- This year, nickel breached the level of US$100,000 per tonne on the LME for a brief period.
- The growing EV industry is pushing demand for nickel.
- Demand for nickel is expected to grow significantly through 2030.
Nickel prices after sliding to US$19,090 per tonne on the London Metal Exchange (LME) on 15 July 2022 rebounded strongly and closed at US$24,000 per tonne on 1 August 2022. The nickel prices stood at US$22,000 per tonne on 3 August 2022.
The stock of the base metal in LME’s warehouse dropped to 67,000 tonnes at end-July 2022. The nickel inventory was around 230,000 tonnes at the same time last year.
Data from the Australian government’s Resources and Energy Quarterly June 2022 report suggests that nickel prices would average around US$25,700 per tonne in 2022.
Around 70% of all the nickel produced is consumed by the steel industry. The EV battery market currently consumes around 5% of global nickel production. Strong demand for EVs and battery metals is slated to push demand for nickel higher.
Nickel consumption grew 16% to 2.8 Mt in 2021. The stainless steel market recorded growth of 10% in nickel consumption, while in battery precursors, consumption grew an impressive 60%.
Nickel demand is expected to be around 2.9Mt in 2022, up 4.9% from last year, and is forecast to go up to 3.2Mt by 2024. Demand for nickel in battery precursors is expected to continue to grow 20% annually.
In a short-term scenario, the current inflation levels in major economies could slow down the global demand for the entire commodity sector. Also, the war between Russia and Ukraine continues to weigh down the global supply chain.
Moreover, industry reports suggest that the battery industry is focusing on making lithium batteries cobalt-free. Cobalt is the costliest component of lithium batteries and has severe supply chain issues. As a result, battery manufacturers are trying to replace cobalt with nickel.
Australia holds 22% of the global nickel resources. In 2021, Australian miners produced 162kt of nickel. The mine production is estimated to grow significantly over the years and is expected to reach 232kt in 2023-24, as per the Resources and Energy Quarterly report.
On this note, let us flick through a few of the ASX-listed nickel miners that have been making serious strides in exploration and development activities.
IGO Limited (ASX:IGO)
IGO Limited is a Western Australia-based nickel-copper-cobalt player. The company has three active nickel projects- Nova Nickel, Forrestania Nickel and Cosmos Nickel. The company is also actively diversifying its operations to lithium as demand for lithium is rising.
During the June 2022 quarter, IGO’s nickel production was 9,369 tonnes, which took FY22’s total nickel production to 40,703 tonnes. The production was from the Nova and Forrestania operations.
The company’s revenue for the quarter was AU$277.9 million, 13% higher than previous quarter.
Panoramic Resources (ASX:PAN)
Panoramic Resources is engaged in the exploration and development of the Savannah Ni-Cu-Co Project in WA. The project is brownfield and has produced 9,072 tonnes annually in the past along with significant copper and cobalt production.
The company is working to restart production from the mine and is currently undertaking a drilling program over the tenure.
Mincor Resources (ASX:MCR)
Mincor Resources operates nickel assets in the Kambalda District of WA. The district is one of the premium nickel mining jurisdictions on the global scale, and since the discovery of nickel in the region, it has produced 51Mt of nickel.
Mincor produced the first of its ore from the project in the June quarter and supplied it to BHP Nickel West’s concentrator for processing. The company generated AU$25.3 million as cash flow for the June quarter from the project.
Poseidon Nickel (ASX:POS)
Poseidon Nickel operates three nickel projects in the WA region and holds nearly 400,000 tonnes of nickel resources. The company operates the Black Swan, Lake Johnston and Windarra nickel projects.
The company aims to supply 15ktpa of nickel metal from its projects and become a reliable supplier of nickel sulphide.
BHP Group (ASX:BHP)
The mining behemoth is also engaged in nickel mining and processing. In its recently released quarterly report for the period ended 30 June 2022, the company informed that nickel production stood at 18.8kt for the quarter. Annual nickel production for the company was 76.8kt.