Not that long ago it was described as ‘flying under the radar’, but as the electric vehicle (EV) market picks up, nickel is making a new name for itself in the resources space. 

While much of the hype surrounding commodities for EV usage has centred on lithium, a larger amount of nickel than lithium is actually required in the production of these batteries. 

Having already been strengthened in the past 18-24 months thanks to a steady demand of stainless steel, primarily from China, nickel looks set to boom. 

Independent Group CEO Peter Bradford said stainless steel demand had put the nickel market in deficit for the past three years, following an oversupply that saw prices plummet and buyers stock up. 

“This year’s deficit is about 100,000 tonnes, which is about five per cent of the nickel market,” he said. 

“That’s a pretty tight deficit, and ordinarily that would be driving a much higher price than what we have now. 

“However, during the excesses of the period leading up to 2014 we ended up with a large inventory and we are slowly reducing that inventory.” 

Mr Bradford said as the inventory reduced down to critical levels over the next one to two years, nickel prices could be expected to “take off”, driving new industry investment. 

Experts believe a nickel price of $20,000-$25,000 a tonne would incentivise new investors. As of October 2017, the price sat at just over $14,500 per tonne. 

“Going forward, things look even brighter because we are starting to talk positively about global growth,” Mr Bradford said. 

“EV’s could potentially deliver an extra 10-40 per cent of nickel demand by 2025.” 

Speaking at the Paydirt 2017 Australian Nickel Conference in October, St George Mining Executive Chairman John Prineas shared similar statistics, saying analysts believed the nickel price would increase by up to 200 per cent by 2020. 

“Growth in EV battery manufacturing alone is forecast to increase nickel sulphide demand by 300,000 to 900,000 tonnes annually by 2025,” he said. 

“Incremental demand for nickel sulphide from the EV market will continue to rise rapidly after 2025. 

“Now is the time to gain exposure to a rebound in the nickel price.” 

St George boasts the most recent nickel sulphide discovery in WA at its Mt Alexander project, with a high-grade nickel- copper-cobalt deposit over a strike length of 3.5km. 

Sitting pretty at its own site, it’s as if Independent Group CEO Peter Bradford had a crystal ball when he first chose to invest in the Nova project at Fraser Range. 

“We built Nova at the bottom of the nickel cycle and we are just bringing it up to full production at a time when nickel prices are starting to take off,” he said. 

“I’d like to be able to claim we foresaw the market dynamics – it’s the sort of project that will be highly profitable at all stages of the nickel price cycle, so it makes sense to build that whenever you can.” 

In an average year, Nova produces around 26,000 tonnes of nickel in the form of nickel sulphide that is processed offshore to become nickel sulphate, which is needed in batteries. 

The mine was brought into commercial production only five years after discovery, and Independence Group is on the hunt to find “another Nova”. 

In addition to nickel, Nova produces 11,000 tonnes of copper and 900 tonnes of cobalt annually – two other commodities critical in the production of EVs. 

“Nickel and cobalt are a part of the battery, but copper is also important because you need an extra amount of copper in electric vehicles to move all the electrons around,” Mr Bradford said. 

“Plus, people have got to put in charging stations to power their electric vehicles, so that requires more copper again. 

“Copper is going to be a big winner from a volume point of view.” 

Cobalt has seen a value rise in the last 12-24 months thanks to its application for EVs and small production scales. 

“There’s not a very big market, so any increase in demand has a big impact straight away,” Mr Bradford said. 

“We are big believers in the nickel-cobalt story and we are also big believers in the Fraser Range where Nova is located.” 

As a result, Independence Group has built up its land position to 12,000sqkm and has spent $30 million this year on exploration for additional nickel-copper-cobalt deposits. 

WA-based cobalt exploration and development company Ardea Resources holds one of the world’s largest cobalt resources at it Kalgoorlie Nickel project and is banking on a cobalt boom. 

Ardea Resources Managing Director Matt Painter said cobalt demand was forecast to outstrip supply, with future supply bottlenecks likely. 

“The automotive electrification revolution is underway,” he said. “All car marques will sell EV and/or hybrid vehicles soon. 

“The outlook for the industry is looking good for the foreseeable future.” 

So, what could a boom mean for these industries? 

On the upside it means higher prices, better cashflow, improved balance sheets and potential funding for further exploration. 

On the downside, supply is generally tight during a boom when it comes to people, equipment and resources. 

Mr Bradford said in order for industry to really take advantage of the upcoming boom it needed to invest in further exploration, with a risk that opportunity could be bypassed totally if it didn’t get on board. 

“As an industry we haven’t been doing enough exploration across the board in all the metals,” he said. 

“What that means is we have set ourselves up for a lack of mine supply in the future. 

“We don’t know where the metal is going to come from going forward.”  

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