Martin Vydra: Cobalt is Seasonally Weak, but Fundamentally Strong
Martin has a long engineering background from all over the world since he worked for Sherritt International Corporation. He has seen all aspects from the extraction and development including marketing and selling directly to end users.
He describes why the cobalt market is quite opaque primarily since it is produced as a by-product of nickel and copper mining. As a result, the price is typically not controlled by supply and demand. This lack of transparency means a retail investor can’t quickly determine the market price.
Generally, cobalt producers will negotiate annual contracts with their metals customers about once a year. They rely on a magazine called Metals Bulletin that sets a benchmark price for cobalt contracts settlement.
Many investors do not realize that there is already significant demand for cobalt from industry for products using super-alloys often needed for aircraft. Also, electric vehicle growth is consuming cobalt not only in batteries but in electric motor magnets and other electronic components.
His position involves looking for strategic opportunities that less experienced analysts might overlook. His focus is to bring a technical perspective on the assets that Cobalt 27 is looking at and to identify assets that are undervalued or at least fair-valued.
He is bullish on cobalt and feels the recent downswing is temporary and that demand will continue to be steady and strong. He says, “higher prices will be needed to bring additional supply online.” In the next three to five years higher prices remain likely, especially if the E.V. market picture continues.
Talking Points From This Weeks Episode
• Cobalt market is quite illiquid an easy to use pricing mechanism is lacking.
• Spot prices may not show an accurate picture of the cobalt market.
• There is lots of existing demand and uses for cobalt.
• Remains bullish on cobalt and sees a strong demand picture going forward.
Martin Vydra is Head of Strategy for Cobalt 27 having joined after a 31-year career with Sherritt International Corporation, a leader in the mining, processing, and refining of lateritic nickel and cobalt with operations in Canada, Cuba and Madagascar. Martin is widely recognized as an expert in nickel and cobalt extraction, processing and refining including the development and application of advanced technologies to maximize the recovery of valuable metals such as nickel and cobalt from a variety of feeds. While at Sherritt, Martin’s technical accomplishments spanned four continents and over twenty operations.
From 2012 to 2017, Martin held the position of Senior Vice-President of Metals, where he successfully guided the division through one of the most challenging periods in the commodities cycle, while delivering production at near to bottom quartile costs. Martin played a key role in the assessment of Cuba’s operations at Moa Bay, which resulted in the formation of Sherritt’s Moa Joint Venture.
Over his career, Martin has been responsible for the sales and marketing of cobalt, nickel, fine cobalt powders and chemicals, thermal spray powders and coinage with end users ranging from aerospace to lithium-ion battery manufacturers.