The nickel industry should be prepared for shortages of 150,000–300,000 tonnes a year by the early 2020s due to increasing market demand, according to Poseidon Nickel’s chief operating officer.
Speaking at the Australian Nickel Conference in Perth yesterday, Poseidon Nickel COO Michael Rodriguez said nickel’s use in stainless steel production was a “huge driver” of the metal’s consumption and still dominated the market (with global growth of roughly 8 per cent per year).
However, he believes the industry can also expect shortages as nickel becomes increasingly used in electric vehicle (EV) battery production.
“Over the next seven to 10 years, the battery market will be dominated by lithium ion batteries for cars — with batteries comprising about 40kg of nickel per standard EV produced, such as a Tesla S model,” he said.
Speakers at the conference talked positively regarding the future of Australia’s nickel industry as an important component for base metal and battery production.
“It doesn’t need a lot of maths to see that something like 300,000 tonnes of nickel will be needed to go into EVs within the next two years alone,” Rodriguez said.
Independence Group managing director Peter Bradford said the Nova operation in Western Australia’s Fraser Range, which recently completed its first year of production, was well placed to “emerge as a stable supplier of minerals critical to clean energy storage”.
Alto Capital analyst Carey Smith said nickel margins had improved allowing production to become economic on a cash basis.
He referenced a poll conducted by the London Metals Exchange (LME) that considered nickel to be the base metal with the greatest potential in 2019.
Smith also mentioned that the global nickel market was poised to undergo significant changes, with the uptake of nickel pig iron (NPI) in China and Indonesia — from 25000 tonnes in 2006 to 650,000 tonnes in 2018 — contrasting an overall decline in global production of nickel sulphide.
“Ten years ago, nickel sulphide feed accounted for around 55 per cent of nickel production, or around 750,000 tonnes,” Smith said.
“In 2018, it reduced to 700,000 tonnes from 805,000 tonnes in 2015 and is becoming less important in the global nickel market. That ore decline is likely to continue with expectations of nickel sulphides only commanding 33 per cent of global consumption in 2018.”
PCP Capital Group principal Liam Twigger also chimed in, citing several share boosts and floats among companies in the sector, including Poseidon, whose share price was up 350 per cent year on year from September 2017.
“In my view, I believe that value seems to building in the Australian nickel sector,” he said. “This value is being added at a very steady pace.
“This is in addition to further consolidation opportunities in the Kambalda region and Fraser Range, and a continued strong push into the battery metals space by the likes of Nickel West with its Nickel Sulphate strategy, Western Areas with its MREP and Independence Group with Nickel Sulphate hexahydrate.
“The Australian nickel sector remains in great shape, not only for today but also for the future.”