Mr. Hoffman: Geovic Mining is a Colorado-based company listed on the TSX exchange in Canada and the over-the-counter bulletin board in the States. Our primary asset is 60.5% ownership of a world-class cobalt property in Cameroon, Africa, which also holds significant quantities of nickel and manganese byproduct. About 95% of all the world's cobalt is produced as a byproduct, so the fact that this is a primary mine makes it very unique. And as far as we know, it is the largest primary cobalt deposit ever discovered.
TWST: What's the overview of the supply and demand dynamic, and the competitive issues within the cobalt marketplace?
Mr. Hoffman: Cobalt right now is about a 60,000-ton-per-year market, which is very small. It's larger than a rare earth, but when you compare it to, say, nickel, which is 1.5 million tons per year, or copper, at 20 million tons per year, you realize it's a very small market. Particularly because almost all of it is byproduct. So there are very few companies that have much of an interest in cobalt other than as a byproduct from their nickel and copper mines.
Cobalt demand has been growing for the past 15 years at a roughly 7% or 8% CAGR. The largest component of cobalt demand is rechargeable batteries, which is about 25% of the total. In fact, there's been a lot of interest in lithium lately because of the growth in demand for lithium-ion rechargeable batteries. But it turns out the cobalt market is equally exposed, via percentage of total usage, to batteries. Moreover, lithium ion batteries actually use more cobalt than the current batteries in cars like the Prius, which itself is anticipated to switch over to a lithium-ion battery - from a nickel-metal hydride battery currently - in the next few years. So there's potentially significant upside potential to cobalt demand for the next 10 to 20 years, particularly regarding rechargeable batteries.
From the supply side, as I said, 95% or so is produced as byproduct from very expensive nickel laterite and copper mines from various parts of the world. Going forward, around half the supply that's required to meet rising demand is expected to come from large copper mines in the DRC, many of which are uncertain as to whether they'll actually be built. So the wildcard is the DRC. And given that we have a primary source of cobalt, moreover in a far more stable country than the DRC, we are in a strong position to capitalize.
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