Commodity prices have seen drastic increases over the past several months as demand for materials increases in a post-lockdown world. Nickel is amongst many other metals that have seen increases in demand and prices as manufacturing scales up across the globe.
Nickel has traditionally been highly sought after for its use in the production of stainless steel. More recently, nickel has also become an increasingly important element in electric vehicle (EV) production, as the material allows for producers to create lighter, smaller and higher density batteries.
And as more and more countries around the world continue to push towards the adoption of EVs, demand for nickel has continued to increase. Analysts expect this rapidly expanding market to continue growing, with an estimated compound annual growth rate of 26.8 percent by 2031.
On Tesla’s (NASDAQ:TSLA) July 2020 earnings call, CEO Elon Musk was quoted as saying, “Please mine more nickel … Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way.”
Because of this, Canada continues to be a favorable location for mining companies looking to capitalize on this growing demand.
Not all nickel is created equal
From an investing standpoint, it is important to know that not all nickel that is extracted and refined is made in the same way. To be usable in electric vehicles, the nickel must be of the highest quality — often referred to as “Class 1.”
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