Is cobalt the commodity of the future?

If the vision of Elon Musk comes to fruition, cobalt will become an important commodity for the mining industry in the future.

The billionaire genius recently unveiled Powerwall, a home battery that give homeowners the ability to get off the commercial power grid entirely by storing surplus electricity generated from solar panels during the day or from the utility grid when rates are low.

Unlike Tesla's electric cars, Musk has stated Powerwall will use a more powerful battery consisting of nickel, manganese and cobalt. If the home battery takes off like many people expect it to (there are 38,000 reservations for the home battery pack so far), Tesla may require up to 10,000 tons per year of cobalt. At that rate, Tesla will account for roughly 10 percent of the current global market.

“The new currency for smart commodity investors will be cobalt, which is poised to play a growing role in everyone’s life if the vision of American billionaire Elon Musk to have a Tesla Motors battery powering homes comes to fruition,” said Andrew Critchlow, commodities writer for The Telegraph.

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Cobalt is commonly produced as a by-product from either copper or nickel. According to the U.S. Geological Survey, the Democratic Republic of Congo accounted for half of the global production for cobalt in 2014. Current leading producers include Freeport-McMoRan, Lundin Mining and Fortune Minerals.

In their recent market overview report for investors, commodities team at Macquarie wrote: “Many peer commodities would be more than happy with that relative growth coming from all consumer sectors combined, never mind just one alone. With a steadily improving demand profile, we do expect it to receive increased attention over the coming two years.”

Musk continues to thrust the renewable energy industry forward and the payoff could be in the hands of the mining industry.

As the demand for electric cars continues to grow -- 740,000 units sold last year -- and new incentives to consumers to shift away from fossil fuels for transport and electrification are on the horizon, more mining companies are preparing for a climate change in business.

Cobalt is the one commodity that should be on everyone’s radar.  

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