Demand for cobalt being powered by boom in electric cars

PALA Investments Ltd fund manager Anthony Milewski figures that one of the best payoffs from a global boom in electric vehicles will be a hard, grey metal that so far has drawn little interest from investors. That's why he's stockpiling it.

During the past year, the Switzerland- based mining fund has been buying cobalt, an essential element in the lithium-ion batteries powering Tesla Motors Inc cars as well as all sorts of mobile devices. Even after a 50 per cent surge in prices last year, Mr Milewski and other bulls expect more gains as companies like General Motors Co and Volkswagen AG make their own electric vehicles.

But cobalt investing isn't all that simple. There's very little trading in futures contracts offered by the London Metal Exchange (LME), which can mean increased volatility risk. A handful of penny-stock companies like Fortune Minerals Ltd are developing cobalt projects, though most won't start producing for years. And for mining giants including Glencore plc and Vale SA, the metal remains just a small byproduct of bigger copper and nickel operations.