Bloomberg reported in December that after doubling in price in 2021, Cobalt gains were expected to extend into 2022.

Many investors looking for the best way to prosper from these gains are now turning their attention to small cap and microcap mining stocks.

That’s because cobalt is most often mined as a by-product of copper and nickel and most cobalt stocks are small cap, micro cap or nano cap.

By going “small,” investors can find companies that focus more on cobalt and that could be well-positioned for strong gains as cobalt demand continues to surge.

The tradeoff, of course, is that small stocks like these often come with uncertainty and a high degree of risk.

What is Happening in the Cobalt Market?

Increased production of electric vehicles has put cobalt, along with lithium and nickel, in particularly high demand.

That’s because these natural elements all play key roles in the batteries that power those electric vehicles.

Cobalt is used to increase density and prolong battery life in lithium batteries. As production of those batteries has ramped up demand for cobalt has surged.

Supply chain disruptions combined with production issues have combined to limit the availability of cobalt. In fact, it has been flagged for potential shortages in the future by industry experts.

Among the production issues cobalt is currently facing is that a large amount of this natural element (two-thirds) is mined in the politically unstable region of the Democratic Republic of Congo. To make matters worse, China is responsible for refining up to two-thirds of the cobalt that is mined each year.

These facts have led to the creation of a number of small mining companies, particularly in Canada, that are looking to step in and meet the rising need for cobalt.

Small Cap Mining Stocks to Watch 

Here are some smaller companies that could enjoy growth in the future. Especially, if cobalt demand continues to increase and relations with China continue to be “dicey”:

• UEX (TSX:UEX) – this company says it is leading the discovery of ethically sourced cobalt in Canada. It is involved in the discovery and development of existing cobalt deposits, along with uranium deposits, in the Athabasca Basin.

• Giga Metals (TSXV:MZN) – this company is a supplier of battery metals and is aiming to develop the world’s first carbon neutral nickel mine to power a clean economy.

• Fortune Minerals Ltd (FTMDF) – this is a development-stage cobalt mining company that is developing the NICO project in southern Canada.

• Electra Battery Materials (ELBMF) – this company is building a cobalt refining facility in Canada.

• Canada Nickel (CNIKF) – this Toronto-based company has a production process for net-zero cobalt.

• Sherritt International (SHERF) – this company has roots in nickel but also mines cobalt. Its largest mine is in Cuba.

 

Photo by Pedro Henrique Santos on Unsplash