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Cobalt (The next Uranium), Discussion
Hevlet
post Posted: May 23 2007, 12:54 PM
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Posts: 24


In reply to: kahuna1 on Saturday 21/04/07 12:10pm

Just came across an interesting spin to the Cobalt debate in this thread....

http://www.isecureonline.com/reports/SCC/WSCCH459/

Most likely a beat up but would be interested in peoples thoughts re. the Russia re. cobalt supply issue in the article .....

Sorry if this is long.....

QUOTE

Devil in a Blue Dress
If you follow the financial news, you know that commodities and natural resources have been in a major bull market for the last few years. In fact, the CRB Index -- which is a measure of commodity prices -- recently hit its highest level since 1980.

What's behind this staggering rise in commodity prices? Well, in most cases, it's a simple matter of supply and demand. 

The world is gobbling up natural resources at an incredible clip. At the same time, our supply of natural resources is diminishing. We are simply running low on everything from oil to gas to iron to aluminum to copper to uranium.

Of course, investors who have gotten in on commodities before they make their price run have made a fortune. And while most commodities have had their big run... a virtually unknown natural resource is just starting to make its move.

This resource is cobalt, a transition metal closely related to nickel.

The word cobalt is derived from the German kobalt, meaning "goblin" or "devil," a term that gold miners used because they thought that the bluish metal was worthless.

But cobalt is far from worthless... 

For centuries, cobalt has been used to create beautiful blue glass, ceramics, pottery, and tile. 

In fact, traces of cobalt were found in Egyptian artifacts dating back to 2,600 B.C.

Of course, today, cobalt is used for much more than color. 


Essential to Modern Society!
Chemical & Engineering News reports that cobalt has recently undergone a significant transformation from an "ugly duckling" of no interest to miners... into a "swan" of strategic industrial importance.

It might surprise you to learn the countless ways cobalt is essential to our daily lives. From cobalt's applications in health, communications, and national defense... modern society could not function without cobalt.

The U.S. Geological Survey (USGS) reports that for many commercial, industrial and military applications, there is NO SUBSTITUTE for cobalt.


Cobalt is used in cell phones, rechargeable batteries, hard-disk drives, memory chips, radial tires, drill bits, paints and inks, satellites, turbine blades, and even solar panels.

And get this: Because cobalt has an unusually high melting point (2,723 Fahrenheit), it's able to withstand extreme temperatures that would destroy conventional metals like steel and aluminum. This makes cobalt absolutely essential in the production of jet engines and guided missiles.

And listen: New applications for cobalt are being discovered constantly, and some of them are starting to radically transform whole industries.

Take hybrid cars for example... 

According to Booz Allen Hamilton, hybrids are spreading like wildfire, and could account for more than 20% of new cars by 2010. That's 4 million new hybrids coming out every year.

And guess what? 

Cobalt is a key ingredient in hybrid vehicles. In fact, hybrids use five pounds of cobalt... in nearly every car!

But perhaps the most important use of cobalt is by the United States military. 


A Matter of National Security
Not only is cobalt important to the U.S. military... it's a matter of national security.

You see, cobalt is critical to the production of military aircraft, defense satellites, guided missiles, tanks, and even submarines. Without cobalt, it would be virtually impossible to produce many defense products such as jet engines, missile components, or electronic components.

In fact, cobalt is so vital to our national defense that the United States government has classified it as a "strategic material."

Cobalt received its "strategic" classification under the Strategic and Critical Stockpiling Act (50 U.S.C. 98-h-2).

According to this law, a "strategic material" is a commodity whose lack of availability would seriously affect the economic, industrial, and defense capability of the United States.

Further, this law requires that cobalt be stockpiled at 20 locations throughout the country so that the United States is not dependent on foreign sources of cobalt.

Bottom line: Cobalt is vital to our national defense. 

Problem is, despite the Stockpiling Act, the United States is almost completely dependent on foreign sources of cobalt.

According to the U.S. Geological Survey, the United States DID NOT mine or refine cobalt in 2006.

Our domestic production was ZERO. That means the United States must rely on foreign sources for nearly all its cobalt needs.

And here's the worst part: As the demand for cobalt is soaring, the world is facing a severe supply shortage that could be devastating to the United States. 

That's because Russia is moving to dominate the cobalt market for its own political gain.

What's worse, the Kremlin is not shy about using violence and intimidation to get its way.


Evil Kremlin Rising
As you may know, the Soviet Union collapsed in 1991.

At that time, then-President Boris Yeltsin launched a massive privatization of Russia's state-owned enterprises.

This resulted in one of the greatest transfers of wealth ever seen, as a small group of business tycoons -- known as "oligarchs" -- claimed some of the world's most valuable natural resources including oil, gas, nickel, and... cobalt.

At the end of 1999, Boris Yeltsin resigned as Russia's President, and appointed his successor, a former KGB agent named Vladimir Putin. Yeltsin believed Putin would nurture Russia's burgeoning democracy. 

But the opposite has happened... 

In fact, during his reign, Putin has taken strides to roll back democracy, and transfer wealth and power away from the Russian people... and back into the hands of the Kremlin.

"Putin is imposing dictatorship the old-fashion way" reports The Washington Post. 

And Britain's Financial Times agrees, saying that Putin "took a chainsaw to the fragile roots of Russian democracy."

According to Time magazine, Putin has already seized control of Russia's major television networks, and driven media tycoon Boris Berezovsky into exile.

In addition, Putin has stocked the Russian government with his KGB cronies. 

"It's the beginning of a constitutional coup d'etat," said Sergei Mitrokhin, a former parliamentary leader from the liberal Yabloko party. "It's a step toward dictatorship."

And the Moscow Times concurs: "Russia is full of fear. Businessmen and politicians are afraid of Vladimir Putin. [Putin] relishes the fear. The greater the fear, the stronger his power."

According to The Moscow News, Russian businessmen are forced to pay millions of dollars annually to the Kremlin and render financial support to pro-Putin political forces. 

And here's the thing you need to understand: As a former KGB thug, Putin will do whatever it takes to get what he wants.


Enemy of the State
In fact, NewsMax.com reports that in July 2006, the Russian legislature passed a law making it LEGAL for the Kremlin to kill "enemies of the state."

And make no mistake: People who don't follow the Kremlin's orders quickly end up in jail... or worse.

"The kinds of deaths and murders in Moscow today are wholly different from those of the 1990s," explains Vanity Fair investigative reporter Brian Burrough. "Then the killings were products of the struggle to control Russia's newly privatized businesses. Today, the people who are dying are mostly ‘enemies of the state' -- journalists, whistle-blowers, regulators, and dissidents."

Do you doubt it? Well, consider this:

On Oct. 7, 2006, a Russian journalist, Anna Politkovskaya, who had criticized Putin, was shot in the head and killed in the elevator of her Moscow building.

And in November 2006, Alexander Litvinenko, a former KGB agent who had publicly denounced Putin, died in a London hospital.

The cause of death? Litvinenko was poisoned with a radioactive element called polonium 210.

A Scotland Yard investigation revealed that Litvinenko had visited with two KGB men on the day he was poisoned. Further, telltale traces of polonium 210 were found everywhere the two KGB agents had been.

Many international experts believe that Litvinenko was a victim of a Kremlin orchestrated assassination... retribution for his "unpatriotic" words about Putin.

Bottom line: Across the board, people in Russia fear for their safety. And there is one sector in particular in which Russian President Putin has a seemingly insatiable appetite.


Putin Devours Natural Resources
In today's Russia, owning a natural resource company is a flat-out dangerous occupation. In fact, some of Russia's wealthiest resource barons have gone from the boardroom... to a jail cell... practically overnight.

For example, in October 2003, Kremlin soldiers stormed the private jet of Mikhail Khodorkovsky.

Khodorkovsky, a billionaire oligarch and chairman of Russia's largest oil company, was beaten, thrown into a Moscow jail, and charged with tax evasion.

Khodorkovsky was then banished to a Siberia prison camp while the Kremlin took control of his $12 billion company,
Yukos Oil.

Of course, Mr. Khodorkovsky is not alone in his suffering.

According to The New York Times, Russia has taken several steps  to tighten its state control over energy resources. In fact, nearly every natural resource company in Russia has been ripped from private hands and put under the Kremlin's control.

Why would Putin go to such extreme measures to take natural resource companies under Kremlin control?

Simple. Control of Russia's natural resources allows Putin to exercise tremendous political power on the world stage.

Russia's crude use of natural resources for political gain is an old story. For years Moscow has been using its control over natural gas to reward neighbors who submit to its political will, such as Belarus, and punish those who seek greater independence, such as Georgia and Moldova.

According to The Washington Post, Putin shut off gas supplies to the Ukraine in order to undermine its democratic and pro-Western government.

On July 29, 2006, the Kremlin halted oil shipments to Lithuania. And in January 2007, Russia shut off crude oil supplies to Germany, Poland and other parts of Eastern Europe, all in an effort to exercise political muscle.

Vice President Dick Cheney has accused Putin of using natural resources as tools of intimidation and blackmail.

And now, Putin is making his move on the lucrative cobalt market... and he is willing to crush anyone who gets in his way.

Do you doubt it? Well, just ask Mikhail Prokhorov...



A Billionaire Bordello
in the French Alps
Mikhail Prokhorov is the CEO of Norilsk Nickel, the world's largest producer of nickel and cobalt.

The company is massive. In fact, its volume of output accounts for nearly 2% of Russia's Gross Domestic Product.

Bottom line: The company is highly valuable to the Kremlin. In fact, according to Forbes magazine, Norilsk is one of Russia's last natural resource assets controlled by the private sector.

And word is that Putin has been pushing for some time to gain control of Norilsk.

Thing is, Mr. Prokhorov is a flamboyant billionaire who loves his status and power. And although the pressure has been growing, Prokhorov has been slow to relinquish control of his company.

That all changed in January 2007...

While Mr. Prokhorov was on a ski vacation at the exclusive Courchevel resort in the French Alps... he was arrested and charged with running a high-end prostitution ring.

Despite his vehement denial of all charges, Prokhorov was held in jail for four days. 

Many international experts believe that Prokhorov's incarceration was a warning shot from Putin: "Give up Norilsk, or join the other oligarchs in Siberia."

As you can imagine, Prokhorov got Putin's message... loud and clear. With his fellow oligarch Mikhail Khodorkovsky rotting in a Siberian prison camp, Prokhorov decided it was in his best interest to get out of Putin's way.

So, within days of being released from jail, Prokhorov signed control of Norilsk Nickel over to his Kremlin-friendly associate, Vladimir Potanin.

Bottom line: Putin is in prime position to gain control of Russia's lucrative cobalt empire.


Commodity Blackmail!
This is very bad news for the United States.

According to industry expert Richard Reinhard of Web site Resource Investor, Russia has a history of restricting cobalt supplies to increase its profits. 

Cobalt inventories are already low. And now that the Kremlin has moved to secure its position, cobalt prices are soaring. 

In fact, prices have nearly doubled...

According to the Web site Metal-Pages, one London commodity trader says that cobalt market is the busiest it's been in 30 years.

"It's just been non-stop," says the trader, reporting that organizations are so desperate for cobalt, they are paging him in the middle of the night.

And it gets worse...

On Feb. 7, 2007, the EU approved the sale of giant cobalt company, OM Group (OMG) to Norilsk. OMG is the largest producer of cobalt by-products on the planet.

Consequently, the Kremlin has gained even greater leverage over the global cobalt market.

And make no mistake: Russia has no intention of playing nice with the United States. 

According to the International Herald Tribune, the relationship between Russia and the United States has reached its lowest point since the Soviet Union collapsed a decade and a half ago.

And now, because of its complete cobalt dominance, Russia is positioned to influence America's most vital industries... including national defense.

Obviously, this poses a serious problem for several U.S. industries, not to mention the United States military.

Says international economic expert and best-selling financial author, J. Christoph Amberger: "The Kremlin is positioned to exert its political will on the United States via ‘commodity blackmail,' just like it did with the Ukraine, Georgia, and Moldova."

"It's got what we desperately need," explains Amberger. "It's as simple as that."

Fortunately, a $2 tiny mining consortium has discovered a massive supply of cobalt that will put an end to Russia's ruthless extortion.


Tiny U.S. Mining Consortium Stuns Kremlin --
Secures Cobalt Fortune!
As it turns out, the most lucrative source of cobalt is not in Russia. It's in the tiny country of Cameroon... on Africa's rugged West Coast.

And although Russia would love to get its hands on Cameroon's cobalt riches... a tiny $2 U.S. company has already beaten it to the punch. 

Good news for U.S. industry and military operations. And even better news for early investors who could ride this $2 stock all the way to $27 per share by September 2007.

Let me give you the details on this remarkable opportunity:

Back in 1981, the United Nations launched a development program in Cameroon. The idea was to use local mineral resources to help fight poverty in the African country.

And the project initially proved promising. In fact, the U.N. found a large nickel mine. But because nickel prices were so low at the time, the discovery didn't draw much attention.

But in 1994, a veteran geologist named Bill Stevanovich (not his real name) became aware of the Cameroon nickel discovery. After reviewing samples, Stevanovich realized that the mine had an unusually high level of cobalt.

Further investigation revealed that the Cameroon site held the single-largest cobalt supply on the planet!

Stevanovich quickly formed a company, CobalCam, Inc. (not its real name) and began feasibility studies on the Cameroon cobalt mine.

It quickly became clear that the mine was an absolute fortune just waiting to happen. Not only was there a massive supply of cobalt at the location, but the cobalt was very close to the earth's surface. This meant that mining costs would be minimal... and profits would be mind-shattering.

Of course, news of Cameroon's lucrative cobalt mine spread, and every mining outfit on the planet was watering at the mouth for a piece of the action.

Stevanovich worked to position himself with the Cameroon government, but it was a toss-up as to who would get the mine.

Finally, the U.S. government decided that the Cameroon cobalt reserved needed to be in U.S. hands.

So... Cameroon's President Biya was invited to a private meeting at the White House with President Bush in March 2003.

It was the first time the presidents of the two countries had ever met. 

What did Bush promise President Biya? No one knows for sure... but days after the meeting, CobalCam was granted an exclusive contract to develop the Cameroon cobalt mine.

Think about that...


By the way if you are wondering the company they are beating up is Geovix listed on the TSX under stock code GMC - I do not hold - just interested in the Cobalt story.

Hevlet


 
kahuna1
post Posted: Apr 21 2007, 11:10 AM
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Posts: 2,754
Thanks: 3127


In reply to: woteva on Friday 20/04/07 03:26pm

Well I hope you are right with your view.

However the demand rate for the 10 year period has averaged 8.7% according to the CDI.

I do suspect the price doubles and along with it screaming and kicking will be Nickel.
Best plays is junior Nickel boys who are on the cusp of production or those valued at the US$7- per lb as the market has them pegged right now.

As to the future demand .... and past demand .....

The CDI

http://www.thecdi.com/cdi/images/documents..._and_Demand.pdf

Even better a paper on the topic in their newsletter near the end

http://www.thecdi.com/cdi/images/news_pdf/..._news_jan07.pdf


Recent news ... but halfway down the page is the estimated USGS numbers for future demand ... around the same as the CDI as i quoted 8% ish ..... out to 2015 ...

http://www.formcap.com/s/CobaltNews.asp

The exact article all by itself as opposed to the current news as well ...

http://www.formcap.com/s/CobaltNews.asp?Re...t-Cobalt-Market

Now your side a published report ... which contradicts both USGS and CDI demand numbers and talks your side .... but its talking a 12% increase in demand since 1995 ...

http://www.the-infoshop.com/study/ros48871-cobalt.html

Copy Of USGS last Cobalt paper ... I provided their 2007 demand estimates in links above ...

http://minerals.er.usgs.gov/minerals/pubs/.../cobalmyb05.pdf

Again another talking a 12.9% increase in demand since 1995 till 2006 .... the resource investors article ....

http://www.resourceinvestor.com/pebble.asp?relid=29058

QUOTE
Cobalt consumption in 1995 was only 24,000 tonnes, but during the past 10 years has grown at an average rate of 12.9% per year, and continues to grow.


Now not to put too fine a point on it .... the above is crap .....

Here is the exact table of USGS mine production and DEMAND and goes with the resource investor numbers for 1995 ... and goes out to 2004 .... the exact numbers whist it doesn't have the 2005 or 2006 numbers one was near ZERO and 2006 showed a 20% increase but the overall average USGS keeps talking about of increases in DEMAND or 8.7% since 1995
for me at least are strongly backed with statistical evidence.

http://minerals.usgs.gov/ds/2005/140/cobalt.pdf

People can make their own minds up ....

Woveta many thanks .... but I lean more to the side of 10% growth as opposed to your own. I agree with the prediction of rising prices and tight supply ... however longer term not a fan either of this metal as such. Reason being beyond a short window in this case say out to 2015 the actual amount of cobalt reserves well known and identified sits at a MINIMUM of 13 million tons of Cobalt ... so even if they doubled demand by 2012 as you say or 2015 as USGS and CDI think ... or me in-between the two ... at say 2014 ... at 120,000 tons demand ... ignoring the fact the new batteries for cars will 99% be recycled just like lead ones but even more so since they cost 3 times as much .... 13 million tons and 120,000 tons demand leaves me over the 100 year mark.

Its not that rare ....

Maybe we see a spike like you say ... as with uranium ... on short term shortages but the demand certainly will be elastic for some applications. The Hybrid cars if it costs them and extra $1,000 for cobalt and $2,000- for Nickel because one will be locked hand in hand with the other the price of the car will go up and make it even less competitive than it already is compared to a petrol powered car.

Only time will tell.

Still of the view with you ... Cobalt goes up and suspect about 100% increase personally and Nickel to hit the US$30- mark and long term the price I suspect is a case of supply chasing demand and not sure when it will catch it ... certainly not by 2010-12 ... even 2015 seems unlikely so the Nickle price remains bid and along with it cobalt.

Of course at some stage there will be corrections along the way, but the reality is every year Nickel ... and Cobalt demand goes up and needs a new ravensthorpe type mine coming on line .... with 7-8% growth in demand for Nickle and even higher for Cobalt 8.7-12% depending on which comics one reads.

For both at this stage I would agree Cobalt demand/supply equation slightly worse than Nickel but both have decent new supply coming on line till 2012 at this stage to meet this new demand, but things are extremely tight.

Do just love some of the juniors in the Nickel/ Cobalt side and market is baulking at the massive amounts of Capex needed to bring a HPAL laterite Nickel deposit on line.

Large companies who have been bringing them on line BHP, Xstrata and co have faced cost blowouts of 100% in most cases and delays of 12-24 months which at this stage has them thinking twice about going there agin. Its not that they dont have a selection of new largish deposits to bring into production but its the inability to hedge without massive discounts and being exposed to a real cost of US$3.50-$4- per lb of Nickel break even when it was the long term price not so long ago. In fact the economics for a traditional mining company in the face of this equation despite the spot price being here at US$23- has seen many delay production decisions.

One side the cost of new mines has doubled to a level which is greater than the spot price 3 years ago. Most Nickel sulphide deposits enjoy cost per lb even for new mines half the cost of a laterite deposit. An aside since most don't contain Cobalt, but a few things. 90% of the sulphide deposits have been or are being mine and those left are deep high cost ones on the main so their cost structure will be closer to Laterite deposit costs anyhow.

I suppose its akin to natural gas. back in the 1970's if someone discovered a laterite Nickle deposit the technology to produce it was not there. Not until the 1990's did the technology start and was a bumpy ride even till 2000. In the 1970's I remember going through some gulf states and there were gas flares at nearly every single oil well as they burnt off that pesky gas. Different story today.

With the laterite deposits, experience has made the big holders somewhat reluctant to develop them despite the spot price. As time creeps on new mines are needed now ... to replace ones running out in 2012 and beyond and to meet the new demand curves.

Working with traditional BFS numbers and using a very conservative Nickel price against the reality of costs being double will be making many question the economics verses the risks of developing laterite deposits. When a bigger mine say at 50,000 tons production HPAL laterite costs $2- billion to develop yet your exposed at USD$4- of the 2004 price it will just make the decision harder and post 2012 things will need at this stage two Ravensthorpes to come into production in 2012 alone and then one each year beyond minimum.

There is a light at the end of the tunnel. Having watched the same equations bandied about for LNG gas deposits and then Iron Ore deposits .... a trend is emerging. The actual end users are more than willing to finance the projects for a partial share of the production and the way they see this is very different than a BHP or Glencore or Xstrata.

As a consumer who intends to be in business for ever they see it the correct way. BHP and the rest see costs at US$4 - and they need an assured price of say US$8- to make them move in the face of the 100% blowout in costs. That's the price 12 months ago by the way ... so they will be delaying and fustigating development for both their own reasons ... keep supply tight and their producing mines benefit ... like OPEC turning off the taps ....
but for a manufacturer or a steel maker who has the demand and will always have the demand the equation is the opposite. Total opposite.

Supplies are tight so if they fund it along with an agreement to buy the off-take they ensure supply in the first place. Second from their perspective they are forced to buy at the current spot rates and possibly into the forward market but despite the deep discount the price is still 4 times the actual cost of production. So for them risking some cash which by the way they are more and more willing to do ... then ensure supply ... and for the cash get 50% or more of the product effectively at US$4- per lb as opposed to $24- and the rest at going market rates.

This makes one hell of a lot of sense. More and more the development of these deposits not just Nickel/Cobalt is going to outside parties or upstream parties. mainly the Chinese but also some Indians and Malaysians. for them it makes massive economic sense to ensure supply firstly, at a cost in reality way below what it would normally cost them.

In short if you have a favourite in mind whilst the market loves and I mean loves a BHP or Glencore or Xstrata coming on board and prices them accordingly ... they will drive just as hard a deal as the Chinese on dilution of the resource but the reality is them being driven by different economic perspectives will take in some cases 5 or more years to develop than the other guys. Big difference for shareholders of a struggling miner forced to wait 5 more years expend 5 years more cash and dilute shareholders to hell.

If you want a partner you want someone cashed up and either the Chinese first choice, or Indians or Malaysians. No two ways about it. But the market will of course continue to love a company with BHP as a partner. eventually they might catch up with reality. Quicker production means quicker returns and with a backer looking at it from the other side of the equation makes any problem seem trivial. ensuring first supply ... and at a deep discount to the spot market and expected spot market in coming years ..... its a cracker.

Lots of examples of this ... deposit which would never have been developed with backers willing to risk the cash for the development costs and ensure supply is the future. Big miners face more and more of this type of development and on a traditional model they CANNOT compete. Manufacturers and end users are willing to ensure supply and its a fantastic deal for them to go this way.

Some ones u might want to look at but there are many ... Magellan Lead mine in the middle of nowhere in WA financed by a Malaysian battery maker. Never ever would have got up any other way. Ramu nickle mine in the very very remote PNG highlands the Chinese fell overthemselves with the money to develop it and totally free carry HIG to production with 12% ? share ... of course that was when much lower prices were around. withing one company we have falconbridge or whoever owns them now ... HIG Freida copper deposit possibly the largest undeveloped copper deposit in the region and what has the big company being doing ... ah Xstrata now ... well they have been stuffing around for the last two years and still continue to do so.

Lots of them out there.

As I mentioned the cost of say a ravensthorpe mine laterite at $2- billion ish ... remote area ect ect.

The economics of developing say an iron ore deposit are far far worse than a laterite one.
It also requires massive investment to build a port and rail system to get the bulk out.
Similar price tag. In fact same sort of mined amounts for the project I am thinking of.
At 0.75% Nickel/Cobalt to produce 60,000 tons of Nickel/Cobalt needs about 8 million tons of ore processed a year .... if one used even a price half the spot of US$11.50 and cost at the very high end of US$4- so a profit per lb of US$7.50 on 132.2 million lbs of production one might hope to make USD$991.8 million per annum.

So at I have an iron ore deposit in mind and its going to produce at 10 million tons per annum same $2- billion capex price tag but the profit per ton is at best US$25- usuing a reasonable long term Iron ore price ... so the fund er in this case ... not a large mining company of course .... top end profit number is USD$250- million about 25% of the Nickel economics. Of course not counting the over production of one verses the other.

Big miners will be baulking at even funding Nickel with these numbers. Xstrata certainly is with Frieda river and holding HIG to ransom.

I mentioned this one because Sherlock bay nickel now ARH signed a deal with these above numbers in mind selling 50% interest to be 100% fully funded INTEREST free till production by a Chinese company. No repayments till 90% of production reached.

In a normal case development of this deposit would be left totally in the hands of someone with enough contacts or money ... usually a large miner .... but here we have a very economic deposit that may have sat for another 20 years without the Chinese.
Freaky thing is one of the owners has interests in deposits for another 5 and possible 10 billion tons of similar ore in the region. Not suggesting ARH is a great buy here but production with a massive cash-wad being spent is meant to be on line 2010 in stead of 2050 or latter if things remained the same.

Sorry a ramble .....

Just if you want a deposit Cobalt of Nickel as I like ..... watch your partner ... big miners can get nicked ... get a Chinese partner or Indian who is marching to a different economic tune .... especially one that uses the product. rather that or sit for another 2 year s until the analysts decide ... hey maybe Nickle/Cobalt prices are going to be higher and revise their long term price up.

The reality is cost of production for what will be 90% of Nickel and a slab of Coabalt production is going to come from laterite deposits in coming years. The other reality the estimated cost of production when they started to bring the new supply on line was US$2- per lb and its in fact going to cost somewhere around the US$3.50 mark and thats break even. So to ensure supply the price ... long term price given the massive capex needed to build the things will need to be at LEAST 3 times the new cost of production. Without it people will be less willing to risk the money upfront.

In part that where we sit now. Big miners reluctant to spend on many difficult projects in this scenario and the next 2-3 years more and more I suspect we see end users stepping in and more than willing to fill the gap. Fantastic deal for them. Imagine being able to buy Nickel at US$3.50 for the next 20 years or copper at US$1- for the same period.

Not suggesting the Iron ore deal where they lost 50% equity for interest free fully funded to production will happen for Nickel. With the profits per ton at US$23- making a good grade deposit 1% equiv NI/Co profit of US$430- per ton verses an Iron ore thing even with today's prices a profit maybe of US$40- top end ..... you could even see a Nickel miner fully carried to production but retaining 50% .... not having to repay a cent.

Just love the economics of it ....
Bottom line buy ones with partners other than the big boys ... possibly quicker production.
If one announces a Chinese partenr or Indian with cash go nuts. rather than sit like HIG poor shareholders have with Falconbridge and twiddle their thumbs .... HRR has a similar sort of partner dragging their heels with their Nickle deposits and if they had a brain this 100% owned one they have they should sell down interest to someone with the cash and willingness to develop it before I turn 60 in 17 years !!

All the best







--------------------
All views expressed are my own opinions. While I take every care when posting no guarantee to the absolute veracity of the postings is given or implied. Please do your own reseach and consult a professional investment advisor before investing.
 
woteva
post Posted: Apr 20 2007, 02:26 PM
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Posts: 890
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QUOTE (kahuna1 @ Thursday 19/04/07 08:17pm)

QUOTE
As to the increase in demand to 120,000 tons by 2011 ... from 60,000 tons in 2006 ...
Big call .... big big call ... and the industry since I just read everything I could would not agree. The again always someone out there with a big call ...
Found this article well balance and the 120,000 ton number you used for 2011 ... well they agree ... but in 2015.


kahuna, 90K by 2011 is conservative. The data that you sighted is indeed well publicized and was issued by the CDI themselves, however

QUOTE
"Cobalt consumption in 1995 was only 24,000 tonnes, but during the past 10 years has grown at an average rate of 12.9% per year, and continues to grow.


So why have they estimated annual growth from 2007-2011 at just 8-9% pa when it has averaged 13% pa for over a decade and industrial use/application will rise over the next decade NOT decline icon14.gif In other words demand growth will likely be closer to 15-16%over the next few years or nearly double estimates.

IF demand does grow at that rate then 120K by 2011 is very doable.

-Virtually all major vehicle manufacturers will have their full range of HEV's on the market by 2010 and sales growth has been estimated at 280% from 2006-2010. (IMO this is a conservative estimate and does NOT take into account dramatically higher fuel costs such as $100+pb oil by 2009)

-New lithium-ion batteries use 40% more Co than older batteries and most manufacturers are only now commencing coversion(further reason to expect growth demand at higher levels than 13% rather than the 8-9% figure used)

-The HEV truck market which is expected to take-off around 2009

-They have also not taken into account new technologies using Co

Of course much of this is based OMO, but I feel very confident that $100+ Co is close at hand.

Not to mention the fact a large chunk of the worlds supply of Co comes from the DRC and that in itself is reason to be bullish

Cheers



--------------------
"If history repeats itself, and the unexpected always happens, how incapable must Man be of learning from experience."
GBS
 
kahuna1
post Posted: Apr 19 2007, 07:17 PM
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QUOTE (woteva @ Thursday 19/04/07 07:11pm)

What u exactly said ....

QUOTE
With no new mine supply expected to come on line in the next 12 months, by mid 2008 the annual shortfall will be 10000t + and upward pressure will be immense.



Ur line .... no new mine supply expected to come on line in the next 12 months ....

My line back ....

The additional capacity for 2007/8 is around 6,500t with the Ravensthorpe and Browns nickel-cobalt projects in Australia making up just under half of it.

Since I know BHP fairly well ... here is what they said

QUOTE
The first shipment of MHP to Yabulu is expected in the second quarter of 2007 and first metal in the third quarter of 2007 with full production from the second half of 2008.


As to the increase in demand to 120,000 tons by 2011 ... from 60,000 tons in 2006 ...
Big call .... big big call ... and the industry since I just read everything I could would not agree. The again always someone out there with a big call ...

Found this article well balance and the 120,000 ton number you used for 2011 ... well they agree ... but in 2015.

http://www.resourceinvestor.com/pebble.asp?relid=29058

Just a little difference ...

Might also help with some reading on the following link ....


Cobalt Development Institute

Currently, we have 44 members from 18 countries including all the major cobalt producers.


http://www.thecdi.com/institute

Maybe you could share a link with the increase in demand call you have or is it your own view ?

Cheers



--------------------
All views expressed are my own opinions. While I take every care when posting no guarantee to the absolute veracity of the postings is given or implied. Please do your own reseach and consult a professional investment advisor before investing.
 
favshare
post Posted: Apr 19 2007, 06:33 PM
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Hi guys , you peaked my interest with this one. So I did a simple thing and put Colbalt in the seach engine in the share scene web site and these are all the code that had Colbalt mentioned somewhere. Not sure how relevant some off them are but it is a start.

HAV,WGR,MLX,CMR,CRC,HAZ,VCN,EYE,INL,ARU,RML,HMC,WSA,PDM,GRY,RRS,LHG,FXR,JRV

HOPE THIS HELPS. smile.gif

 
woteva
post Posted: Apr 19 2007, 06:11 PM
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QUOTE (kahuna1 @ Thursday 19/04/07 06:15pm)

kahuna as I said Co as by product of Cu Ni will add some supply to market but taking into account the increase in demand and drop-off of stockpiles then Co will remain in shortfall until 2010.
I still expect we will see a rapid increase in price due to a sudden spike in that shortfall into 2008 as the market digests the fundamentals. After 2009 the shortfall will begin to decline as new supply comes to market...but the price will still be over $100 by 2011 as by 2011 global demand has been estimated at a min. 120 000 t pa, double current levels.



--------------------
"If history repeats itself, and the unexpected always happens, how incapable must Man be of learning from experience."
GBS
 


kahuna1
post Posted: Apr 19 2007, 05:15 PM
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Hmmm ...

Yes market is tight ... ....... lots looking and I believe 50 or so listed on the asx with JORC deposits. Don't doubt the price goes up this year .... or out to 2011-12

One in fact has a JORC deposit with 150,000 tons of cobalt along with 2 million tons of Nickel.

As for new mines and none opening .... I disagree totally .... if a new Nickel mine is opening its usually an associated metal ... cobalt.

Sometimes also found with Copper and deposits in PNG in particular seem to be found with CO.

Just some of the companies with Cobalt interests ...... there are over 200 globally.


All companies with cobalt properties
BAJA MINING CORP.
CHINA NONFERROUS METALS INT'L MINING CO. LTD. (CNMIM)
COLUMBIA YUKON EXPLORATIONS INC.
ELDORADO GOLD CORPORATION
EQUINOX MINERALS LIMITED
ESO URANIUM CORP.
FIRST NICKEL INC.
FNX MINING COMPANY INC.
FORTUNE MINERALS LIMITED
NAMEX EXPLORATIONS INC.
NEWMONT MINING CORP
SCANDINAVIAN MINERALS LIMITED
SOLEX RESOURCES CORP.
ABITEX RESOURCES INC.
ACCLAIM EXPLORATION NL
ADITYA BIRLA MINERALS LIMITED
ADMIRALTY RESOURCES NL
AFRICO RESOURCES LTD.
ALBERTA STAR DEVELOPMENT CORP.
ALBIDON LIMITED
ALTAI RESOURCES INC.
ALTIUS MINERALS CORPORATION
AMADOR GOLD CORP.
ANGLO AMERICAN PLC
ANOORAQ RESOURCES CORPORATION

And it goes on and on ....

As for demand side ... well your number on cobalt global demand GROWTH is about what I think same sort of thing as Nickel ....

Supply ..... your thoughts are wrong ..... I know this because the Ravensthore Nickel mine opens next year and is in current ramp up ..... and its production will be

QUOTE
The project involves open pit mining from three adjacent ore-bodies, and a hydrometallurgical process plant to treat both limonite and saprolite ores to produce up to 50,000 tonnes p.a. of contained nickel and 1400 tonnes of contained cobalt in MHP


When in full tilt .... without looking at some of the other I know produce Cobalt as well as Nickel ....

There are a lot and I mean a lot of others .... Cobalt producers coming on line .... dont get me wrong I agree demand growth is also moving with it. Main uses are the old batteries and super alloys which account for around 50% of its use.

HIG's Ramu mine .... another one

QUOTE
The feasibility study envisaged production of 32,800tpa Ni and 3,200tpa Co as cobalt salt, over a 20-year mine life.


And a swag of others...... and i mean 50 or more out to 2010.

Do not disagree however the price remains well bid .... very much like Nickel the outlook the same ... but there is quite a large chunk of supply coming on line in coming years for cobalt ... as well as Nickel but demand is driving things. Supply is chasing the demand growth and unlikely to catch it till 2010 or 2011.

Not all of the following are Cobalt .... they are Nickel mines new ones and expansions so u will have to look to see if the Nickel is associated with Cobalt but Ravensthorpe is .....
Ramu didn't make it onto this list for some reason .... but it does ... 2009 start ...
Berong is ... 1.3% NI and 0.74% CO ....
Caldag .... is same grade 1.30% nickel and 0.07% cobalt


You can check the rest if u want.

Then we have copper mines new producers with associated Cobalt and there are lots of them coming into production 2007-12 but tiny Cobalt from each of them.

Like Nickel also ... and Cobalt but not too much higher I think. Market is valuing Nickel and cobalt via association with a long term price of about 33% of the current spot.

Think this is wrong ... demand is going nuts and Nickel is struggling to keep up with demand growth ... so too cobalt alongside.

Basically I don't think you will find a cobalt mine as such ....
the ratios are about 30% from Ni Co deposits mainly Laterite ones and rising with developments ... then 35% from Cu Co deposits which are suplhide deposits
Then the rarer Ni Cu Co Suplhide deposits about 18 % and the balance being made up from secondary sources.

Pretty sure I read out to 2010 ... the cobalt market gets around 20,000 more tons of production out to 2010 from the CU CO and Ni Co alone .

Spent the weekend looking at both so pretty sure of the outlook and numbers. Xstrata and BHP and quite a few others all the same sort of tune. The 7 listed below, Ni Co laterite ones make up the lions share of new CO supply I think ... 15 k tons or so between them.

Cheers




%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

Berong – Toledo Mining +10,000tpy 2006 Q4 Ore Production
Caldag – European Nickel +21,000tpy 2007 Heap Leach
Ferronikeli – Int. Mining/Alferon +10,000tpy 2008/09 Smelting to FeNi
Goro - Inco +60,000tpy 2008 HPAL
Onca-Puma - CVRD +57,000tpy 2008 Smelting to FeNi
Ravensthorpe – BHP Billiton +45,000tpy 2008 HPAL
Vermelho - CVRD +46,000tpy 2009 HPAL
Total +249,000tpy


Brownfield Expansions, Committed:
Moa Bay / Sherritt +16,000tpy 2007 HPAL
PT Inco +19,000tpy 2009 Smelting to Matte
Rio Tuba II +10,000tpy 2009 HPAL
Total +45,000tpy
Grand Total +294,000tpy

The above are Nickel laterite expansions and Most have associated Cobalt ....

Below are the Nickel Suplhide expansions planned and less will have associated Cobalt .....
Suplhide deposits individually obviously smaller and easier to produce ..... less capex up front. Obviously the only ones which will have Co are the ones also with Cu as a by product about 33% of them without checking would be a fair call.


Greenfield Projects, committed: Capacity Timing Product
Avebury – Allegiance +8,000tpy 2007 Concentrate
Bostwana Activox – LionOre +23,000tpy 2009/10 Metal
Enterprise – Albidon +8,000tpy 2008 Concentrate
Flying Fox –Western Areas +12,000tpy 2006/07 Concentrate
Nickel Rim South – Xstrata Nickel +12,000tpy 2009 Concentrate
Total +63,000tpy

Brownfield Expansions, committed:
Black Swan - LionOre +5,000tpy 2006 Q4 Concentrate
East Alpha – Consolidated Minerals +5,000tpy 2007 Concentrate
Jilin – Jilin Huarong +15,000tpy 2008/09 Matte
Jinchang – Jinchuan +15,000tpy 2007/08 Metal
Maggie Hays – LionOre +6,000tpy 2007 Concentrate
Miitel South – Mincor Resources +2,000tpy 2007 Concentrate
Nkomati I – ARM/LionOre +5,000tpy 2007 Concentrate
Phoenix – Tati Nickel +2,000tpy 2006 Q4 Concentrate
Prospero – Jubilee Mines +8,000tpy 2008 Concentrate
Raglan – Xstrata Nickel +5,000tpy 2008 Concentrate
Taimyr & Kola – Norilsk Nickel +15,000tpy 2010/11 Metal
Total +83,000tpy
Grand Total +146,000tpy


As for the Cu Co producers ... dont have a list but its longer than both the above but the actual amount of Co pruduced by them each is tiny.

Biggest supply source will be the Nickel laterite and Lamomite projects coming on line or expanding. Basically there will need to be one new Ravensthorpe sized Nickel mine announced each year just to keep up with demand growth. There ar equite a few likely deposits which surely will be coming on line post 2012.



--------------------
All views expressed are my own opinions. While I take every care when posting no guarantee to the absolute veracity of the postings is given or implied. Please do your own reseach and consult a professional investment advisor before investing.
 
will_smith
post Posted: Apr 19 2007, 04:29 PM
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Posts: 957


In reply to: woteva on Thursday 19/04/07 04:12pm

Commonly refered to as the I-Pod metal

yeah I too like the long term growth prospects

for mkt cap v resource my mulla is on VCN

 
woteva
post Posted: Apr 19 2007, 04:12 PM
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QUOTE (kosmos @ Thursday 19/04/07 04:56pm)

Thanx kosmos, but I'm thinking more of pure Co play.I do hold a TSX listed company called Caledonia Mining that has a large Co deposit in Zambia that they are currently bringing to market, however it is all but impossible to find an Aussie producer, but that is what makes the whole Co picture so bullish. It is produced as a by-product by many Cu/Ni producers but very few principle producers.

Demand is increasing dramatically and supply is, (if anything) at present declining as the US and Russian defense has all but run out of stockpiles and will very shortly dry up completely.

The current annual shortfall could will increase drmatically in the next 12months 10K t by mid 2008 is conservative.

End users will pay the prices too because overall a quadrupling of the current price will not effect their bottom lines very much. For instance a HEV,at current prices contains around $250 Co. Considering that consumers are prepared to wait months for delivery of a HEV at present and ever rising oil prices I can't envisage of a drop-off in sales. In fact quite the contrary. Sales of HEV's are increasing dramatically.

Combine the above with moblie phone sales in China and India and the Co story couldn't be better.

The problem is finding a vehicle to exposure.



--------------------
"If history repeats itself, and the unexpected always happens, how incapable must Man be of learning from experience."
GBS
 
moosey
post Posted: Apr 19 2007, 04:05 PM
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For a junior you could also try this one-:
Metals X Limited - Investor InformationMetals X Limited is traded on the Australian Stock Exchange. Ordinary fully paid shares in Metals X are traded under the code MLX and options expiring 31 ...
metalsx.com.au/investors/ - 6k - Cached - Similar pages

MLX METALS X LIMITED
April 2007
18th Becoming a substantial holder
12th Wingellina - Scoping Study Results
2nd Appendix 3B
March 2007
29th Collingwood Tin Project
21st Change in substantial holding
20th Appendix 3B Placement to Jinchuan Group Limited
20th Wingellina Attracts Chinas Largest Nickel Producer
20th Change in substantial holding
16th Wingellina - World Class Nickel Deposit
14th Half Year Accounts
January 2007



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--------------------
All posters Please note, the decision to either buy or sell this share is entirely the individuals choice, I am not authorised to give investment advice, I post here to discuss the merits of technology as I see it, which may or may not be correct? and any information here is worth what you paid for it! the moose is loose
 
 


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