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Driven in part by troubles with Vale’s Sudbury operations, nickel surged to a seven-year high on Wednesday. Nickel – the key mineral found in Sudbury – topped US$9.53 a pound, the highest it’s been since 2014.
Bloomberg News said concerns that there’ll be less supply of the key industrial metal to meet resilient demand from economies reopening as the pandemic retreats sparked higher prices.
The thunder from down under has been reverberating through Ontario’s Ring of Fire mining camp – located roughly 500 kms northeast of Thunder Bay – as Australian mining giants BHP and Wyloo Metals are fighting a bruising bidding war for Noront Resources. The junior exploration company owns the Eagle’s Nest nickel/copper potential mine as well as extensive world-class chromite deposits and other mineral-rich promising ground.
BHP is the largest mining company in the world, whose current CEO, Mike Henry, is a Canadian, while Wyloo Metals is owned by Fortescue Metals, founded by mining billionaire Andrew ‘Twiggy’ Forrest, and is the world’s fourth largest iron ore miner.
“Noront’s ROF land package hosts some of the most prospective mineral deposits in the world. These deposits have the potential to become Canada’s next great mineral district, supporting the production of future-facing commodities for multiple generations”, claimed a Wyloo Metals news release in August.
The entry of multi-billion-dollar mining corporations signals a proverbial “game-change” in the stalled Ring of Fire mining camp. Noront Resource was a struggling junior company that did manage to consolidate almost half of the valuable mineral claims in the camp but did not have the funds to do significant further exploration or to build their existing mine. Newly established and well-funded explorer Juno Corporation is the largest claim holder who after extensive aerial geo-physics surveys that showcased promising anomalies, is hoping to add to future discoveries.
Electric vehicle giant Tesla (NASDAQ: TSLA) has inked a multi-year nickel supply deal with New Caledonia’s Prony Resources, which guarantees the US carmaker about 42,000 tonnes of the metal needed to produce the batteries that power its EVs.
Prony, which bought the loss-making nickel and cobalt operations in the French territory from Vale (NYSE: VALE) earlier this year, said it’s targeting production of 44,000 tonnes of nickel by 2024. That’s about double the expected 2021 output.
Nickel is the mined commodity most exposed to biodiversity risks, a recent report by Verisk Maplecroft shows.
According to the consultancy firm, the battery metal’s exposure to such risks is mainly due to the fact that some of the largest nickel operations on the planet are located in biodiverse areas such as Indonesia, New Caledonia and the Philippines.
Nickel is having a bad week as China’s power crisis spreads from factories to households and its clampdown on steelmakers crimps the stainless market, still responsible for the bulk of demand.
Despite automakers’ clamour, less than 10% of nickel ends up in the battery supply chain, and market action is concentrated in Asia, specifically the Indonesia-China stainless steel industries. Nickel market watchers are not unaccustomed to ups and downs and Old Nick’s copper is having quite the year.
Western groups compete for assets to secure supplies of key battery metal
In remote northern Ontario, hundreds of kilometres from the nearest railway or paved road, the world’s largest mining group and an Australian metals tycoon are in a bidding war for a deposit containing millions of tonnes of nickel.
The battle between BHP and Andrew Forrest’s Wyloo Metals for the asset’s owner Noront Resources comes as miners race to meet surging demand for battery metals as electric vehicles go mainstream.
LONDON (Reuters) – Nickel is making a comeback. London Metal Exchange (LME) three-month nickel hit a seven-year high of $20,225 per tonne on Thursday morning and has a new-found spring in its step after collapsing in February.
That is when Chinese steel group Tsingshan announced its Indonesian nickel operations would supply matte – a form of the metal used only for stainless steel production – to battery makers. That undercut a collective bet that only refined nickel would be sufficiently high grade for the electric vehicle sector.
South Korean conglomerates Hyundai and LG will jointly build a $1.1 billion electric vehicle battery plant in Indonesia to take advantage of the Southeast Asian country’s potentially vast consumer market and rich natural supply of nickel.
The 50-50 joint venture, slated to operate in the Karawang regency, Indonesia’s West Java province, will break ground this year and start production in 2024 with annual capacity for 10 gigawatt hours of battery cells, Hyundai said in a statement on Thursday.
Hyundai and LG can churn out 150,000 battery-run electric vehicles at that capacity, the statement says. The factory built on 330,000 square meters of land will help Hyundai and its subsidiary Kia “secure a stable supply of EV batteries at a competitive price” for future electric vehicles, it adds.
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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.
Nickel is making a comeback. A strong pandemic recovery rally was rudely interrupted in March, when China’s Tsingshan Group said it intended to produce battery-grade nickel at its Indonesian operations.
Converting what is currently a process stream for Tsingshan’s stainless steel production to an input for electric vehicle cathode chemistry would undermine nickel’s bull narrative of a looming shortfall of battery-quality metal.
The London Metal Exchange (LME) three-month nickel price slumped from a seven-year high of $20,110 per tonne to $15,665 over the first half of March. It has since clawed its way back to a current $18,400 with ripples of tightness appearing across nearby time-spreads against a backdrop of falling LME inventory.
JAKARTA (Reuters) -Indonesia is considering a plan to restrict construction of smelters producing nickel pig iron or ferronickel in order to optimise use of its limited nickel ore reserves for higher-value products, a senior mining ministry official said on Thursday.
Indonesia is currently the biggest producer of the two crude metals, and a restriction on more smelters coming online could hit Chinese stainless steel producers who are among biggest customers for Indonesia’s relatively cheaper materials.
Restricting construction of new smelters is deemed necessary because of limited reserves of saprolite nickel ore, Ridwan Djamaluddin, a senior official at Energy and Mineral Resources Ministry, told Reuters as the government discussed the plan with a parliamentary committee.
Less than a year ago, two major nickel EV battery chemical processing plants planned to dump 31 million tonnes of toxic mine waste into the Coral Triangle, threatening fragile and endangered coral reefs and subsistence fishing communities.
Today, both projects have withdrawn their permits to dump mine waste into the ocean, and the Indonesian government has publicly committed not to issue permits for the harmful practice. But there is still work to do.
Earthworks is collaborating with Action for Ecology and People’s Emancipation (AEER) to ensure the Indonesian government uphold its promise to prohibit all future submarine tailings disposal. Until then, the risks to downstream users, financial backers, and most of all communities and the marine environment, remain.
China says it has found a way to make “green” nickel chemical for EV batteries from nickel laterite deposits in Indonesia that could help to alleviate the coming supply deficit in the metal that is essential to electric vehicle batteries.
Don’t be fooled. The process itself is extremely polluting, and ‘ocean tailings ponds’ are anything but green. Thankfully car companies aren’t buying it. Future nickel supply for battery-making is therefore unlikely to come from Indonesia or anywhere else where nickel laterites are mined.
EVs coming to Canada
Canada is in the beginning stages of developing an electric vehicle supply chain that capitalizes on the country’s rich battery metals endowment and cheap hydro-electric power particularly in Quebec and British Columbia.
A number of happenings in the copper market conspired to elevate the spot price beyond $4.60 a pound on Thursday, confirming Ahead of the Herd’s suspicions that a new wave of resource nationalism in some of the largest copper-producing nations is washing over the sector.
Resource nationalism is the tendency of governments to assert control, for strategic and economic reasons, over natural resources located on their territories. It has been identified as one of the key risks for investors in the natural resources space.
With the copper price soaring on tight supply and heavy demand, as the world’s biggest economies revive following a year of coronavirus-related restrictions, the temptation for producer nations to cash in on more valuable copper reserves to pay for social programs is proving hard to resist.
Indonesia is on track to become the world’s nickel capital with new projects potentially lifting the country’s share of the important stainless steel and battery metal ingredient to a whopping 60% of global output later this decade.
Much of the planned investment is linked to Chinese companies keen to cement their grip on stainless steel production and to meet fast growing demand for batteries which require a range of new-energy metals such as nickel, lithium, cobalt and copper.
The pace of growth in the Indonesia nickel sector can best be measured by an investment bank forecast that the country could lift its share of worldwide nickel production from 28% to 60% inside the next eight years.
