I pointed out last year that it was a good time to buy commodities. Supplies are down and will take a while to recover. Plus, inflation is rising. Apple agreed and showed it by deciding to buy cobalt directly from producers. Cobalt is essential in producing batteries, and Apple needs to ensure a supply at a reasonable price.
Due to bone-crushing drops in the price of gold, silver, oil and other commodities in the ’80s and ’90s, mining companies either underinvested in new production or shut down mines altogether. For a long while, this left the world with supply constraints. The mining industry, after years of running full-out to increase production, has caught up to demand with many major commodities. Oil is an especially key example, via shale production.
Lithium and cobalt may be “new school commodities” but they are no different than other commodities in being subject to the laws of supply and demand. What could change its current condition of tight supply and strong demand? New mines in friendlier places could be discovered. Chemists could come up with replacements for cobalt or at least find ways to use less of it. But those two things look a long way off.