Interesting debate on this whole thread. I have been following it last month or so, so thought I would provide a view as well. For disclosure looking to buy back in, albeit I regret selling but such is life.
This whole debate is around the following three concepts and upfront I think both aspects of the debate have validity. The positivity or negativity depends on whether you take a short or long term view here.
1. Timing
It is obvious market conditions have changed sine WFE went into a trading halt. You just have to look at the broader market for that. If anyone thinks otherwise well just map the DOW and cobalt (and lithium carbonate prices) last year.
2. Short Term versus Long Term
The short term outlook for cobalt last year has changed, and that is reflected in what has happened to the cobalt price. But longer term the outlook for the cobalt price remains very favourable IMO as EV takeup increases. Like lithium, the demand for cobalt will not go away. What is important is that the price of EV reduces which will accelerate EV takeup with consequential demand increase in demand for inputs such as cobalt (and lithium). Most forecasts I have seen on the 'net' do not look at the impact of EV price reductions on input needs and therefore exponential growth in cobalt (and lithium) demand. A good example is the computer, if you followed the forecasts in the 1980s the laptop/computer would be in its infancy stages, yet price reductions are the basis for accelerated takeup with consequent increase in demand for the inputs. Ditto for the car and what the Model T Ford did for the car industry as a whole at the start of the 20th century.
Like in the LNG area, essentially when you build new cobalt supply capacity it can't be put built at the incremental basis to exactly match demand hence in the short term you get a 'glut' of sorts and therefore price reductions, like what you are seeing for cobalt. But demand does catchup and prices head back north which is exactly what I expect to happen in the cobalt (and lithium) area albeit prices won't go back to their 'highs' of the last few years but will still rise a little from here (and certainly will not fall back to historical averages of the period prior to EV takeup).
Another way to put it, cobalt prices may remain 'bearish' in 2019 but that will change overtime. When the input market is bearish, in a growing end market of EV, new supply capacity is not introduced at the mine level and what then happens is demand catches up to supply and passes it and the action begins again. The outlook for cobalt to 2030 is positive and that will be reflected in a long terms 'positive' price graph (uptrending with peaks and trough given how supply capacity is introduced into the value chain).
https://investingnews.com/daily/res...ls-investing/cobalt-investing/cobalt-outlook/
https://www.woodmac.com/news/editorial/the-cobalt-conundrum/
do not advertise external links.au/companies/news/212832/cobalt-set-for-bearish-2019-but-demand-fundamentals-remain-strong-212832.html
https://finfeed.com/features/fundamentals-say-dont-write-cobalt-off/
3. JORC versus WFE
Fundamentally, WFE takes the ore from supplies and produces the cobalt. But it is still reliant on companies proving up their resource so that they can get WFE to use that ore to produce cobalt/copper and pay them.
In other words, WFE is still reliant on companies having the resource to use WFE's production capacity, full stop. To suggest JORC does not matter to WFE is a very strange argument to make. WFE can only make money if companies come to a view their JORC resource is worth mining, and here is the catch, some of these companies will develop their own processing facilities so not all will be fixated on using the services of WFE or selling to WFE. Why would you as a resource owner tranfer an element of your profit to a processing facility? Too me this suggests who will be selling to WFE or using the services of WFE will be those companies who do not have a sufficient resource (but still have a good resource) to justify building their own processing facility.
Obviously longer term what I expect is that WFE will prove up its own tenements to feed ore into their production facilities, rather than seek to buy/treat other company's ore. In other words, my gut feel is a lot of what is been debated here is of a short term nature because longer term the WFE production and feedstock model will be very different to what is been debated here.
The production facilities are worth a lot of money to WFE when it gets its own feedstock into those facilities, hence for those with a long term view WFE looks like a very worthwhile stock to invest in.
My blabberings based on nothing.
All IMO IMO IMO
I ripped out your JORC quote so we don't get confused
