Longer-term bullishness about the role nickel will play in the world’s green-energy transition appears to be outweighing its current sluggishness.
That is creating the curious conundrum where new discoveries of the lustrous metal are still being greeted with enthusiasm in stock markets, as evidenced this week on the ASX. But more on that later.
While currently trading at about US$21,000 per tonne (AU$31,350) – far closer to a 10-month low than the now seemingly-distant highs of US$48,000 (AU$71,680) in March last year – nickel seems to have some heavy-hitters sitting steadfastly in its corner, despite the current chills of global financial insecurity.
Notably, BHP Group remains a strong nickel booster, predicting demand for the metal will grow as much as fourfold during the next three decades as electric vehicles (EVs) almost entirely replace traditional cars. The world’s biggest miner predicts nine in 10 cars sold by 2040 will be EVs, helping to boost the worldwide usage of key battery materials such as nickel.
And it is the market for electric batteries that is seen as the foundation for nickel’s growth as it overtakes its traditional use in the production of stainless steel.
That hypothesis is backed by the fact that about 85 per cent of the nickel sulphate produced at the big Australian’s Nickel West refinery in Western Australia, already goes to the battery sector – remarkably, up from just 10 per cent just six years ago.
It is now a fact banished to the annuls of history that the miner even considered selling the plant before reversing that plan in 2019, as nickel’s key role in the energy revolution became apparent.
Such is BHP’s belief in nickel (and copper, for that matter), its Xplor program – an initiative launched in August last year to help the mining behemoth grow a portfolio of what the company describes as “forward-facing commodities” – will exclusively target nickel and copper-related projects when it kicks off its second round in September.
Global nickel supply is currently dominated by the archipelago of Indonesia, which accounts for 37 per cent of the world’s production and 22 per cent of reserves. However, the Indonesian Government’s ban on the export of nickel ore in 2020 is reshaping the industry, as that country looks to cash in on its dominance.
With supply of the finished nickel product set to grow from Indonesia, the ANZ bank predicts a similarly increasing presence for Australia, which clearly has no qualms about shifting ore. The nation’s output is set to grow from 154,000 tonnes last year to 202,000 tonnes in 2024.
But it is not just the big players looking to dine out on the looming nickel revolution. Sydney-based Resources and Energy Group saw its share price bolt 216 per cent last week after it got onto some nickel and cobalt in its first drill campaign for the year near the historic WA town of Menzies. Its stock touched 3.8 cents after closing out the week prior at just 1.2c.
The rise followed the unveiling of assay results from the company’s Springfield nickel prospect, which included a mineralised 8m interval going 0.64 per cent nickel, 469 parts per million cobalt and 45 parts per billion platinum and palladium.
Resources and Energy Group was formed in 2005 and has operated as a gold and energy transition metals explorer since 2015. It has the East Menzies gold project in WA and its Mount Mackenzie gold-silver project in Queensland in its portfolio.
The latter has a JORC 2012-compliant resource of 129,000 ounces of gold and 862,000 ounces of silver, while in WA, the company is working up a project which has a collective area of 103 square kilometres stretching over 50 tenements.
But it wasn’t just the explorers based on Aussie soil which were onto the nickel trend. Adavale Resources put on 137 per cent to hit 3.8c from a low of 1.6c after hitting nickel sulphides at its project in Tanzania.
After landing a 4.15m intersection of massive nickel sulphides, the company is beefing up its chase, with a second diamond drill rig joining the hunt.
Adavale, which sees itself as stalking “elephants” in the East African nickel belt, is drilling high-priority targets across its portfolio extending across 1311sq km. It sits along strike from Lifezone Metals’ Kabanga nickel project, which has been described as the world’s biggest “under-development” high-grade nickel sulphides deposit.
The ongoing EV boom means the global nickel demand appears likely to continue to increase, especially if the traditional demand generator of the Chinese economy slows down. However, when China eventually roars back to life, things could get interesting.
But last week wasn’t just about digging things out of the ground. Workplace wellbeing software provider Limeade took top spot as the highest runner on the back of a friendly merger with online health care provider, WebMD. After clocking off at just 11c a share the previous week, Limeade flew to 41.5 cents last Friday – a move that perhaps proves once and for all that there are dollars to be made in keeping employees happy, healthy and engaged.
Who would have thunk it?
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