Mincor Resources (ASX:MCR) has ridden the highs and lows of the nickel market, from shutting its operations in Kambalda at the industry’s nadir in 2016 to reemerging as a $650 million mine builder in the midst of its electric vehicle powered recovery.

In that time its share price has risen upwards of 300%.

Mincor is currently building the Cassini mine near Kambalda, which is due to deliver the first nickel concentrate to be produced in more than three years from the historic mining district, where Australia’s first nickel boom began in 1966.

The mine’s development comes at a pivotal point in the nickel market’s evolution.

While 70% of demand is still found within the traditional stainless steel sector, the reason many investors, funds and major mining companies are interested is the 50kg of nickel in each lithium ion battery.

The IMF says nickel, along with other battery metals like copper, lithium and cobalt, could see an unprecedented period of sustained historic highs within a decade under ambitious net zero by 2050 decarbonisation scenarios.

That could see it challenge price peaks of US$50,000/t seen in 2007 before the GFC.

That paradigm shift has seen nickel enjoy a rare step into the limelight.

The world’s biggest mining company BHP (ASX:BHP) has placed its nickel business front and centre in its transition from old to new energy, Australia’s highest profile billionaire and green energy advocate Andrew Forrest has ramped up his investment in nickel equities and Australian battery minerals major IGO (ASX:IGO) has made fellow nickel miner Western Areas (ASX:WSA) a takeover target.

Stockhead spoke to Mincor boss David Southam about the state of the nickel market, its emergence into the mainstream, how long Kambalda can deliver for and the impending ‘Game of Thrones’ between BHP, Twiggy and IGO.


Do you think we’re going to start to see some M&A, some consolidation, coming up with that into the space? And we know that there are discussions between IGO and Western areas in the public domain.

“That is in the public domain and I’m not going to comment on that.

“There are some IPOs and some recently listed nickel hopefuls in the region. But it takes a long time to go from exploration to actually building a mine.

“And I’ll tell you what, I wouldn’t like to be starting to build a mine today, just given the tightness of labour, but also then the long lead time to get critical equipment.

“So they’re probably a few years off, but it doesn’t mean that you know, if they find something interesting, there can’t be M&A around that.

“And then as a wider Western Australian space it’s very active at the moment, I think some commentators have described it as a Game of Thrones for nickel.

“And Mincor is in an interesting position where our major shareholder is Wyloo Metals (Forrest), our second largest shareholder is IGO, our offtake partner is BHP.”


So you’ve got all three houses of the Game of Thrones connected into one company?

“And obviously once upon a time, I was the executive director of Western areas. We like to see ourselves as peacemakers.”


What does that say to you about the positioning of nickel in the mainstream compared to where it was five or six years ago? Batteries are such a great narrative for mainstream media commentary and analysis, it’s projected nickel to a level of awareness that maybe it didn’t have before.

“I’ve seen that transition, you know, because five or six years ago, as nickel company executives we were always talking about, watch this electric vehicle space and not many people are probably taking much notice.

“What most investors don’t realise is nickel’s in everyday equipment that we use.

“70% goes into stainless steel, so your dishwasher, your pots and pans, knives and forks, building cladding, medical equipment, it’s everywhere. But I suppose it’s maybe not as sexy as a new industry like electric vehicles.

“And I suppose we’ve been helped by high profile electric vehicle companies like Tesla, where people now are starting to understand that there’s 50 kilos of nickel in every battery.

“The IMF just came out a couple of nights ago, and talked about nickel being a critical metal and where is the supply going to come from and upgrading price forecasts for nickel.

“You’ve got European countries banning diesel and combustion engines and moving to electrification. And all the main part of the technology is around a nickel cobalt manganese battery because of its energy density, which in simple terms means it will go 500km plus without needing recharging.”


Those IMF forecasts, they’re talking about unprecedented sustained periods of historically high prices. If you look at the charts, they’re talking about probably around 2030 we’re looking at you know, $40,000 a ton nickel price, which I think we’ve only really seen once. Is that a good thing or a bad thing?

“I think I’ve been quoted before at Diggers and Dealers where I said the one thing that will kill high nickel prices is high nickel prices.

“So as producers of the metal we have to be careful what we wish for.

“From a Mincor perspective at today’s price we make a very good return for our shareholders. I think if you see large and quick spikes in commodity prices, it doesn’t bode well because generally quick spikes are followed by quick falls, whereas a gradual lift will incentivise new production.

“Newer production has lower grades, which means it costs more to get out — and so without the incentive price, there may be a problem with nickel supply 2030 and beyond.

“We’re blessed in Kambalda in that everything that we’re drilling at the moment we hit massive sulphides. Including with our recent discovery, the Hartley prospect. So we’re pretty excited about the future.”


And talking about Kambalda, nickel’s been mined there for 55 years now. What do you think are the prospects for delivering multiple new mines into the future? Taking the account that there’s not a lot of production at the moment, it’s coming online now. But will it be able to produce at the same rate in 50 years, as it will be in five years?

“Nature will always dictate future discoveries. But one of the things that isn’t well understood about the Kambalda district is whilst it has been operating for many years, over the last 15 years less than $20 million has been put into greenfields exploration.

“We’re talking 1.8 million tons of nickel have come out of the district, yet very few dollars have been spent on greenfields.

“Cassini is a perfect example of that. We reinterpreted the geology, made the first greenfields discovery in close to 15 years, Hartley that we’re drilling now hasn’t had holes put into where we’re hitting massive sulphides.

“And then when you look at the space that we’ve consolidated in Kambalda, a 4km area where nearly 800,000 tons of nickel have come out, there’s 1km hasn’t had a drill hole put into it, which we’re connecting into right now.

“There’s a significant search space there for plenty of nickel sulphides to be found. So look, as you’d expect, I’m bullish on the opportunity.

“But Mother Nature will dictate, there’s always a limit, whether it’s 20 years, 40 years, 50 years.

“In 50 years time, I would suggest is probably another style of battery that’s going to be around, but the important thing for us and for our investors is the OEMs and the vehicle manufacturers are putting a significant amount of capital in for those NCM batteries now, so they need to pay back.”


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