange traded at $32,000 a ton in late 2016, and increased to $56,000 a ton in 2017. These trends go hand in hand with increased cobalt usage in battery manufacturing for the electric car industry, which will be further boosted by China's recent announcement to join France and the United Kingdom in setting a ban on sales for all fossil-fueled powered vehicles.4

Even though over one half of the world's cobalt production originates from the Democratic Republic of Congo (DRC), CORFO has uncovered records indicating that La Cobaltera area being surveyed once produced cobalt with an average ore grade of 7.3%, which is more than double of DRC's current 3%. The Chilean Agency for Energy Efficiency recently cited the Technical University Federico Santa Maria's Department of Metallurgical Engineering and Materials' finding that between 1844 and 1944, La Cobaltera produced up to 20,000 tons of cobalt per year.5 Bitran also cited estimates that copper mining tailings contain between 0.2%-0.3% of cobalt, as well as gold, silver, copper, molybdenum, and rare metals, which could begin to be mined in the near future following CORFO's initiative to promote the exploitation of tailings through technological developments and its Summit on Mining Tailings on 2 August, 2017.6

The renewed search for cobalt is but one of the mining endeavors undertaken by Chile's CORFO and Sernageomin. On similar matters, we would...