Tesla Motors Inc (TSLA): A Revolution In Industrialization Is Underway

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March 24, 2014 10:38am NYSE:GEX

investRick Mills: Imagine with me for a moment that the car market is at the start of a major transition. Why would I think that? Well…


  • Electric cars deliver full torque from a standstill so they have impressive acceleration. They are fun to drive!
  • Electric cars are quiet, there is no combustion, no muffler.
  • Electric cars do not use explosive fuel, there is no gas tank.
  • Electric cars are cheaper to operate, electricity being cheaper than gasoline.
  • Electric cars are also cheaper to maintain than combustion systems. Having far fewer parts makes the car less complex, easier and cheaper to maintain – there’s no ignition, exhaust, timing or cooling systems.
  • Electric cars can be plugged in at home and you wake up with a fully charged battery every day.
  • No more getting ‘hosed’ at the gas station, not even the day before a long weekend when combustion engine car owners are lining up.
  • Road trips have currently been extended to over 400 km on a single charge.
  • A network of charging stations is being built.
  • Tesla’s car battery can be guaranteed for a full eight years. Other manufacturers will follow this achievement.
  • Old batteries can and will be recycled. Current technology saves a minimum of 70 percent on CO2 emissions involved in creating lithium-ion batteries from scratch.
  • Zero tail pipe emissions.

I think that by 2020 battery-powered cars will become a no-brainer purchase for many of us.

The most recognized name in electric cars at the moment is Tesla Motors Inc (NASDAQ:TSLA) whose goal is to ship 500,000 cars in 2020. To reach that goal would require the entire battery industry to more than double production. That’s just Tesla – never mind other existing players and new entrants into the electric car market.

If ten percent of all cars on the road were to become battery-powered global battery production would require an astounding 20-fold increase.

JB Straubel, Tesla’s chief technical officer,  called this a “massive revolution in industrialization, on a scale that is kind of hard to imagine.”

Tesla Motors has plans to build, by 2017, the world’s largest lithium-ion battery factory – a ten million square foot manufacturing and recycling center it calls ‘Gigafactory.’ Tesla says its Gigafactory alone will eventually produce 35 gigawatt-hours of battery capacity every year which is more battery power than was produced globally in 2013.

Gigafactory will lower costs by shifting material, cell, module and pack production to one spot eventually allowing Tesla to roll off their assembly lines as many as half a million electric vehicles per year.  

There are three essential components to a lithium-ion, or Li-ion, battery:

  • An anode which is the negative electrode, it’s made from graphite.
  • A cathode is the positive electrode, it’s lithium with cobalt based chemistry.
  • An electrolyte, lithium salt is used as the conductor.

Lithium is not in short supply, as a matter of fact the market is currently in oversupply.

The graphite market is a different situation. There is currently a projected deficit if even just Tesla’s goals are to be met. However there is no actual shortage of graphite at this time and dozens of junior resource companies have graphite projects with many of them quite advanced.

That’s not the case for the other critical and strategic component of the lithium-ion battery – cobalt.

Much more cobalt is used in a lithium-ion battery than graphite. As a matter of fact LiNiCoAlO3 (Li-NCA) batteries typically have nine percent cobalt by weight. That equates to roughly six kilograms of cobalt per vehicle.

According to Robert Baylis, an analyst for Roskill, the Gigafactory alone will require an additional 6,750 tonnes of cobalt (current global annual demand 75,000 tonnes) when operating at full capacity. That’s hugely significant when you consider most cobalt is produced as a by-product of nickel mining (57%) and copper mining (37%) – only 6% of our cobalt use is supplied from primary cobalt operations.

The USGS calculates cobalt reserves are dispersed as:

  • Africa 52%
  • Americas 17%
  • Australasia 24%
  • Asia 7%

Some minerals are considered more important than others. A critical or strategic material is a commodity whose lack of availability during a national emergency would seriously affect the economic, industrial, and defensive capability of any country.

“Cobalt is considered a ‘technology enabling’ substance as its at the forefront of technological developments and innovation, whether for energy storage systems and catalytic processes, which are so important for the global green agenda, or enabling greater efficiencies in the operation of gas turbines. So subtle and essential is cobalt that it also forms the basis of many established and new biotech applications crucial for human health and diagnostics. In fact cobalt is so important for industrial development that the EU has recognised that it is a ‘critical’ metal for the EU in its Raw Materials Initiative, which was undertaken to help support EU industry from the effects of possible disruption to the supply of critical mineral availability.” Cobalt Facts, 2013, CDI

The U.S. Department of Homeland Security, in its most recent report, classified cobalt as a critical mineral.

The French Bureau de Recherches Géologiques et Minières rates high tech metals, including cobalt as critical based on three criteria:

  • Possibility (or not) of substitution
  • Irreplaceable functionality
  • Potential supply risks

Demand is increasing for critical metals due to:

  • Economic growth of developing countries
  • Emergence of new technologies and products

Many countries classify cobalt as both a critical and a strategic metal because cobalt is used in so many diverse industrial and military applications.

  • Super alloys
  • Renewable Energy Re-usable energy storage systems
  • Wear resistant alloys
  • Magnets
  • Binder Material
  • Thermal spray coatings
  • Orthopedics
  • Life Science
  • Catalyst in de-sulfurizing crude oil and as a catalyst in hydrogenation, oxidation, reduction, and synthesis of hydrocarbons.
  • Gas to liquid technology (GLT)
  • Other Uses – Drying agents in paints, de-colorizers, dyes, pigments, and oxidizers. Promotes adherence of enamel to steel, and steel to rubber in steel belted radial tires

Super-alloys use to be the largest use of cobalt and their manufacture still commands a large share of the market. But today the largest market share and the fastest growing use of cobalt is in energy storage – batteries.

Global Cobalt Corp. TSX.V-GCO

One of the company’s best maneuvering itself to take advantage of the ‘Revolution In Industrialization’ caused by the greening, the electrification of our land based transport systems is Global Cobalt Corp.

Global Cobalt Corporation is a critical/strategic metals company focused on the development of a new mining region in the Republic of Altai, a mineral rich pro-mining region of southern Siberia, Russia. Global Cobalt’s goal is to bring on stream a number of highly prospective projects and establish a new mining jurisdiction focused on cobalt and other strategic metals.

Global Cobalt’s flagship asset is the world-class Karakul Cobalt Deposit which has the potential to be the largest known primary cobalt asset outside of Africa. The Karakul option agreement was a milestone accomplishment and positioned Global Cobalt as a first-mover into the Republic of Altai.

The most recent results from the Winter 2013 diamond drill program at the Karakul Cobalt Project continue to duplicate and support a metal zonation geological model that demonstrates the Karakul Cobalt Deposit includes higher grade cobalt, higher grade copper and higher grading tungsten and bismuth zones than previous work had indicated. To date results correlate very well with, and verify historic Soviet-era drill hole results. Most importantly GCO’s results have confirmed the validity of the Karakul Cobalt Project. Also, new mineralized zones were discovered and promising silver and tungsten values were returned. Plans have been outlined to accelerate completion of a NI 43-101 compliant resource and fast-track development of the project to supply the growing demand for cobalt.

“Each release of assay results continues to confirm the validity of the historical drill and technical data but more importantly, we are gaining an understanding of the unique high grade sections for each metal group within the Karakul Cobalt Project which is key as we initiate on mine planning activities.” Erin Chutter, CEO of Global Cobalt

One of Global Cobalt’s strategic advantages rests in the Altai Sister Properties, a collection of assets that covers prospective ground in a westerly arc north of Karakul. Although the primary development focus remains the Karakul deposit, the Altai Sister Properties offer tremendous upside potential and, in some cases, extensions of known mineralization. Initial analysis of the historic drilling results, along with a geophysical review indicates that the Altai Sisters have the potential to add dramatically to the Company’s future resources.

Global Cobalt has an agreement with China’s top battery material supplier, Beijing Easpring Material Technology Co., Ltd. The Agreement provides GCO the right to sell to Easpring up to 100 percent of the total crude cobalt hydroxide, cobalt concentrate or cobalt carbonate production from the Karakul Cobalt Project for an initial term of 10 years from the commencement of commercial production at competitive market prices. In addition, the Agreement also allows for Easpring to participate in future mine project financing. Global Cobalt has also awarded a Feasibility Study to Beijing General Research Institute of Mining & Metallurgy, a leading global mining consultancy.

Speaking to Global Cobalt’s activities in the Russian Federation, Mr. Georgiy Mamedov, Russia’s Ambassador to Canada commented in a written statement on March 14, 2014:

“I would like to reiterate that Russia is committed to inviting Canadian companies to invest and work in Russia. We welcome foreign investment and will work closely with mining and exploration companies as part of that strategy. Global Cobalt Corporation is the type of company that we encourage to be active in Russia and we are very supportive of the Company’s efforts to be successful in its activity.”

Conclusion

Tesla is highlighting the revolution in industrialization currently underway – the electrification of our land based transport systems and energy storage affordable for everyone.

Global Cobalt Corp., with its highly qualified management team has the exploration, development and production expertise to enable timely, skilled development of their impressive asset portfolio.

Global Cobalt is the first-mover into a new mining region, the mineral rich, pro-mining Altai Republic of Russia’s southern Siberia. GCO is the pioneer, the first foreign, investable, publicly traded mining company to advance the mineral resources in the entire region.

Global Cobalt Corp. TSX.V: GCO, cobalt and the revolution in industrialization should be on all our radar screens. They are all definitely on mine, are they on yours?

If not, they should be.

This article is brought to you courtesy of Rick Mills from Ahead of The Herd.


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