Special Report: The worm is turning for nickel and cobalt prices. Nickel is up almost 20 per cent this year, and cobalt prices rebounded for the first time in five months.

On top of this, carmakers like BMW are now prepared to pay more for cobalt from stable jurisdictions, like Australia.

But we need more of this local production to come online first.

This is great news for advanced nickel-cobalt plays like Australian Mines (ASX:AUZ).

Not only is demand for non-DRC cobalt on the rise, but Australian Mines’ offtake partner SK Innovation is aggressively ramping up battery production to meet demand – and it’s going to need more nickel and cobalt to do it.

Right now, South Korea’s SK is struggling to expand production quickly enough to keep up with new battery orders.

Argus says that SK’s order backlog for EV batteries has increased by 30 per cent to 430GWh since the end of last year alone.

“The backlog has surged as much as sevenfold since the end of 2017 and 13-fold since the end of 2016, the company said today,” Argus reports.

“The 100GWh of orders that were added in just the past few months is equivalent to more than 21 years’ worth of production at the company’s present capacity, and is almost triple the amount of new capacity that SK Innovation has under development.

“SK Innovation has said it plans to boost capacity to 60GWh/yr by 2022, indicating more plants are in the works.”

A bigger resource could enhance Sconi economics

Yesterday, Australian Mines announced that two satellite nickel-cobalt projects could extend the life and enhance the economics of its globally significant Sconi project in Queensland.

New resource estimates for Bell Creek and Minnamoolka, about 115km from Sconi, boost the explorer’s total Queensland metal inventory to 738,359 tonnes of nickel and 71,757 tonnes of cobalt.

Australian Mines says a parallel development strategy for its Bell Creek and Minnamoolka projects could materially increase its annual production of battery-grade nickel sulphate and cobalt sulphate for the electric vehicle sector.

The company is now evaluating the economics of developing Bell Creek as a stand-alone, low-cost, shallow open-pit satellite mining operations with an on-site beneficiation plant.

This plant would potentially produce a concentrate for trucking to the proposed Sconi processing plant.

Australian Mines boss Benjamin Bell says these satellite deposits potentially offer untapped value to Australian Mines’ shareholders.

“Our strategy to evaluate the addition of low-cost satellite mining operations close to Sconi in parallel with our project delivery timeline for the larger Sconi Project has the potential to boost the return on our proposed investment,” he says.

 

This story was developed in collaboration with Australian Mines, a Stockhead advertiser at the time of publishing.
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