Mineral explorer Boadicea Resources Ltd (ASX: BOA) is focused on nickel, copper, gold, and lithium deposits in the most vibrant mining jurisdiction of Western Australia. The benefits of mining in such a well-known location globally include higher chances of success while having a diversified commodity portfolio largely helps offset the risk associated with one particular sector.
More so, as per Fraser Institute’s latest Annual Survey of Mining Companies 2019, Western Australia has been ranked first amongst 76 top mining jurisdictions worldwide for investment based on the Investment Attractiveness Index, which incorporates both mineral and policy aspect into account.
While Boadicea Resources has an interesting commodity mix under its purview of exploration, we will primarily look at the market opportunity and outlook for Nickel, the second most abundant element in the earth’s core after iron ore. Moreover, the most prospective nickel deposits in the country reside in Western Australia.
Given the high prospectivity of this mining location, the Company is expanding its ground position via consolidation of more and more tenements in the Fraser Range, ~200 km south east of Kalgoorlie, where the Fraser Range Nickel Belt hosts nova-style high-value targets. The Fraser Range is also a fast-developing mineral province with untapped large known resources, presenting a lucrative opportunity for upcoming miners to capitalise on the same.
Interesting Read: Boadicea Resources Secures Landholding in Fraser Range - Discovery Next
Nickel – In Focus
One of the most important things to note is that nickel export contributes more than $ 3 billion to the Australian economy, that witnesses nickel production of over 200,000 tonnes each year, according to Australia’s Department of Industry, Innovation and Science (DIIS). It is one of the base metals, which are the building blocks of infrastructure and have various industrial and commercial applications.
Properties & Applications
Nickel, the silvery white shiny metal, is resistant to corrosion and ferromagnetic in nature. The metal finds application in creating magnets of intermediate strength, manufacturing of glass, stainless steel (accounting for ~ 68% of the global uses of nickel), coins, plating, rechargeable batteries and even bulletproof safes.
According to the Resources and Energy Quarterly Report for December 2019 released by the DIIS, nickel prices had stabilised after strong gains over the prior three quarters in 2019. Subsequently, in the first quarter of 2020, nickel prices experienced the sharpest fall, dropping 17.3%, at the backdrop of the global economic uncertainty caused by COVID-19 pandemic, demonstrating a stark contrast to the high prices in the second half of 2019, as per the World Bank.
Demand for stainless steel products accounting for majority of nickel usage has particularly been hit hard in China and Italy due to lockdowns. Although 2020 has so far been challenging for one and all, nickel prices, as per DIIS, are expected to go up, averaging around USD 16,500 per tonne in 2021, depicting an increase from USD 14,000 a tonne in 2019.
The main global consumer markets for nickel are led by China followed by the European Union, Japan and the United States in that order. According to DIIS, Australia’s nickel export earnings are expected to total ~$ 4.7 billion in 2020–21, up from $ 3.6 billion in 2018–19, as the price recovers with the subsiding of the COVID-19 situation.
Consumption has been outpacing constrained production for nickel and with the current bottlenecks, the trend is expected to continue through to 2021, which would support an uptick in the nickel prices. Particularly, growth in stationary energy storage and electric vehicles are expected to raise nickel usage, as nickel intensity requirement increases in battery chemistry.
A positive market environment, on the global front, continues to incentivise growth in Australia’s nickel production. There are a number of new and expansionary projects being undertaken in Australia while many mines on care and maintenance are considering reopening, that would support nickel exports from the country.
Australian nickel explorers and miners such as Boadicea Resources have a great opportunity to capitalise on existing factors like Indonesia’s restrictions on exports and constrained production due to COVID-19, by following a strategic pathway to production and serve the nickel market in the near term.
Eventually, mine production is expected to recover from the outages and closures being experienced right now and the outlook for nickel, as a crucial mineral, globally, appears bright.
Stock Information: The BOA stock settled the day’s trade on 4 May 2020 at $ 0.205, climbing up 5.12% by $ 0.010, with a market capitalisation of ~ $ 10.84 million.