High Voltage: Nickel moves to the fore on discoveries galore
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Our High Voltage column wraps all the news driving ASX stocks with exposure to lithium, cobalt, graphite, nickel and vanadium.
In 2016 nickel stocks were friendless, brutalised by years of falling prices.
Multi-commodity miner BHP (ASX:BHP) had attempted to offload its WA-based nickel division a number of times. Western Areas (ASX:WSA) was slashing costs left and right, while Mincor (ASX:MCR) and Poseidon Nickel (ASX:POS) were forced to shut down their operations entirely.
Exploration essentially stopped dead.
Around 2017, the ‘we need a crapload more nickel for batteries’ thematic emerged from the arse-end of company presentations.
These EV demand projections subsequently moved to the front and repeated ad nauseum by nickel companies who were (are still are) largely supplying the stainless steel industry.
But mines take many years to develop. It’s the demand outlook which is important, especially for explorers.
Recent high profile comments by Tesla’s Elon Musk have made this demand story extra palpable to investors.
The electric vehicle trailblazer alone could need up to 1.15 million tonnes of nickel a year — almost 50 per cent of current global supply — by 2030 to meet ambitious production targets. It’s a seemingly impossible goal, but the intent is there.
WA players are stepping up to the plate. In 2019, a revitalised Nickel West, once the red-headed stepchild of BHP’s portfolio, was given ‘core’ status and the cash to expand operations.
About 70 per cent of Nickel West’s ~80,000tpa production now goes to battery manufacturers.
A cashed-up Mincor has just started project development and will shortly be a nickel miner once again. Poseidon Nickel is considering a restart of its Black Swan operation.
But most importantly — a reinvigorated exploration sector has generated an extraordinary number of high profile WA nickel discoveries over the past 12 months.
These company making finds include Chalice Gold Mines’ (ASX:CHN) Julimar, Legend Mining’s (ASX:LEG) Mawson, Poseidon’s Golden Swan, Estrella Resources’ (ASX:ESR) Carr Boyd, and Azure’s (ASX:AZS) Andover.
There’s surely more to come.
Nickel investor sentiment is currently flying — 11 of the top 20 battery metals stocks (55 per cent) over the past month have nickel exposure.
Here’s how a basket of 105 ASX stocks with exposure to lithium, cobalt, graphite, nickel, and vanadium are performing>>>
Scroll or swipe to reveal table. Click headings to sort. Best viewed on a laptop:
A spectacular intersection at Estrella Resources’ (ASX:ESR) flagship Carr Boyd project could see it “joining an elite list of recent Western Australian nickel discoveries” like Julimar, Golden Swan and Mawson.
The discovery, announced October 8, sparked a 1,200 per cent increase in the explorer’s share price.
The share price of explorer Auroch Minerals (ASX:AOU), which is dialling in on WA’s next nickel discovery, is at its highest point since late 2017.
And Pure Minerals (ASX:PM1) flew after inking an offtake-potential project funding deal with the world’s biggest electric vehicle battery maker, LG Chem.
This Memorandum of Understanding (MOU) – a non-binding agreement that comes before a legal one – is for the supply of 10,000t nickel and 1,000t cobalt each year from Pure’s TECH Project in Queensland.