Record nickel prices could jumpstart a half-dozen mining projects in Canada. Prices have been climbing steadily for months, as investors bet supply for the metal, a key ingredient in batteries, would fall short of growing demand for electric vehicles. Then, on March 8, the price surged to US$100,000 per tonne on the London Metal Exchange (LME) from about US$20,000 per tonne before trading was halted.
The LME attributed the surge to concerns about Russia’s invasion of Ukraine, which accounts for 11.2 per cent of world nickel production, according to Statistics Canada. Analysts and industry executives also pointed to rumours that a large investor had staked out a short position on the metal, and were applying a squeeze.
A short position is essentially a bet that the price of an asset will fall, and a squeeze is an attempt by another investor to exploit that position. “The last couple days, you almost have to set them aside,” said Martin Turenne, chief executive of FPX Nickel Corp., which is developing a nickel project in central British Columbia.
“It’s a very particular short squeeze that’s being just incredibly messy, but you know the nickel price will settle back down to a more normal range when these winds have passed.”
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