- Cobalt Holdings hopes to raise around $230m in gross proceeds from the IPO
A metal investment firm promising to offer equity investors exclusive, direct exposure to the price of cobalt plans to list on the London Stock Exchange.
Cobalt Holdings announced on Monday it hopes to raise around $230million in gross proceeds from a City IPO next month in efforts to capitalise on soaring demand for the energy transition metal.
Mining giant Glencore and investment firm Anchorage Structured Commodities have agreed to become cornerstone investors in the listing and will take an estimated combined stake of 20.5 per cent.
Cobalt Holdings said the IPO will enable shareholders to have direct exposure to cobalt prices, without shouldering the risks and liabilities associated with the element’s exploration or production.
Often the by-product of copper and nickel extraction, cobalt is considered an important element in the energy transition owing to its prevalence in electric vehicle batteries and renewable energy storage.
It is also used in super alloys for gas turbines and aerospace engines, blue pigments for glassware and ceramics, and catalysts that remove impurities like sulphur from crude oil.
Future: Cobalt is considered a major element in the energy transition owing to its prevalence in electric vehicle batteries and renewable energy storage
The Democratic Republic of Congo is the world’s largest cobalt producer, accounting for about 78 per cent of annual global output last year, according to price reporting agency Fastmarkets.
Annual cobalt demand more than doubled from 94,000 tonnes to 239,000 tonnes between 2015 and 2024, but consultancy Benchmark Minerals forecasts this hitting 369,480 tonnes by 2031.
Cobalt Holdings revealed it has an agreement to provide up to 1,500 tonnes of cobalt to Anchorage in 2031 and a six-year deal to supply about $1billion of the mineral to Glencore.
The latter proposal includes an initial $200million purchase of 6,000 tonnes at a discount to the current spot price.
Cobalt prices at present remain below long-term averages amidst softening EV sales and increased production from Indonesia and the Democratic Republic of Congo.
Yet Benchmark forecasts a supply deficit emerging in the cobalt market over the next few years due to growing demand for EV batteries.
Jake Greenberg, chief executive of Cobalt Holdings, said: ‘We believe now is the right time to build a strategic stockpile of cobalt. The long-term price of cobalt has historically been well above the prevailing spot price.
He added: ‘We anticipate that supply and demand will come back into balance over the coming years and will create the necessary conditions to incentivise investment in new mines and refining capacity in the West, all of which are essential to deliver the energy transition.’
Greenberg co-founded London-listed Yellow Cake, a specialist investor in uranium, the fuel used to produce electricity in nuclear power plants.
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