It looks ike 2018 will be a very good year for nickel.
Last month, world metal markets closed for the Christmas break with nickel on an upswing. The metal reached $5.46/pound U.S., more than $1 U.S. higher than the average price of $4.43/pound U.S. in the first half of the year..
The $5.46 U.S. price was also 23 cents higher than the $5.23U.S. recorded back on Nov. 27.
The amount of nickel sitting in London Metal Exchange warehouses –another indicator of where prices are headed — is also showing signs of life. On Nov. 27, there were 382,362 tonnes of nickel in the warehouses. But as of Dec. 20, the total had fallen to 373,400.
The 373,400 tonnes is also a far cry from the 389,154 tonnes recorded on Aug. 31, 2017, one of the year’s highest inventory days.
Stan Sudol, owner/editor of The Republic of Mining website, is not surprised at what is happening to nickel.
“Without a doubt, the world is heading towards an electric vehicle future and the batteries used to power these vehicles contain significant quantities of nickel, copper and cobalt – all of which are mined in the Sudbury Basin,” he said. “Just an aside, we should also not forget that the polymetallic ore in Sudbury also contains platinum group metals – the third largest source in the world after South Africa and Russia – which are currently used to build catalytic converters used to control auto exhaust pollution in the cars we drive today.”
Sudol said that while the global manufacturing sector has finally realized there may be future shortages of nickel, they are probably just beginning to understand the magnitude of that scarcity.
“Global nickel is produced from either sulphides deposits like the Sudbury Basin, Russia, northern Quebec and Manitoba and Western Australia or laterites found in New Caledonia, Indonesia, Philippines, Cuba and Madagascar,” he said. “The split between sulphides and laterites are roughly 40 per cent to 60 per cent respectively. Nickel sulphides are the preferred material to make into the car batteries. Most nickel laterites and nickel pig iron are of a lower quality product that is not favourable for electric vehicle batteries. In desperation, they could be upgraded for battery use but at a significant cost which is really not economically practical.
“Depending on how fast the world auto sector converts to electric vehicles and the ensuing infrastructure to support them, the potential impact on the Sudbury Basin will be significant. The Sudbury Basin, alongside the isolated Siberian nickel operations of Russian-based Norilsk, have historically been the two largest nickel sulphide deposits in the world.”
Sudol noted that an important challenge in the nickel mining world has always been logistics, as nickel mines and mills are often not in the same location as smelters and refineries. He said Greater Sudbury is well positioned due the fact that mines, mills, smelters and a refinery are in the same geographic location. In addition, due to the glut of nickel laterite and nickel pig iron production of the past decade and ensuing low prices, not many new sulphide operations have been brought into production.
“Combined with decreasing production or closure of older nickel operations – Frood-Stobie Mine and northern Manitoba operations – or the isolation of many of the current sulphide producing regions like northern Quebec and Norilsk – the Sudbury Basin’s location on major infrastructure routes and its enormous exploration potential will see global interest renewed in this extraordinary geological region.
“So, we should remember that the many sustainable mining practices — lowering carbon emissions, mine safety and an 96 per cent reductions in sulphur emissions since 1970, just to name a few — done in the Sudbury Basin to supply the necessary nickel, copper and cobalt puts this community in a leading role in the transition to a green auto future.
“Both the provincial and federal levels of government should recognize this important fact and ensure none of their green energy policies hinder the future growth of this strategic sector.”
Mark Selby, president and chief executive officer of Royal Nickel Corporation Minerals, is looking forward to 2018 and the years that follow.
“I think the key thing here is nickel has always had a very strong demand,” he said, in a telephone interview from Toronto. “Stainless steel is a very strong demand market. It has always displayed growth compared to other metals.”
Royal Nickel is currently looking to develop the Dumont nickel sulphide deposit in the Abitibi mining camp in Quebec, one of the world’s largest undeveloped nickel deposits.
What will now come into play with nickel, said Selby, is batteries for electric vehicles.
In fact, with projected growth in demand for nickel in stainless steel and in electric vehicle batteries, Selby forecasts increases of hundreds of thousands of tonnes in demand, with an extra half-million to one million tonnes of nickel going into electric vehicle batteries alone from 2025-2030.
Automobile manufacturer Toyota, he said, which had been working for some time developing hydrogen-powered vehicles, recently decided to move instead to electric vehicles, a move which is great news for nickel producers.
“In the last six months, there has been a massive, massive swing toward electric vehicles,” said Selby. “The fact they have switched gears from a hydrogen vehicle to a battery vehicle, it’s not a question of the limit, the potential of electric vehicles, but how they can meet demand.”
Selby said over the next decade, look for electric vehicle production to start slowly but continually double as time passes, pushing up demand for nickel for use in the batteries to power those vehicles.
What Royal Nickel is now doing, he said, is getting the massive Dumont nickel ore body ready for development. The deposit is a 30 years-plus life ore body some five kilometres in size and is currently the fifth largest nickel deposit behind the Sudbury Basin, two Russian Norilsk sites, and one site in China.
As well, said Selby, the Chinese government has decided to move away from lower-quality nickel sources such as nickel pig iron, another factor that will help to cut into the current oversupply of nickel on world markets and also boost nickel demand.
Consequently, Selby sees nickel selling for anywhere from $4.50 to $5/ pound U.S. in 2018, and “possibly as high as $6 per pound”, as the oversupply issue is dealt with and electric vehicle production gets rolling.