5 Reasons Investors Prefer North American and European Cobalt Mines

Mining is a geographically diverse industry with active operations on almost every continent. Investors have a lot to consider when deciding where to put their funds as mining has a profound impact on some areas, while they may be rich in rare materials, a successful mining operation may not be sustainable. There are social and ethical factors to consider, such as conflict mining, most well known for the blood diamond trade that predominantly affects mining operations in Africa; Environmental factors like the impact on biodiversity in Brazil, where mining is affecting 40% of the livable habitat of 13 species of bird and anuran; and logistics, it can be difficult and risky to establish a mining operation abroad, where many areas lack proper access to transportation and communication systems.

With that in mind here are 5 key reasons that investors prefer North American and European Cobalt Mines:

Reduced Risk to Social Reputation

Who you associate with matters, and investors must consider the impact their investments may have on their social reputation. Many consumers still associate Apple products with the controversial working conditions and employee treatment at Foxconn, who manufactured many of their devices most notably the iPhone and iPad. In 2016, Amnesty International alleged that the cobalt used to manufacture lithium-ion batteries distributed globally in cameras and mobile devices had been produced by child labour in the Congo, sold by the Congo DongFang Mining Corporation. These sort of associations can devastate your corporate reputation. Mining operations in the E.U. and North America carry less risk for investors with their strict regulations and guidelines, including higher safety standards for employees and operations, access to better technology and equipment, and ethically sourced labour.

Reduced Political Risk

Investors take on a lot of risk working with unstable countries or high rates of corruption, it can come with a lot of unexpected problems. The Democratic Republic of the Congo contains significant quantities of untapped mineral deposits, including a large amount of the worlds cobalt supply, but historically the mining industry has caused turmoil in the area. In 1998 local mining operations were forced to close due to robberies, kidnappings, and harassment from the Rwandan and Ugandan military. These risks are not present when investing in North American or E.U. mines, and that stability is important to investors, who put a lot of capital into developing these mining operations. Their risk of theft and loss of employees is greatly reduced, protecting the initial investment and future profits.

Higher Safety Standards

Work Safety is one of the top concerns for mining operations in North America and the E.U. and their investors, but mines in other areas are not subject to the same laws and regulations creating a higher social risk for investors. With the implementation of modern safety guidelines and the Mining Safety and Health Administration, annual deaths in mine employees have dropped from 242 in 1978 to 28 in 2015. Proper ventilation equipment, hearing protection, and spraying equipment are all mandatory in N.A. and E.U. mines to protect employees. These practices also protect investors from the social ramifications of being involved, even indirectly, with substandard work practices like those reported at Foxconn.

Improved Logistics

Mining operations in North America and the E.U. have access to local logistics networks, such as railways, roads, and telecommunication services allowing employees, technology, and resources to be coordinated and brought in safely and easily. In case of disaster, these mines are also more accessible to emergency and rescue personnel. This improved access to logistics makes for more efficient and safer mining operations, both of which are important to potential investors.

Better Availability of Talent

Due to the differences in standards and working conditions around the world, many of the industries most talented refuse to work in mining operations outside of North America or the E.U. Those who are willing to take on the work often leave their families at home, creating strain and resulting in reduced workplace performance and a higher rate of accidents. 

In an intensely competitive market, having the top talent is crucial, and as leaders in the industry, mining operations in North America and the E.U. have no trouble attracting the industries best, giving them a competitive edge that makes them much more attractive to investors.

Thanks to social media, news of incidents travels faster than ever before, increasing the sensitivity and accompanying risk involved with political and social incidents. This is a trend that will drive Cobalt and other mineral prices higher, for a more in-depth analysis of the subject, download our free guide, 5 Trends That Will Drive the Price of Cobalt Stocks to the Moon in 2019.