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$22.2m follower assets
BHP Sees Need for Nickel
BHP Group will increase its spending on nickel exploration over the next two years to meet growing demand for the raw material used in making electric vehicle batteries, the chief of its nickel operations said on Wednesday.

“This year will be the highest annual spend for exploration in Nickel West,” Farrell said.
By 2030, around 60% of all car sales globally will be electric, increasing to 90% of all car sales by 2040, she said. “The dominant battery chemistry powering this global fleet is expected to rely on nickel,” Farrell said.

“This megatrend, combined with a firm demand base from the traditional stainless and class-1 applications means we anticipate demand for nickel in the next 30 years will be 200% to 300% of demand in the previous 30 years,” she said.


Recap of my June 1st post on the need for nickel:

BHP, the world’s largest mining company sees nickel as one of three “future-facing commodities”, along with copper & potash, and is currently scouring opportunities in the highly prospective Ring of Fire region of Ontario.

According to Rystad Energy’s October 2021 press release, global demand for high-grade nickel will outweigh supply by 2024 and will continue a steady year-on-year climb. Rising demand spurred in part by the energy transition will lead to a shortage in less than two years. Unlike other essential battery raw materials used for cathodes such as lithium, the battery market is not the dominant end-user for nickel in the short-term. The stainless-steel industry accounts for more than 70% of current global nickel demand, and the battery market made up less than 10% as of 2020.

Nickel demand from the stainless-steel industry is expected to grow at 5% a year, while the market for batteries is poised to explode. In an unconstrained supply scenario, battery demand for nickel could quadruple by 2030. The battery market currently only accounts for 9% of the current global supply, but that share could rise to 31% by 2026.

There may be enough nickel in the ground to support a major EV ramp up, but there are not enough planned mining projects or processing facilities to make the type of high-grade nickel that’s needed for EV batteries. The nickel content in battery cells is only increasing, as more nickel increases energy density. Not all nickel is high quality enough for EV batteries, it must be “class-one” nickel, with at least 99.8% purity.

My current favorite speculative nickel play in the high-risk junior mining sector is $SPC.V.

Others for your watchlist:

$NAN.V
$CTM.AX
$CRI.V
$FPX.V
$HZM.TO

Please DYODD, I am happy to answer any questions that I can – and as always, please note that you should never invest more than you can afford to lose in such a high-risk sector. For me that’s normally a 1-2% allocation, never more than 5%.

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Jennifer's avatar
$22.2m follower assets
The Need for Nickel
CEO Neal Froneman of Sibanye Stillwater was interviewed in November, stating that the company has plans to grow its battery metals business further, banking on the ongoing growth of the electric power train and electromobility. “We are focused specifically on lithium and nickel; we think cobalt and manganese are going to be thrifted out of battery chemistries,” A constraint on the production of raw materials essential to the energy transition, such as nickel, lithium and copper, is a “new wave” impacting the sector and is likely to act as a restraint on the adoption of EVs, Froneman said. “God forbid, we don’t want car companies trying to run mines, just like we wouldn’t want miners to run car companies – it would be an absolute mess. But car companies are desperate to secure raw materials and fast-thinking companies like Tesla have recognized their growth will be constrained by not having the metals they need,” he told Metal Market Magazine. “The constraints are not the factories, the car plants, the technology – it’s the metals. That’s why we have a much more conservative view of the rate at which battery EVs will make inroads – it’s not as quickly as most people think,” he said.

BHP, the world’s largest mining company sees nickel as one of three “future-facing commodities”, along with copper & potash, and is currently scouring opportunities in the highly prospective Ring of Fire region of Ontario. BHP’s president for Americas Minerals, Ragnar Udd, expects that the world will need four times the nickel in the next 30 years as it has in the past 30. After BHP’s failed bid for Noront, Udd confirmed the company would still be pursuing assets in Canada because of the country's high-grade nickel deposits, policy that’s becoming more investor friendly, and a population that seems to “get it”. Udd said that BHP will pursue value “wherever that may be”. Though he noted early-stage to mid-stage projects posed more risk, they could also bring a higher reward and said acquisitions could include in-house exploration, as well as early-stage investments in junior and mid-sized miners.

According to Rystad Energy’s October 2021 press release, global demand for high-grade nickel will outweigh supply by 2024 and will continue a steady year-on-year climb. Rising demand spurred in part by the energy transition will lead to a shortage in less than two years. Unlike other essential battery raw materials used for cathodes such as lithium, the battery market is not the dominant end-user for nickel in the short-term. The stainless-steel industry accounts for more than 70% of current global nickel demand, and the battery market made up less than 10% as of 2020.

Nickel demand from the stainless-steel industry is expected to grow at 5% a year, while the market for batteries is poised to explode. In an unconstrained supply scenario, battery demand for nickel could quadruple by 2030. The battery market currently only accounts for 9% of the current global supply, but that share could rise to 31% by 2026.

Volkswagen CEO Herbert Diess said recently that Tesla CEO Elon Musk is moving “twice as fast” as the rest of the industry in the shift to EV production. Tesla Inc. has been scouring the globe for the metal, signing pacts with several nickel suppliers since 2021.

There may be enough nickel in the ground to support a major EV ramp up, but there are not enough planned mining projects or processing facilities to make the type of high-grade nickel that’s needed for EV batteries. The nickel content in battery cells is only increasing, as more
nickel increases energy density. Not all nickel is high quality enough for EV batteries, it must be “class-one” nickel, with at least 99.8% purity. The higher the grade of the original nickel deposit, the easier & less energy to process it. Most sources of high-grade nickel sulphide are found in Canada, Norway, Australia, and Finland. Additional nickel could come from laterite, a lower quality but more prevalent type of nickel found in Indonesia and the Philippines. Upgrading low-grade nickel laterites is an extremely energy-intensive process, and the CO2
footprint would in approximately 15-20 times that of Talon Metals’ Tamarack project in Minnesota. North American projects also potentially bring supply closer to an end-user in the future.

My current favorite speculative nickel play in the high-risk junior mining sector is $SPC.V.

Others for your watchlist:

$NAN.V
$TLO.TO
$CTM.AX
$CRI.V
$FPX.V
$HZM.TO

Please DYODD, I am happy to answer any questions that I can – and as always, please note that you should never invest more than you can afford to lose in such a high-risk sector. For me that’s normally a 1-2% allocation, never more than 5%.

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