VIDEO - There’s Been a Massive Shift in Nickel Sentiment

Holding a highly positive outlook for nickel, Mark Selby, president and CEO of RNC Minerals (TSX:RNX), believes the base metal has gone through a transformation in terms of investor interest, thanks largely to its role in the rapidly expanding electric vehicle (EV) sector.

“Over the last 12 months the sentiment towards nickel has gone through a massive shift. The focus is on the potential demand from EVs, where nickel, in terms of quantity, will be the biggest metal in demand going forward once we get into the 2020s,” he told the Investing News Network (INN) at the 6th International Nickel Conference.

“There’s a massive incentive for carmakers to go to higher quantities of nickel. For example, Tesla (NASDAQ:TSLA) today already uses batteries that are more than 80 percent nickel, and the whole industry is going to shift that way,” he continued. “So by the early to mid-2020s, you’re going to see massive increases in nickel demand from the EV sector.” 

Despite nickel’s growing presence in the EV sector, Selby believes that the metal has and continues to benefit most generously from stainless steel demand growth.

“I was glad to see people talk about the robust stainless steel demand growth [at this conference] — it’s been continuous support [for] nickel for a very long time, so the outlook for nickel is probably the brightest it’s been for a very long time,” he stated.

“This 5-percent growth in demand came with almost zero from EVs,” he continued. “So that was just from existing growth in stainless steel and alloys that are used in things like jet airplanes.”

Selby also discussed where nickel is headed, elements that are impacting its price and what it all means for RNC Minerals. Watch the video above for more insight or read the transcript below.

INN: How are you enjoying the 6th International Nickel Conference conference so far?

MS: Oh, it’s great. It’s good to have the nickel conference here in Toronto where you’ve got Vale (NYSE:VALE), formerly Inco, headquartered here for a very long time.

INN: Great. What are you looking forward to seeing and discussing at this conference?

MS: I think over the last 12 months the sentiment towards nickel has gone through a massive shift. The focus is on the potential demand from EVs, where nickel in terms of quantity, will be the biggest metal in demand going forward once we get into the 2020s and that’s on top of the robust stainless steel demand growth – it’s been continuous support [for] nickel for a very long time, so the outlook for nickel is probably the brightest it’s been for a very long time.

INN: You mentioned the EV sector — can you tell me a little bit about how nickel plays into that?

MS: Sure. So the typical EV battery today is made one-third nickel, one-third cobalt and one-third manganese. Again, with the growth in EVs, you know cobalt’s sort of been the initial beneficiary of that, but the issue is cobalt is much higher price than nickel and it actually is lower energy density than nickel [which] is there to keep the battery from catching fire basically. So there’s a massive incentive for car makers to go to higher quantities of nickel. For example Tesla today already uses batteries that are more than 80 percent nickel and the whole industry is going to shift that way. By the early to mid-2020s, you’re going to see massive increases in nickel demand from the EV sector. So in terms of nickel supply we need to double the amount of nickel supply from what existed in 2010 so it’s a massive, massive growth.

INN: And can you touch a little bit on how demand is ahead of supply currently for nickel?

MS: Sure. So we’ve been in a deficit now for the last few years and nickel demand’s grown at about 5 percent per year. To put that in context, that’s double the rate that copper and zinc have grown over that timeframe and so with that compounding you’ve seen a rapid growth in nickel demand. The last five years we’ve had a lot of supply come from China and Indonesia which has sort of come rapidly in the market, we’ve kind of gone through the easy stuff and and now there’s real constraints in terms of new supply. We founded RNC to basically have a nickel project ready for this, what we saw coming – shortage in nickel supply, so it’s working out… the timing is working out to be quite fortuitous.

INN: Beyond the EV sector, can you tell me a little bit about why investors should be excited about nickel right now?

MS: So again, this 5 percent growth in demand came with almost zero from EVs, that was just from existing growth in stainless steel and alloys that are used in things like jet airplanes and so forth. The Chinese economy is now moving into sort of a higher value add, part of it is economic development, and so because nickel and stainless steel have always been higher priced to some of their competitors, [their] competitive substitutes, China is now moving into those phases of growth where it’s going to use more nickel and more stainless steel. That 5 percent demand growth is kind of a minimum going forward and then you have to layer on top all this new demand that’s going to come from EVs, so by the middle of the next decade it’s going to be a very, very exciting nickel market.

INN: Speaking about 2018 specifically, where do you see nickel going and what are some of the things affecting the price of nickel right now?

MS: Nickel I think might be the best performing base metal so far this year – prices went through US$15,000.00 a tonne on the way to US$7.00 a pound, depending on which way you look at it. And again, we’ve seen seen continued stock draw-downs out of the LME and we’ve seen a continued bump up in the nickel price, so I think we’re going to continue to see nickel prices grind higher as the year goes on and for a project like ours at US$7.00 nickel it’s worth a billion dollars and for every 50 cents higher it’s worth another US$3 million, so we’re quite excited to see nickel prices get into this range.

INN: Switching gears a little bit, and this will be my last question, what can you tell me about RNC — any projects you have ongoing … anything exciting that you can let us in on right now?

MS: Sure. Our Dumont project, which is what the company was originally founded around, we’ve refocused on that asset now that nickel and cobalt are getting some attention in the market. We have the largest undeveloped nickel reserve in the world and the largest undeveloped cobalt reserve in the world, so there are very few junior companies that own that kind of asset, so we’re going to push as hard as we can to get financing in place to be able to make a construction decision by this time next year, because if we don’t, we think one of the majors who wants exposure to the battery metals sector, or just wants a shovel-ready base metals project, you know, Dumont ticks a lot of boxes, we’re fully permitted, shovel-ready – we literally just have the financing step left to go and we could be in a position to start next year.

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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in contributed article. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.