In the popular imagination, lithium is the element that powers EVs. As Elon Musk has already pointed out, the term “lithium-ion batteries” is somewhat of a misnomer because they do not contain as much lithium. “Although [they’re] called lithium-ion, the actual percentage of lithium in a lithium-ion cell is about 2%, “Musk explained at Tesla’s shareholders’ meeting in 2016.” Technically, our cells would be called nickel-graphite, because the primary component in the cell as whole nickel. ”
More recently, Musk reiterated the importance of nickel, and made what sounds to some like an urgent plea for more of things. “I just want to emphasize again, all the mining companies out there, please mine more nickel,” Musk said during Tesla’s last quarterly conference speech. “If you’re in the world, please mine more nickel and … go for efficiency, of course environmentally friendly nickel extraction at high volume. Tesla will give you a gigantic contract for a long period, if you are mining nickel efficiently and in an environmentally sensitive way. “
However, meeting the expected increase in demand for element # 28 may not be so easy, due to various supply-side issues. In a recent interview with Kitco News, Michael Beck, Managing Director at Regent Advisors, said he sees something of a “perfect storm” brewing in the nickel trade.
A Tesla Model 3 contains about 30 kilograms of nickel, Beck told Kitco’s Michael McCrae. “Nickel is probably the single most important metal component in battery processing. It is where all the energy is stored, and more and more battery chemistry is being refined to allow the uptake of as much nickel as possible. The more nickel, the higher the energy density of the battery. ”
The spotlight on nickel is a recent development. Nickel prices collapsed in 2007, and there has not been much development of new capacity since then, Beck says. “In these intervening almost 12 years, there has been no significant investment in new nickel capacity. The last 12 years have been a drawdown of too much inventory, and that is coming to an end. The rise of demand has just begun. ”
The long delivery time for bringing new nickel mines into production is another compelling factor. “It takes 7 to 10 years to install new nickel projects,” Beck says. ‘So, you’ve made a perfect storm. You have a built-in structural deficit for the next 12 years … you have inventories in the next 18 months to almost zero. You also have this new question source that never existed for nickel. ”
Above: Ken Hoffman, senior expert at McKinsey, responds to Tesla’s need for nickel to speed up the EV revolution (YouTube: Kitco NEWS)
Anything that seems to add to an investment opportunity for someone. “In the universe of metals, [nickel is] our favorite, ”says Beck. “We think you’ll see a big up-tick of the nickel price in the next two to three years … when deficits arise, and that’s what will be required to get new investment in the sector.”
So, what companies are ready to take advantage of the upcoming nickel rush? “Perhaps Norilsk is the most interesting in the larger cap of established players,” Beck says. ‘They are the number two producer of nickel, and they are based in Russia. That’s probably the only best way with large caps to get exposure to nickel. It is a major producer of the metal, and as nickel goes up, so does its share price. At the smaller end of the spectrum, there are a bunch of little nickel explorers and emerging developers. ”
Over the next few years, Beck believes that nickel marks will emerge, and most companies with nickel exposure will benefit. However, there is another factor at play. Tesla and other EV makers are naturally envious of getting their raw materials from sustainable sources. The sector has invested a lot of effort and cash in cleaning up its supply chain for cobalt. Elon’s recent plea for nickel specified that it should be mined in an environmentally sensitive manner. (Norilsk, by the way, has recently been involved in not one but two oil storms in Russia’s Arctic region.)
Giga Metals in Vancouver responded quickly to Elon’s appeal, saying it has a source of environmentally responsible nickel in development. As Matthew Hall reports in Mining Technology, Giga Metals owns a property called Turnagain in north-central British Columbia, which it says is one of the largest undeveloped sulfide-nickel projects in the world, and also includes cobalt.
Canada has many nickel mines, but Giga Metals has a unique vision for the Turnagain mine. “Our goal is to be the first carbon neutral mine in the world,” said Giga Metals president Martin Vydra. “We plan to use power from BC Hydro’s clean energy network, which will cover more capital expenditures than the alternatives, but the good thing is to do it.”
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Above: Tesla’s Model 3 (Source: EVANNEX; Photo by Casey Murphy)
“If you want environmentally responsible nickel, I really think you should look at sulfide deposits in first world jurisdictions like Canada and Australia,” said Mark Jarvis, CEO of Giga Metals. “Canada has several very large, low-grade, open pitched sulfide nickel depots waiting to be developed, including Canada Nickel’s Crawford depot, Waterton’s Dumont depot and our own Turnagain depot. Canada has some of the toughest environmental regulations in the world, so if you buy your nickel from Canada, you can be sure that this part of your supply chain is ethical sourcing. “
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Written by: Charles Morris
