Investment in Nickel exploration looks set to surge, driven by EV boom
Updated: Aug 22, 2022
Jessica Farrell, Asset President of BHP Nickel West, said last week “BHP have budgeted for a significant uplift in Nickel exploration spend over the next 2 years. By 2030 around 60% of all car sales globally will be electric, increasing to 90% by 2040. The dominant battery chemistry powering this (EV Fleet) is expected to rely on Nickel”.
These statements from BHP Limited (WKN: 850524) have reinforced many investors view companies in the Nickel exploration and development phase will be positioned strongly for the demand for EV batteries and renewable energy.
Benchmark Mineral Intelligence has assessed there will be a global deficit of 230,000 tonnes of refined nickel by 2030. Benchmark go on to say that over 30% of refined Nickel was processed in Indonesia in 2021. This is forecast to increase to 50% by 2025.
In July this year, Vandita Pant, Chief Commercial Officer for BHP stated, “Demand for nickel in batteries is estimated to grow by over 500% over the next decade”.
Indonesia holds almost 25% of global Nickel reserves. However, there are significant issues around the sustainability and carbon footprint of the processing which is overwhelmingly based on HAPL (high pressure acid leaching) using energy from brown coal fired power stations.
In July this year, many non-government organisations (NGOs) sent open letters to Tesla’s CEO, Elon Musk, requesting the Company not to invest in Indonesia’s Nickel industry due to environmental concerns.
Australia holds close to 20 million tonnes of Nickel reserves and it’s the world’s fifth largest producing country. Investment and M&A activity in the Australian Nickel sector looks set to increase global investor, customer, and stakeholder attention on the industry.
This week BHP launched A$8.3 billion takeover for copper, gold, and nickel explorer OZ Minerals Limited (WKN: AOQ657).
This together with the recent takeover of Nickel producer Western Areas Limited by IGO Limited (WKN:765651) suggests the sector is looking strong for institutional investor activity for the rest of 2022.4
The BHP factor is a strong value-driver for small Australian nickel explorers with its nickel sulphate processing plant in Kwinana in Western Australia. The plant currently has a capacity for 100,000 tonnes of nickel sulphate a year at 99.99% purity – enough for around 700,000 EV batteries. The plant has the potential to be expanded to 200,000 tonnes a year capacity.
In July this year, BHP signed an offtake agreement with Tesla to supply nickel sulphide from its Kwinana plant and made a broad commitment to work closely with Tesla on reducing greenhouse gas emissions.
The BHP plant is one of the worlds lowest CO2 emitters after an agreement was made to use 50% renewable energy from solar energy this year and it’s committed to sourcing 100% of its electricity requirements from renewable energy in the medium term.
The huge processing ability of BHP Nickel West and its relationships with electric car makers such as Tesla, provide encouragement to local, smaller Nickel explorers and producers there is strong commercial, and sustainable market for any reserves.
In a 2021 article in Australian Mining a report from Roskill was quoted that anticipated global nickel demand to rise to 2.6 million tonnes by 2040 and Australia will contribute to more than 25% of the new mined supply by 2030. Australia is also expected to overtake Japan and Taiwan as the second largest nickel sulphate producer in the near term.
An excellent video from Australian ABC News on the rush for Nickel and why CSIRO are predicting by 2050 five times as much Nickel will be required as lithium.
Some of the smaller Australian Nickel producers and explorers are also receiving strong investor focus. Some of these are:
Nimy Resources Ltd (WKN: A3C8RW) is Australian based Nickel exploration company with a vision to unlock a new Western Australian nickel sulphide province. The company is focused on exploring and developing a newly discovered Nickel Belt called the “Mons” Nickel Project covering a land holding of 1,761sqkm.
In July Nimy resources announced diamond-drilling at Mons project had intersected massive nickel-copper sulphides. The drilling further revealed several mineralised zones up to 4m in width including pentlandite, chalcopyrite and bornite. Strongly anomalous levels of cobalt were also detected using portable x ray fluorescence (pXRF).
Executive director, Luke Hampson, said the new nickel-copper sulphide zones provide evidence of the Mons projects "increasingly strong prospectivity. The hole terminating within a komatite flow further confirms the mineralisation potential of this sparsley explored and newly discovered greenstone belt" he said.
Nimy Resources is traded on ASX and in Germany.
Widgie Nickel (ISIN: AU0000172041) is a unique consolidation of 240sqkm of highly prospective nickel and new economy metal prospects, within the Eastern Goldfields nickel sulphide belt in Western Australia. The company has a large nickel sulphide resource base of 10.68Mt at 1.6% Ni. The Company is strategically located with proximity to significant infrastructure.
Widgie Nickel is aiming to be production ready by end of 2023. In the medium term the Company will undertake additional work to quantify Cobalt, Copper, Palladium and Gold deposits. Additional green fields exploration will be undertaken with a goal to increase reserve endowment.
Widgie Nickel is traded on ASX