Which ASX nickel juniors are benefiting from this week’s big price jump
Junior ASX-listed nickel explorers are enjoying increased investor attention after the price of the steel-making and battery commodity hit a near four-year high this week.
The price of nickel on the London Metal Exchange reached a new high of $US15,275 ($19,606) on Wednesday, marking a roughly 74 per cent hike on its low of $US8795 mid-last year and a daily gain of 7.5 per cent.
It was the biggest daily nickel gain in more than six years — and the “biggest single day move in a major commodity I can recall in a long time”, said Sam Broom, an investment executive at Sprott Global Resource Investments.
“All the while, LME inventory continues to decline at a rapid clip.”
Most ASX nickel juniors tracked by Stockhead gained ground or held steady on Thursday.
Resource Mining Corp (ASX:RMI) led the way with a 43 per cent jump to 2c.
Ardea Resources (ASX:ARL) gained 27 per cent to $1.10. Great Western Exploration (ASX:GTE) and Hannans (ASX:HNR) both climbed 25 per cent.
>> Scroll down for a list of 50 ASX juniors with exposure to nickel
The price hike was partly driven by speculation that one of the world’s biggest nickel producers, Russia’s Norilsk Nickel, may be hit by US sanctions against Russia.
Earlier this month the Trump administration placed new sanctions on seven Russian oligarchs and 12 companies they own or control, 17 senior Russian government officials, and a State-owned Russian weapons trading company and its subsidiary, a Russian bank.
Any US assets these companies own or operate would be frozen and Americans would be banned from doing business with them.
“For now, as far as we know there are no sanctions against any Russian nickel producer, but there are lots of worries that it will expand to them, particularly the producer Norilsk Nickel,” Cheng Mok, senior managing editor metals markets Asia for S&P Global Platts, told Stockhead.
“Based on what we can see has happened to the alumina and aluminium markets, there’s going to probably be a price surge if the same happens to Norilsk Nickel.”
The $35.7 billion Norilsk Nickel is one of the biggest nickel producers in the world. Russia accounts for roughly 10 per cent of global nickel supply.
That “could be highly disruptive, especially given the demand for nickel and cobalt in electric-vehicle batteries, smart phones and other uses of lithium-ion batteries, as well as strong demand for nickel and cobalt-bearing superalloys in aviation and in industrial gas turbines,” Anthony Poole, editor-in-chief of S&P Global Platts’ Platts Metals Daily, told MarketWatch.
If the US does place sanctions on Norilsk Nickel, it will benefit nickel stocks in other countries, including Australia.
“Whoever buys from Russia will probably have to look for new suppliers and that is definitely going to help all other producers in the market,” Ms Mok said.
Electric vehicle (EV) battery manufacturing could drive incremental nickel demand up by as much as 40 per cent by 2025, investment bank UBS predicted this month.
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.
Investors flock to Aussie nickel
Most of the 50 or so ASX-listed nickel players tracked by Stockhead (see table below) made gains or held steady on Thursday.
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):
Resource Mining (ASX:RMI) led the gainers on Thursday with a 43 per cent jump in its share price to 2c.
The company’s key focus is the Wowo Gap project in the south-east of Papua New Guinea, where it’s looking for nickel laterite to feed Chinese demand.
Ardea Resources (ASX:ARL) added 27 per cent while Great Western Exploration (ASX:GTE) and Hannans (ASX:HNR) both climbed 25 per cent.
Ardea has defined over 700 million tonnes of nickel and cobalt mineralisation at its Goongarrie project, 85km north of Kalgoorlie, Western Australia.
Hannans, meanwhile, is exploring for nickel, gold and lithium at its Forrestania project located 120km south of Southern Cross and 80km east of Hyden, Western Australia.
The southern portion of the Forrestania project is about 7km north of Western Areas’ (ASX:WSA) Flying Fox nickel mine.
MinRex Resources (ASX:MMR) was also one of the gainers on Thursday, with its share price shifting up nearly 6 per cent to 5.6c.
The company is currently doing due diligence over the Pacific Express cobalt, scandium and nickel project in New South Wales.