Electric cars could drive nickel demand 40pc by 2025
Link copied to
Electric cars could offer a “renaissance for the nickel market”, according to analysts at investment bank UBS.
Nickel is needed for two of the three dominant chemistries used to make the cathode of batteries for electric vehicles (EV) like the Chevy Bolt or Tesla.
Scroll down for a list of ASX stocks with exposure to nickel.
UBS says EV battery manufacturing could drive incremental nickel demand up by as much as 40 per cent by 2025.
If EV production grows to around 16.5 million in the next seven years, an extra 300,000 to 900,000 tonnes of nickel would be needed each year depending on the battery chemistries used.
Although China currently prefers a lithium, iron and phosphate cathode, UBS sees the Asian powerhouse switching to a nickel, manganese and cobalt cathode, which will also help drive demand for the base metal.
But supply will be an issue, with only half the nickel mined suitable for battery use.
Batteries require high grade nickel products such as pure nickel metal or nickel hydroxide.
For the moment the nickel market is well stocked, but from 2020 the battery opportunity will open up, according to UBS.
UBS is more bullish on the nickel price than consensus with its forecast of $US7.75 ($10.12) per pound by 2020. The price is currently around $US5.92 per pound.
Nickel stocks gain in popularity
Over half of the ASX-listed nickel players tracked by Stockhead (see table below) have made gains in the past 12 months.
Here is a list of ASX-listed stocks with exposure to nickel. (We include here stocks that are primarily nickel-focused as well as those with nickel side projects):
|ASX Code||Name||12-month price change||Price Mar 29, 2018 (intraday)||Price Mar 28, 2017||Market Cap ($M)|
|WSA||WESTERN AREAS LT||0.364628820961||3.125||2.29||875.7|
|SGQ||ST GEORGE MINING||0.0689655172414||0.155||0.145||48.8|
|SAU||SOUTHERN GOLD LT||-0.155172413793||0.245||0.29||12.0|
|RIO||RIO TINTO||0.213582512932||72.73||59.93||118.2 billion|
|RVR||RED RIVER RESOUR||0.208333333333||0.29||0.24||137.2|
|PEK||PEAK RESOURCES L||-0.545454545455||0.045||0.099||27.7|
|IGO||INDEPENDENCE GRP||0.301408450704||4.62||3.55||2.7 billion|
|GTE||GREAT WESTERN EX||0||0.016||0.016||15.6|
|CZN||CORAZON MINING L||-0.44||0.014||0.025||16.4|
|BHP||BHP BILLITON||0.181171548117||28.23||23.9||146.5 billion|
|ANW||AUS TIN MINING L||1.11111111111||0.019||0.009||41.2|
|AOH||ALTONA MINING LT||-0.290322580645||0.11||0.155||59.1|
Jervois Mining (ASX:JRV) is up over 630 per cent at 42c. The company is developing its Nico Young nickel and cobalt project in New South Wales.
There are seven other companies that have more than doubled their share prices in the past year.
Australian Mines (ASX:AUZ), which is working to bring its flagship Sconi cobalt, nickel and scandium project into production, has jumped 439 per cent to around 10c.
Meteoric Resources (ASX:MEI), meanwhile, has climbed roughly 162 per cent to trade at 3.4c.
The company has a portfolio of exploration projects in Canada, including the Midrim and La Force cobalt, copper and nickel projects in Quebec and the Iron Mask and Mulligan cobalt, silver and nickel projects in Ontario.