 we've got Jack and Christopher and Peter Klossy on the same panel. I mean, what does Kelly always say? Boom. This is the last panel of our sixth annual Clean Tech and Technology Metal Summit. And if you ask me, ask me, what is the next big thing? I'm going to tell you Cobalt, okay? So while I love, don't get upset with me, Greg. I love Rare Earths and Ian, I love Rare Earths, but I love Lithium and Graphite, but I think we have a bull run here. So let's start with Peter Klossy, because we've been branding you as the Cobalt King. Cobalt King, go first, please. Thanks, Trace. I was speaking on this yesterday. The reason why Cobalt is likely the next big thing is simple economics. Increased demand, falling supply, rising prices. Cobalt is, there's about a 50,000 ton consumption a year in the industrial area. Super alloys, paints, pigments, medicine, nuclear. The demand is being driven by the cathode of the electric batteries for electric vehicles, for your laptop, for the tools you use in your backyard for your electric toothbrush. They all need Cobalt demand to skyrocket. And Jack, weren't you supposed to talk today? What? Weren't you going to talk about recycling? Well, actually, you know, yes, it's about Cobalt at the moment. Interesting thing is that North America has about the same percentage use of Cobalt as it does abroad. It's about 10% of the world's supply. And we already recycled, of the 10,000 tons of Cobalt used in the U.S. each year, 2,000 tons are recycled. The alloyed people really recycle it because they can't get, they can't be sure of a supply of new Cobalt. So when you refine Cobalt ores, the refining is not very efficient. In the world, there's about 150,000 tons a year of Cobalt, as Cobalt in order brought up, and maybe 120,000 tons of Cobalt in the market because a lot of it's just left behind. First of all, it's not the primary product in the mining. That's nickel and copper normally, silver. So there's a whole lot of Cobalt lying around that's ready to be brought back into the market by, well, recycling is already underway. Do you include waste rock and surface rock in recycling? Absolutely. But I don't want to call it recycling. Let's say that it's looking for value in residues, tailings, and scrap. And I have a friend who's in the Cobalt market trader, and he sent me an email this morning. He said, do you want the flora sweets? Yeah, I do. And so this is a market that's about to take off, and even the, let's say the reclamation and recycling of low grades of Cobalt. Think about something. If any of you still has a gold object on you, a tooth or a pen or something, you realize that some of the gold that probably was used by Cleopatra to buy sparkling water or whatever she did. And we never throw gold away, do we? Never. It's been a human, it's just the way we think. Nobody's ever thrown any gold away. They might bury it with a ferrule for a while, but it comes back out. We trust that gold is going to be worth something. Christopher, is this what you meant with downstream being the next big thing? The recycling of Cobalt, for instance? Is this what you were talking about? The processing in North America of, say, recycling facilities. Is this part of what the big picture you had? Not really, because you actually can avoid the mine altogether, because effectively it's Cobalt that's come out of the ground, and it doesn't need a miner to recycle it. What you would be mining is the drawers and cupboards and closets around your house. If we take a good example, my house, I have a wife and two children, and in our house there are probably around 15 redundant cell phones. They're not used anymore. We keep them for some emotional reason. There are also several laptops that have died. There are batteries sitting around the house. Now all of those batteries are then replicated in everybody's house. I'm sure everybody here has multiple cell phone batteries that are dead sitting around the house. Now if you were to take all those, and then you were to recycle all of those, and of course in yesterday's discussion throw the graphite away, but take the lithium out, take the graphite out, and then if you want to fiddle around, take the copper and the manganese out as well. You could actually then have an amount of cobalt that is six times the current need for batteries for new cell phones. So you can actually deal with all that cell phone. That's 60 seconds. How do you encourage people to do that? We were talking earlier about the brown bag process. It took 20 years. Even now with your green bin, a lot of people don't do it. They just throw the garbage away. How do we change our society to do that? No one was paying you for the brown bag. Who's paying me for my battery? Okay, do you want to pay someone for the battery? And then people will be rummaging around. Where's that cell phone I saw last year? Well, it sounds to me like you have a business model here. We should talk later, Christopher. Okay, so let's go back to the mining of cobalt. And we have Mark here. I mean, Mark, your company is taking off with your graphene processing. You've got cobalt too. Can you just give us a bit of an overview? Yeah, sorry. It wasn't trendy. We picked it up like five or six years ago. We've been nurturing it, waiting for the price to get good on some of the, compared to some of the grades. I think one of the things talking about waste stock piles and stuff to remember is a lot of cobalt metallurgy is not that. It can be simple, but it often isn't. Of course, the word cobalt comes from the German word for goblin because it was very difficult to separate back in. Can you say that slower? I didn't get that. Oh, sorry. Cobalt originally is goblin in the Saxon. It was around Freiberg in the late 1700s, when they managed to isolate it because cobalt is often in a sulfide form. That is, well, the primary deposit of sulfides, and it's hard to separate. So how much do you have? I mean, this is exciting. It's kind of like finance. We have gold bikes back here. And you may not know, for instance, that alkane, in addition to being, you know, zirconium and hafnium, it's probably in a revenue of gold a year. Okay, those are the little surprises. Now we're finding out, Mark, you've got this cobalt. How much do you have? Well, we've got a deposit that's currently got 105 drill holes in it over about a kilometer long, and a whole bunch of new things that are popping up all over the joint. His agreement last month, what, moved your stock up 66%. Okay, so Monti here is representing e-cobalt, which is one of the big performers of the year, and is a cobalt producer. That's right. Or we will be. We're not a producer yet. We expect to be in production by mid-2019. So we're only two years out. We're just finishing our feasibility study. We expect it fairly soon. And once we get that, then we'll recommence construction, and then it'll be very quick. You know, we've already got all our groundwork done, so we just need to get the money together to get underground. So we do expect to be in production by mid-2019. Okay. Hi, Peter. You want to give us a bit of an overview of CDLT? Can I pick up on what Jack was saying? Absolutely. In fact, I recommend we have a good group of power talkers on this panel. I recommend people just lean in. Just keep your answers short, please. The cobalt embainment in Northern Ontario is one of the richest cobalt slash silver deposits in the world. It was mined out in about 1908 to 1915. Then it was remined in the 30s and remined in the 60s. The explorers went in, they pulled the ore off surface. They called the silver sidewalk, because it literally was a sidewalk of solid silver through the middle of town. The old rite of Wayne Line is right downtown cobalt before the fire. The mining methodologies in those days were very different from what we have today, and there was no value in the cobalt, so it was dumped. It's in the bush, it's in the lakes, it's in the rivers, it's under the roads. There have been several turns of companies going into Northern Ontario, draining lakes, taking the silver cobalt. So there are estimates all over the map of how much cobalt is quote on surface, but if you're going to include that in recycling, Chris, I'd be willing to bet there's more up there than there are in all of the closets and drawers with the batteries. You haven't seen Christopher's home. Isn't this what you meant by upcycling? A more comprehensive? Yeah. Yeah, exactly. In the old days they used to mine everything, right? There's nothing left under surface. So they came up and was dumped at surface, whereas now we leave them in the tunnels. He says in the old days and looks at Jack, you should push back. Well actually it's even before my time, imagine how long ago that is. And you're right. I mean there's cobalt everywhere and people are looking like this, where is it? Well they're standing on it. Okay, but it's technology. I think Chris was saying this earlier today. I would frankly just rather open the drawer and take it out of the drawer than actually have to lift a couple of roads in Northern Ontario to get it. Yeah, but I can pull millions of pounds out of the row. How much do you have in your drawer? Well we need to mobilise the capital to do that. A much smaller amount of capital is used to get the batteries and then dissolve them and take the constituent parts out. That's the easy picking. Because what I'm saying here is not that we've got a solution to the cobalt crisis. What we have is a source of cobalt to deal with all the laptop batteries and all the cell phone batteries that you're going to need for the next 10, 15 years. Because once you set up the recycling process when you've got a global population of 7 billion people with 7 billion cell phones at that point all those cell phones after two years and most people only have a two year contract on their phone will recycle it and you won't need to mine any more cobalt for that sector. Now as for the electronic vehicles, electronic vehicles that's a totally different equation. And we have to ask you about Musk. Elon Musk and that's your favourite topic. Who does he have a deal with for all his cobalt? Can someone bring me up to speed? Who's Musk taking a deal with? They're buying the batteries from Panasonic. So where are they getting their cobalt? Through Panasonic is that correct? Well they're buying the batteries so it's wherever Panasonic is sourcing from. Well they claim of course to want to be encouraging sustainability but they need a new resolution to be nicer and not interrupt people. Look how that's going. I don't think that's any secret say most of us have met Tesla and various battery manufacturers so I don't think I'm talking out of school but last time I caught up with Tesla when David Dink was still there no interesting cobalt whatsoever. Yeah it wasn't plastic. They just needed that they had no interest in it. Actually they have put out reports that they don't need it. Have you seen that? Discounted the issue of supply and demand. Christopher I am absolutely certain that we communicated that with Jack in an e-mail. Do you recall? Yeah in the ostrich berries it's hitting the sand. Okay all right. In its SEC filings Tesla has said that it has secured a supply chain for all of its critical metals including it goes on to list many metals including cobalt and goes on to say that that supply chain has been sourced domestically. I bet Monty has an opinion. Monty tell us what you know because I suspect you know more. Yeah look at his eyes twinkling. There's no way that they can source it domestically because there is no domestic source period right now. The only other source is really 98% of it is byproduct. 60% comes out of the Congo. The only primary deposit is in Morocco and that's only 2% so they're going to have a hard time. All the cathode makers there's not a single cathode maker in North America that I'm aware of. All the cathode makers are in Asia right now in China. Panasonic purchases their cathode you know also from other people so they're purchasing from a middleman to be able to build the batteries then they send the batteries to Tesla to build their battery packs. So it's a long chain you know so it'll be interesting to see what they do but it's not going to be they're not going to be able to secure a supply domestically it just simply doesn't exist. Okay so do we have a bull market right now starting or is it just beginning from the perspective that the education is just warming up out there. Peter what do you think about this? I think the general populace hasn't yet caught on to the shortage of cobalt. The average investor and person in this room is aware of it but perhaps isn't as profoundly aware as those of us in cobalt are. If the cobalt market were a year long we're probably in the third week of January. Okay that's a great metaphor in Christopher. Well if the batteries that we're talking about cobalt iron batteries people would be worried about the cobalt. It's all in the name. Okay and I want to ask Mark because Mark you've just you've got you're working with multi-billion dollar companies. Now you must be privy to some confidential information that you might want to share with friends. Tell us one thing we're not supposed to know. Well look I'll tell you a slightly different opinion I obviously can't talk about some of those things but we would have seen what parlor or some of the ex parlor guys are doing. What I saw happen I think about 12 months ago with the lithium with the lithium price boom coming back again was a load of funds around the world a lot of institutions that want to play the battery market and graphite pricing drives them crazy it's totally opaque and they don't really like any of that. Everyone wants to know what's the price what's the market and of the main battery minerals you know it's not really transparent but it doesn't matter if you're an analyst and you're just trying to get some numbers down on paper to prove you know to support the paperwork. So I think what we've seen is a really dare I say it an analyst or almost a marketing type drive that's hit it and the guys said great we're going to rush all these contracts on the LME and that's smashed the price up. But where is the other price I mean I'd love to know where other people use non LME prices you know and the oxides trade somewhere between 15 to 30 percent above LME. So everyone's basing their price projections and working on stuff all based around an LME price that can be so easily stacked essentially has gone from what 15 to 55 thousand in 12 months on a volume of contract which doesn't really reflect anything in the real market. I forget by ton mark but by the pound it was nine dollars and eighty five cents in February so Jack you speak with you know high level politicians all the time I want to know about the Department of Defense and their interest in cobalt. I put you on the spot. It's a big secret I guess because I don't think less any more than about 7 billion people know this but the US Defense Logistics Agency which is the stockpile has received notice that it will be purchasing cobalt for the US stockpile as of the beginning of their fiscal year which is October 1st. Now this may not sound like much you but they haven't been doing this. So the first thing they did they said where do we do that okay they're now in that phase of where do we get this stuff. I don't know how much they're supposed to buy but they're they're in the market right now. So Monty you know about how much cobalt there is out there is cobalt like some of the metals where you just have to find where a meteorite has hit the planet and you get lucky where do we find how much cobalt is there. Well there's actually a lot of it out there but most of it's a byproduct of copper and nickel so you know it's not one of those things that you can just ramp up your cobalt because cobalt's doing well you're going to end up driving down your copper price so if that's your primary asset then that's not going to work very well for you. Although I do know that for companies like Glencore cobalt has made a much more significant impact on their bottom line with the move that cobalt's made. So it'll be fairly interesting there's obviously going to be a lot more people in the cobalt's worth of cobalt in it if cobalt was to double the $50 which it went to in about 2009 I believe it was 2008 the price of the car would only increase by a thousand bucks and when you look at the price of a cell phone the small amount that's in it it's just not going to have an impact so cobalt does have a long way to move. We have one analyst in Johannesburg she has one dog her dog is named cobalt a month ago many of you here know Mark Kristoff from Traxxas and I asked him what his favorite technology metal was and he said cobalt. Now Jack does this surprise you? No you know a Tesla battery has 16 kilo of cobalt. Yeah so that works out to about 35 pounds right? Gentlemen we can't hear you could you lean back in there because I think people will be interested in how much cobalt is 16 kilos so that works out to about 35 pounds a little more than that at 25 dollar cobalt you're looking at doing you know 875, 900 dollars worth of cobalt Okay so then take that math further Tesla said they're making half a million model 3's at 15 kilograms of car that's 7.5 million kilograms of cobalt are 8,400 tons or 8% of the current supply for one model of one car. Please note that would be the entire manufacturing industry in North America uses all by itself so they would double the uses of cobalt in the United States Even Chris's house isn't that big Just when my phone rang earlier it was Electraveia trying to get in on the panel on the battery materials So Christopher tell us a little bit more about where you think cobalt is headed this year I mean people come to this conference to find out about things they don't understand but it's something you can give us for us new investors in cobalt on how we should select a cobalt stock because it looks like we have a bunch of new plays coming out and it doesn't sound like any of them know what they're doing Not all of them I won't address these companies but what I will say is that the point that was made about investors getting in on it is a valid one I used to be a hedge fund manager at the time and if you look at the issue that came up for a hedge fund manager sitting in his midtown Manhattan office mid last year he wanted to get in on the battery scene does he buy a thousand tons of lithium or does he buy the equivalent amount of cobalt and if you bought the equivalent amount of cobalt for the same money value he'd end up with a lot less to store and storage is a big issue if you're going to start hoarding and these hedge funds want to hoard and so it was more sensible by the cobalt now as Jack's just revealed the strategic reserve or whatever it's called has suddenly woken up the light bulb has come on and they've decided now we've got a panic buy in the cobalt market so you've got a variety of idiots with a lot of money running in and pushing it up but there are people who professional people in the trading community who think actually that the spike may just there'll be a certain amount of profit taken by the hedge funds but it may not actually result in a slump because if I was the Chinese if hedge funds started selling I would move in and I'd start buying because the Chinese do not have a cobalt source of substance of their own they're desperate to buy anything that the DRC will sell them and so you've got one smart buyer and you've got a collection of dumb buyers and they're all going after the same thing which means higher prices I heard you were suggesting that China actually does have a supply it's called Kongo it's called the Philippines it's called Indonesia I mean they have already been doing what the Japanese metal agency but yeah I totally agree on the price outlook as far as I'm concerned it's still part of a mega trend actually the price in real terms is not stupid compared to some so yeah and I think if you look at the products and how far away recycling is to some degree although that's really accelerating obviously through Jack's good work but also just the sheer size of it that needs to be done for the EV market but yeah I hear that China within their borders don't have a heck of a lot which is a good thing just to get back on the strategic buy side so in Europe Cobalt is on the critical minerals list which so in the EU that means that if you've got a project involving Cobalt you can get preferred status on development so there is some upside to it and Cobalt's one of them oh I'm staring at Peter Cobalt is different from the rare earths we heard earlier that the magic and the rare earths is in the processing and the end product that you create for a buyer that needs that product Cobalt comes out of the ground people need it in its raw form or in its oxide form Cobalt is more like gold or nickel or copper than the rare earths the demand is there we don't have to go create it okay just so I'm going to warn oh Ian wants to follow up so yeah my view is that what we saw on the rare earths so if Cobalt goes to $50 a pound all those smart dudes in China and Japan are going to get out and say we need to take Cobalt out of the battery system we need to take it out we're going to find something else now that takes a year or two but what's to say that isn't going to happen and isn't going to happen very quickly it'll take a lot longer than a year or two just the development of it to try and develop a new battery there's several people that are trying to work on it now it's all in the laboratory and it'll take a long, long time before it's developed before they can get it to be commercially into production when you've got all these car companies they're already looking at the NMC and the NCA batteries that have Cobalt in them they're not going to just switch gears in an instant and move on to something else in another year like the commercial production that can compete with the Cobalt battery alright perhaps a bit of a naive question but if Cobalt is on a return cycle back to $50 a pound where it was at its peak what was the mechanism that knocked it off of that $50 a pound point and is whatever happened the last time a mechanism that's sitting there waiting to happen again now what happened last time was there was a civil war in the DRC 60% of Cobalt comes out of the DRC so when they went to war it basically shut down the supply coming out of the Congo the price shot up to $50 then as soon as they resolved that and they got back to work in the mines there then of course the Cobalt started to flood the market again and then it collapsed down to about $9 the difference this time around is that the push up in the Cobalt is demand driven as opposed to a problem with supply but keep in mind that the Congo is a powder keg now I mean they're on the verge of a civil war as it is they've got a problem with Ebola I mean they have every problem that you can imagine not to mention the child labour and everything else so it's a problem and that's where 60% of the Cobalt comes from so at any day we could have a big issue that could drive Cobalt even higher hopefully that won't happen that's not based on demand rather than a supply issue so we just have two questions left Dr. Flint Troy Grant tells me you're the smartest person in the entire universe so we expect a really good question no pressure Troy has misinformed there's lots of smarter people in the room the Democratic or sorry the undemocratic Republic of Congo looks like it's going to probably explode I was wondering if anyone on the panel could give me a comment on what you think that would have on the impact of Cobalt price and availability I'll just do the ethical supply chain that Amnesty International has been agitating for which is part of that political corruption process our call which we made yesterday and we made publicly is if the ethical supply chain is imposed it will knock roughly 18% of the global supply of Cobalt offline and prices will approach 100% and it will cost a bigger dollars my thoughts on that subject would be that the Chinese will pay some local warlord to make sure that they get whatever's going as per usual so between the question and your answer let's assume you're right but that then brings in further geopolitical intrigue how will the United States respond how will the UK respond how will Russia respond and just your answer adds itself to the conflict that's going on in there that's the reality of the supply chain let's ask Wilbur Ross if he even knows what Cobalt is to get a blank look I'm sure Andre Gautier, a man of it would like to ask a question if you remind me when the bubble of the river the price increased dramatically and at that time I'm looking at the mini store you don't miss any computer etc etc that's for the river if you have the most of the cobalt would be in the battery the iron and if it's for the electric and the hybrid car etc mostly electric but you have the other car what is the impact if I remember for a normal car it's 4,000 pieces or parts the price of the parts is very important the price of the car the certain segment of the market it's very important if we think that the electric car needs less parts etc what is the margin that the car manufacturer asks if the cobalt go to 30 or 50 dollars a pound you had it earlier for the battery I don't know how much cobalt is in the rest of the vehicle there's probably a little bit in analloy somewhere it would be about a thousand bucks per vehicle right now at 25 dollar cobalt so if you double the price of cobalt to 50 dollars you're looking at an extra thousand dollars per car so it's not really that much it's absolutely it's very small for a cell phone computers or anything like that is there any in the alloys? yeah there is I mean it's a very small amount and that's why I rounded it up if you take 25 dollars about 35 pounds get 875 and then maybe you've got a little bit more cobalt so double price of cobalt if you're looking at an extra grand that's about it for an electric car so it's not that significant really if you're looking at a 40-50 thousand dollar car so on this note I'd like to take it to Amanda and Paul who just keep making more and more money and are looking for creative ideas cobalt? I just would say that seems to me to be a lot of money for a car that's where you're talking about it maybe being four kilos right and so therefore a heavy railroad's car you might have been talking about increasing it during the crisis by 150 or 200 dollars that was enough to send automotive manufacturers into a tailspin and going to look for functional equivalents right and the reason why is because they don't afford they don't have the option of changing the price point of the car during the car's life cycle so if they launch it at 24,999 three years down the track on that model they can't put the price up to 25,999 so I think this is a big problem no you're right about that it's not insignificant amount and I didn't mean to put it that way but the other thing that's happening too is the range is getting to be bigger and the batteries batteries are getting to be more efficient and at that point they will be able to reduce the amount of cobalt to a certain degree like if you look at a NMC it's about 15% cobalt and NCA which Tesla uses is about 9% so through efficiencies over the next several years they will be able to decrease the amount of cobalt that goes into those batteries to a certain amount so I'm talking about the cost of it today based on the batteries today but the technology is improving it's true that the key metric there might be the dollars per kilowatt hour rather than looking at the vehicle as a unit so if it's a dollar per kilowatt hour and you're also getting performance gains then that can remediate basically some of that price increase but at the end of the day demand is still exceeding supply but there are options there's some politics behind some of the chemistry used in the batteries as well that can drive some manufacturing centres to go in different directions and I agree that it's very hard to shift batteries overall but there have already been investments made in this area that are sort of heading off but to get back to Ian's point about why won't it just crash again I think because it is part of the demand drivers so by hook or by crook as the years go by I think it's why lithium, lithium crashed down again right but then it's up again and then it's down but I think if you look back over ten years I think it's up in nine out of ten years but you only just noticed it recently and I think we'll be the same that way One other thing too something I haven't heard anyone mention at all in the last two days is power walls like the Tesla power wall Chrysler in Germany also makes power walls the same very similar actually but as that market is waiting in the wings and will also take off so you've got another massive market that's right in behind all of this is just getting ready to ramp up now so as we see the power walls ramp up I mean that's going to also cause an increase in demand And there's about seven kilograms of cobalt in a Tesla power wall I finally have one question I don't know much about lithium batteries because as you know there is no rears inside so those products are not interesting to me but this morning we heard that lithium demand was high on supply or will be a high on supply and now it's cobalt sorry I missed most of the presentation cobalt as well and I feel like there is little brain spent on recycling batteries which is amazing to me because batteries are easy to collect and then it's just a matter of brain work and try to recycle as much as possible from those Well the problem here I'm a great advocate for the recycling but if you look at the size of cell phones how many cell phone batteries would you have to recycle you can make the equivalent of the same amount of cell phones with those with each battery but how many each of those if you take them out of circulation do you need to make one Tesla battery and you probably took about hundreds so it's a hundreds to one ratio that's good but I work on the lighting and recycling back in 2006 and the major difficulty was that the recycling was not organized so if it had been organized 10 years earlier you would have a code bar and inch lamp telling you what kind of material it was so that you could adjust very easily the chemical process recycling has to be organized long in advance to test back eyes but it will change over time so you better organize the recycling now, not in 10 years time but recycling is a product of price if the price had stayed at $9 we wouldn't be talking about recycling cobalt batteries and what would have happened if it started recycling cobalt batteries 10 years ago the price would have gone to $4 because there would have been far too much cobalt around now you've got a situation of what was a relatively balanced demand just being totally blown up by an extra tsunami of demand potentially coming along the other problem too the big expense with recycling it's not a problem getting the cobalt out of the cathode but it's a problem getting the cathode out of the battery that's where the big expense is with recycling batteries right now it's been described to me as like trying to take the omelet and putting it back inside the eggshell which is something you can use Jack and I were talking about graphite after these batteries have got electrons go through them the actual individual atoms can reposition themselves and their properties will change so it doesn't mean once you've made it it can come back again so there's a lot of work to be done and a lot of these big OEMs are going to have to do it once forward and all the major manufacturers do bigger and bigger EVs they probably can't even do them without having a recycling program set up so the duracell batteries right but are those actually economically efficient to recycle or is that government do-gooding at work I think it's mostly marketing I'm in the amounts I've seen you guys might have seen something different but I'm seeing about 5% max content I happen to know the guy who does that and he told me he sends back alloy sorry what does he do recycles so he owns the company that actually does the recycle but he does he sends the metal back to the battery maker and they advertise using green recycled materials it's a maximum of 2% of the new battery but they don't mention that they say this battery has been made from recycled materials what are the efficiencies then none it's all friends this makes me misty eyed this is why I love investor intel we are a platform for debate and dialogue for intelligent investors to ask questions so that we can understand what we're investing in so on that note we're going to take this up into the wine and cheese reception and I'd like to thank everybody