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Blackstone Minerals
Investor Insights
Blackstone Minerals is well-positioned to leverage a projected nickel supply deficit as it strives to become a vertically integrated producer of low-cost, low-carbon, battery-grade nickel. Key to this is Blackstone’s Ta Khoa project in Vietnam, an emerging hub for the electric vehicle market.
Overview
As the world moves closer to a sustainable net-zero future, the need for battery metals continues to mount and nickel may soon be among the metals to see a supply crunch. Though its roots are in the stainless steel sector, it's also a critical component of lithium-ion batteries.
Given that many nations are aiming to replace combustion vehicles with electric cars by 2030, the metal is already experiencing a massive spike in demand. Benchmark Minerals expects the need for battery-grade nickel will increase about 950 percent by 2040.
It's imperative to ramp up global nickel production but the resource sector, for its part, must do so with a much-reduced carbon footprint to influence the sustainability of the entire value chain. Blackstone Minerals (ASX:BSX,OTC:BLSTF,FRA:B9S) recognizes this. As a vertically integrated producer of low-cost, low-carbon nickel, the company aims to become a leading source of low CO2 emission nickel sulphide. Its flagship Ta Khoa project in Vietnam is representative of that goal.
Blackstone Minerals business structure schematic
With over 20 active mines and a burgeoning technology sector, Vietnam is on the road to becoming a hub of electric vehicle production and innovation, with low labor costs and regulated electricity pricing further driving its growth. Steadily increasing foreign direct investment in the region is indicative of this as the country seeks to attract $50 billion in new foreign investment by 2030.
Blackstone is uniquely positioned to take advantage of this, thanks to two factors. US President Joe Biden's Inflation Reduction Act, which came into force in August 2022, represents the largest investment into climate action in United States history. A similar initiative is rolling out in the European Union (EU), which maintains a Free Trade Agreement with Vietnam — something multiple partners of the company have expressed interest in.
Blackstone's Ta Khoa Project consists of two streams, the Ta Khoa Nickel Mine and the Ta Khoa Refinery. Recent milestones point to Blackstone’s commitment to advancing this game-changing project.
These milestones include a memorandum of understanding with Cavico Laos Mining to collaborate in a number of areas associated with CLM’s nickel mine in Lao People's Democratic Republic and supply of nickel products for Blackstone’s Ta Khoa Refinery in Vietnam.
Blackstone also partnered with Arca Climate Technologies to further investigate the carbon capture potential at the Ta Khoa Project through carbon mineralisation, and explore opportunities to utilise Arca’s carbon capture technologies within the project.
In a bid to collaborate on the supply of renewable wind energy to the Ta Khoa Project, Blackstone signed a direct power purchase agreement with Limes Renewables Energy.
Blackstone received AU$2.8 million as an advance from a research & development (R&D) lending fund backed by Asymmetric Innovation Finance and Fiftyone Capital. The advanced payment reflects the significant investment by Blackstone to develop the Ta Khoa Refinery process and Blackstone’s unique strategy to convert nickel concentrate blends into battery products in the form of precursor cathode active material (pCAM).
In December 2023, Blackstone entered into an option agreement with CaNickel Mining to acquire the Wabowden nickel projectlocated in the world-class Thompson Nickel Belt in Manitoba, Canada.
The Wabowden project will have the potential to fill the Ta Khoa Refinery, removing dependence on third party feed sources.
The company has signed a non-binding MOU with the Development for Resources Environmental Technology joint stock company (DRET) to investigate opportunities to repurpose and trade waste material (or residue) from the Ta Khoa Refinery into construction material products. Moreover, it has also progressed the Ta Khoa Refinery byproduct offtake strategy with Vietnam Chemical Group (VinaChem), PV Chemical and Equipment Corporation (PVChem) and Nam Phong Green Joint Stock Company (Nam Phong) to sell Ta Khoa Refinery byproducts, being manganese sulphate (or epsomite) and sodium sulphate.
As the company plans to build a global nickel business, Blackstone signed a non-binding memorandum of understanding with Yulho Co. Ltd (Yulho) and EN Plus Co. Ltd (EN Plus) to establish a collaboration across the businesses including EN Plus and Yulho who are in joint venture on the Ntaka Hill nickel sulphide project in Tanzania, and the Dinagat Island nickel laterite project in the Philippines.
Company Highlights
- The global nickel market is currently entering a structural deficit, with demand expected to grow 950 percent by 2040.
- Blackstone Minerals is well-positioned to address this deficit as a vertically integrated producer of low-cost, low-carbon nickel.
- Blackstone's flagship project Ta Khoa is a brownfield project situated in Vietnam, one of the lowest capital cost countries in the world and an emerging hub for the electric vehicle market with vast reserves of nickel.
- Vietnam is an increasingly attractive region for investment with direct foreign investments that grew from $1.3 billion in 2000 to $15.6 billion in 2020.
- The Ta Khoa project also has infrastructure advantages, via the existing Ban Phuc mine, and processing facilities, access to low-cost and underutilized hydroelectricity, a trained labor force and support from the local government.
- Blackstone Minerals’ downstream pre-feasibility study confirms a technically and economically robust hydrometallurgical refining process to upgrade nickel sulphide concentrate to produce battery-grade nickel.
- Blackstone’s key nickel and cobalt feedstocks for the Ta Khoa Refinery Pilot program were delivered to the metallurgical laboratory in Western Australia as of April 2022.
Key Project
Ta Khoa
Blackstone holds a 90 percent interest in the Ta Khoa Nickel-Copper-PGE Project, located 160 kilometers west of Hanoi in the Son La Province of Vietnam. It includes an existing modern nickel mine built to Australian Standards, which is currently under care and maintenance. The Ban Phuc nickel mine successfully operated as a mechanized underground nickel mine from 2013 to 2016.
Blackstone intends to complement the existing mine through the installation of a large concentrator, refinery and precursor facility, supporting integrated on-site production of nickel, cobalt and manganese precursor products for the Asia-Pacific market. One of Blackstone's key Research and Development objectives with Ta Khoa is to develop a flowsheet that will support this production.
To fulfill this goal, Blackstone is focusing on a partnership model, collaborating with groups committed to sustainable mining. It is also working to minimize its carbon footprint and implement a vertically integrated supply chain.
Project Highlights:
- Multiple Massive Sulphide Deposits: The Ta Khoa project features several incredibly promising deposits including King Snake (up to 4.3 percent nickel and 18.2 grams per ton (g/t) PGE), Sui Phong (2.95 meters @ 2.42 percent nickel, 0.52 percent copper, 0.06 percent cobalt and 0.05 g/t PGE), and Ban Chang. The project is also the site of the Ban Phuc nickel mine, which was operated from 2013 to 2016 by Asia Mineral Resources, along with several exploration targets that have yet to be tested.
- Experienced Leadership: Internally, Blackstone’s owners’ team brings over 50 years of experience in leadership roles at major nickel mines and refineries globally. This experience has been complemented by ALS Group, Wood, Future Battery Industries CRC, Curtin University and the Electric Mining Consortium.
- Large Reserve and Mining Inventory: The entirety of Ta Khoa is estimated to contain probable reserves of 48.7 Mt at 0.43 percent nickel for 210 kilotons (kt) of nickel and a mining inventory of 64.5 Mt at 0.41 percent nickel for 265 kt nickel. This excludes Ban Khoa and other developing prospects.
- A Long-lived Project: The Ta Khoa mine is expected to produce a yearly average of 18 kt of annual nickel concentrate over its ten-year lifespan. Blackstone believes the refinery can potentially extend its life past ten years.
- An Established Mining Operation: Existing infrastructure onsite includes a 450 ktpa Mill and mining camp. The mine will also benefit from a highly supportive community and favorable government legislation — Blackstone is committed to collaborating with community stakeholders in the project's development.
- Feed Flexibility: Ta Khoa's refinery will offer multiple feed options, including nickel concentrate, mixed hydroxide precipitate, nickel matte and black mass. This flexibility greatly improves the security and greatly reduces the risk of the project overall.
- Valued Partnerships: Blackstone is collaborating with multiple industry leaders and groups in the development of Ta Khoa
- Compelling Pre-feasibility Study: The financial outcomes of a base case pre-feasibility study on the project are promising. Based on a conservative NCM811 precursor price forecast, Ta Khoa displays an exceptional internal return rate on capital invested.
- Integrated Vertical Strategy: Blackstone is constructing both the Ta Khoa mine and refinery against a highly supportive ESG, macroeconomic and fiscal backdrop. This along with Ta Khoa's low capital intensity gives the company a significant advantage over competitors. Said low intensity is the result of multiple factors, including competitive labor costs, favorable regulations and low-cost renewable hydroelectric power.
- A Leader in Low Emissions: Independent assessments from Digbee, Minviro and Circulor, alongside an audit from the Nickel Institute, have confirmed that Ta Khoa will be the lowest-emitting flowsheet in the industry, at 9.8 kilograms of CO2 per kilogram of precursor with opportunities for even further reduction.
- Promising Pilots: With the support of ALS and process engineering partner Wood, Blackstone recently completed a 12-month programme of work that developed a scaled version of its concentrate to sulphate flowsheet. The refinery, which processed more than 9 tonnes of concentrate and MHP, successfully achieved battery-grade nickel sulphate of 99.95 percent, with a nickel recovery rate of 97 percent.
- Current Roadmap: Blackstone's next priority is to complete a series of definitive feasibility studies. Once those are complete, it will focus on fully integrating the mine into the electric vehicle consumer supply chain and finalizing its refining partnership structure.
Management Team
Hamish Halliday - Non-executive Chairman
Hamish Halliday is a geologist with over 20 years of corporate and technical experience. He is also the founder of Adamus Resources Limited, an AU$3 million float that became a multimillion-ounce emerging gold producer.
Scott Williamson - Managing Director
Scott Williamson is a mining engineer with a commerce degree from the West Australian School of Mines and Curtin University. He has over 10 years of experience in technical and corporate roles in the mining and finance sectors.
Dr. Frank Bierlein - Non-executive Director
Dr. Frank Bierlein is a geologist with 30 years of technical and corporate experience, focusing on grassroots to mine-stage mineral exploration, target generation, project management and oversight, due diligence studies, mineral prospectivity analysis, metallogenic framework studies and mineral resources market and investment analysis.
Alison Gaines - Non-executive Director
Alison Gaines has over 20 years of experience as a director in Australia and internationally. She has experience in the roles of board chair and board committee chair, particularly remuneration and nomination and governance committees. She is also the managing director of Gaines Advisory P/L and was recently global CEO of international search and board consulting firm Gerard Daniels, with a significant mining and energy practice.
Gaines has a Bachelor of Laws and a Bachelor of Arts (hons) from the University of Western Australia, a Graduate Diploma in Legal Practice from Australian National University and an honorary doctorate of the University and Master of Arts (Public Policy) from Murdoch University. She is a fellow of the Australian Institute of Company Directors and holds the INSEAD certificate in corporate governance. She is currently the governor of the College of Law Ltd, and non-executive director of Tura New Music.
Dan Lougher - Non-executive Director
Daniel Lougher’s career spans more than 40 years involving a range of exploration, feasibility, development, operations and corporate roles with Australian and international mining companies including a period of eighteen years spent in Africa with BHP Billiton, Impala Plats, Anglo American and Genmin. He was the managing director and chief executive officer of the successful Australian nickel miner Western Areas Ltd until its takeover by Independence Group.
Lougher also holds a first class mine manager’s certificate of competency (WA) and is a fellow of the Australasian Institute of Mining and Metallurgy (AusIMM). Lougher is the chair of the company’s technical committee and nomination committee.
Jamie Byrde - CFO and Company Secretary
Jamie Byrde has over 16 year's experience in corporate advisory, public and private company management since commencing his career with big four and mid-tier chartered accounting firms positions. Byrde specializes in financial management, ASX and ASIC compliance and corporate governance of mineral and resource focused public companies. He is also currently company secretary for Venture Minerals Limited.
Tessa Kutscher - Executive
Tessa Kutscher is an executive with more than 20 years of experience in working with C-Level executive teams in the fields of business strategy, business planning/optimisation and change management. After starting her career in Germany, she has worked internationally across different industries, such as mining, finance, tourism and tertiary education.
Kutscher holds a master’s degree in literature, linguistics and political science from the University of Bonn, Germany and a master’s degree in teaching from Ludwig Maximilian University of Munich.
Andrew Strickland - Executive
Andrew Strickland is an experienced study and project manager, a fellow of the Australian Institute of Mining and Metallurgy, University of WA MBA graduate, with undergraduate degrees in chemical engineering and extractive metallurgy from Curtin and WASM.
Before joining Blackstone, Strickland was a senior study manager for GR Engineering Services where he was responsible for delivering a series of scoping, PFS and DFS studies for both Australian and international projects. Over his career, he has held a variety of project development roles across both junior to mid-tier developers (including Straits Resources, Perseus Mining and Tiger Resources) and major multi-operation producers (South32).
Graham Rigo - Executive
Graham Rigo is an experienced study manager with over a decade of on-site production experience, holding undergraduate degrees in chemical engineering and finance from Curtin University, WA.
Before joining Blackstone, Rigo was a study manager for Ausenco where he was responsible for delivering a series of scoping, PFS and DFS studies for both Australian and international projects over a range of different commodities.
Rigo has over 11 years of site experience in nickel and cobalt hydromet production experience, in supervisory/superintendent level roles as well as process engineer experience.
Lon Taranaki - Executive
Lon Taranaki is an international mining professional with over 25 years of extensive experience in all aspects of resources and mining, feasibility, development and operations. Taranaki is a qualified process engineer from the University of Queensland Australia. He holds a Master of Business Administration, and is a fellow of the Australian Institute of Company Directors. Taranaki has established his career in Asia where he has successfully worked (and lived) across multiple jurisdictions and commodities ranging from technical, mine management and executive management roles.
Prior to joining Blackstone in February 2022, Taranaki was the chief executive officer of Minegenco, a renewable-energy-focused independent power producer. Preceding this, he was managing director of his private consultancy, AMG Mining Global, where he was providing services to the mining industry in Singapore, Guyana, Indonesia and Cambodia. Additionally, Taranaki has held various senior positions with Sakari Resources, PTT Asia Pacific Mining, Straits Resources, Sedgmans and BHP Coal.
Grid Battery Metals
Overview
Grid Battery Metals (TSXV:CELL,OTCQB:EVKRF) is a Canada-based exploration company focused on high-value battery metals required for the electric vehicle (EV) market. The company, formerly called Nickel Rock Resources, changed its name to Grid Battery Metals in April 2023 and started trading on the TSXV under the ticker CELL.
Grid is focused on EV battery metals exploration through its highly prospective lithium and nickel properties in North America. Grid has three lithium properties in Nevada: Texas Springs, Clayton Valley, and Volt Canyon. The Texas Springs property in Elko County covers approximately 2,500 hectares and is adjoining the southern boundary of the Nevada North Lithium Project owned by Surge Battery Metals (TSXV:NILI). Surge recently announced high-grade lithium of up to 8,070 parts per million (ppm) lithium on the Nevada North lithium project, which increases the likelihood of a large-scale high-grade lithium discovery at Texas Spring. Initial soil sampling at Texas Spring by Grid have shown high-grade lithium over 5,600 ppm as announced on February 7, 2024.
The company has completed the first phase of its initial exploration program at Texas Springs, which included a CSAMT geophysical survey and a detailed soil sampling on a 50-meter by 100-meter spacing. Results from these two exploration programs will be key to determining its 2024 exploration plan and possible drilling locations for clay-based lithium targets.
The 2,300-acre Clayton Valley property is immediately north of Albemarle’s (NYSE:ALB) Silver Peak lithium project, the only producing lithium mine in North America. The property has strong potential to host both lithium brine deposits as well as clay-hosted deposits.
Grid has filed the NI 43-101 technical report for the Clayton Valley lithium project, using the results of prior soil samples, geophysical surveys, and drilling on the property, to help identify structure and target areas favorable to lithium accumulation and determine next steps for its overall exploration plan. The company also commenced its 2024 exploration program for the property with Rangefront Geological to perform a detailed soil sampling on a 250 metre x 250 metre spacing, and to oversee an MT geophysical survey performed by KLM Geoscience.
The Volt Canyon lithium property features sediment-hosted lithium clay targets and has excellent accessibility, enabling exploration and exploitation throughout the year. Although limited exploration has been conducted in the immediate area, regional sediment samples in the region taken by the US government returned up to 108 parts per million (ppm) lithium near the property.
Shareholders should benefit from the company’s strategy of divesting its nickel assets into a separate public company. Grid announced plans to spin off its British Columbia nickel property into a new company (ACDC Battery Metals) which will be listed on the TSX Venture Exchange under the symbol ACDC.
Grid’s management and geological team has been actively exploring for EV battery metals in Nevada for over a decade. They have been successful in finding and funding new lithium discoveries and had a number of successful exits from companies, the most recent being Surge Battery Metals, where they were responsible for the discovery of the Nevada North Lithium Project. The management’s successful track record of lithium exploration in Nevada provides confidence about the company’s future.
The support from both the US and Canadian governments through subsidies and favorable legislation continues to drive EV adoption. In particular, both countries have committed to supporting the mining industry for key battery metals with legislation like the US Inflation Reduction Act, which provides both financial and functional support to the mining industry. Buoyed by government policy, US electric vehicle sales are projected to surpass 4.6 million units by 2030 (versus the 2023 estimate of 1.3 million).
Automakers cannot produce electric vehicles without access to battery metals such as lithium and nickel. Fear of missing out is pushing automakers to lock supplies of minerals for electric vehicle batteries. As such, we are seeing increasing partnerships between miners and auto OEMs. Automakers, including General Motors, Ford, BMW, Tesla and Stellantis, have committed large investments in direct financing of mines. We see more carmakers following suit as they strive to own the full supply chain from mine to product.
In mid-2024, Grid Battery Metals expanded its exploration land holdings in Northern British Columbia with a copper property of 17 mineral claims comprising 27,525.24 hectares. The region hosts numerous operating mines, and good infrastructure including experienced exploration and supporting services.
Company Highlights
- Grid Battery Metals is a Canada-based exploration company focused on high-value battery metals required for the electric vehicle (EV) market.
- The company has three highly prospective lithium properties in Nevada, USA: Texas Springs, Clayton Valley and Volt Canyon. In addition, it holds a nickel project under its wholly owned subsidiary, AC/DC Battery Metals called the Grid Nickel Group, based in British Columbia, Canada.
- As Grid focuses on its lithium projects in Nevada, Grid has entered into an arrangement agreement to transfer ownership of its interests in its nickel properties in British Columbia to its wholly owned subsidiary AC/DC Battery Metals Inc. (ACDC). ACDC will be listed as a public company on the TSX Venture Exchange (TSXV) in 2024. All three lithium projects are in the early stage with exploration planned for 2024. Grid commenced its 2024 exploration program at the Clayton Valley lithium project in March 2024.
- Grid has filed the NI 43-101 Technical Report for the Clayton Valley lithium project, dated March 4, 2024, prepared by Steven McMillin P.G. of Rangefront Geological.
- Grid entered into a purchase and sale agreement with AC/DC Battery Metals to acquire a 100 percent interest in a new copper asset with 17 mineral claims comprising 27,525.24 hectares in North Central British Columbia.
- Grid’s management and exploration team has been actively exploring for EV battery metals in Nevada for over a decade, and has been very successful in finding and funding new lithium discoveries, the most recent being the discovery of the Nevada North lithium project.
- EV sales are booming with projections of 4.6 million units by 2030 in the US. Battery metals such as lithium are critical for EVs. Grid Battery Metals is well positioned to be a pioneering player in the battery metals market with a strong focus on lithium, and promising properties in the US.
Key Projects
Texas Spring Project, Nevada
The Texas Spring lithium project, located in Granite Range, Nevada, is 100 percent owned by the company. The project covers approximately 400 hectares (988.4 acres) of area with 34 full lode claims and 30 partial lode claims. It is adjacent to the southern boundary of the Nevada North lithium project, owned by Surge Battery Metals. Surge’s initial drilling efforts have successfully identified lithium-rich clay deposits. A recent discovery in September 2023 showed values of up to 8,070 ppm of lithium. Initial soil sampling at Texas Spring by Grid has shown high-grade lithium over 5,600 ppm as announced on February 7, 2024.
The proximity to Nevada North Lithium certainly increases optimism for the Texas Spring Project. On top of that, the key founders and members of Surge’s geological team are also the founding management team of Grid, which further increases confidence in the project. The project enjoys excellent infrastructure in terms of paved highways and country roads.
The company recently completed the first phase of its initial exploration program at Texas Springs which included a CSAMT geophysical survey and a detailed soil sampling. Together, they would help predict geological structure and possible drilling locations for lithium targets.
Clayton Valley Project, Nevada
The Clayton Valley lithium project, located in Clayton Valley Nevada, is 100 percent owned by the company. The project is spread over approximately 930 hectares (~2,300 acres) with 118 claims. The project is located approximately 344 kilometers (~214 miles) from Reno in the northwest and Las Vegas in the southeast. Moreover, the property is around 315 kilometers (~196 miles) from the Tesla giga-factory and features good infrastructure with excellent road access and a nearby electrical substation.
The project claims are adjacent to the Silver Peak lithium project of Albemarle Corporation, which is the only producing lithium mine in North America. Clayton Valley’s lithium is contained in both underground reservoirs (aquifers) in the form of salty groundwater (brine), and in clay-hosted deposits. Historic exploration work dating back to 2021, which included three reverse circulation holes, has inferred the existence of a graben that may be a sub-basin of the larger Clayton Valley basin and may represent a secondary trap for lithium brines.
Volt Canyon Project, Nevada
The Volt Canyon lithium project, located in Monitor Valley, Nevada, is 100 percent owned by the company. The project covers an area of approximately 635 hectares (~1,569 acres) with 80 claims and is located approximately 122 kilometers northeast of Tonopah, Nevada. It benefits from excellent accessibility that enables exploration throughout the year.
Although limited exploration has been conducted in the immediate area, regional sediment samples in the region taken by the US government returned up to 108 ppm lithium near the property. The deposit’s origin is thought to be similar to Clayton Valley clay deposits, located about 180 kilometers to the south.
The exploration program includes surface sampling, auger or push drill water sampling along with geophysical work to identify drilling sites for an initial drill test on the property. Subsequently, additional surface and subsurface sampling will be executed in the form of drilling.
Management Team
Tim Fernback - President and CEO
Tim Fernback holds a Bachelor of Science from McMaster University in Hamilton, Ontario and an MBA with a concentration in finance from the University of British Columbia. He also holds a Certified Professional Accounting (CPA, CMA) designation in Canada. He has more than 30 years of experience in finance with both public and private companies in Canada and is currently a director of several publicly traded companies.
Robert Guanzon - CFO
Roberts Guanzon holds a Bachelor of Science degree in accounting and has rich experience in finance, accounting and corporate strategy. He serves as the CFO of several junior resource companies listed on the TSXV and holds a certified professional accounting (CPA, CMA) designation in Canada.
Tina Whyte - Corporate Secretary
Tina Whyte has more than 20 years of experience in the corporate and securities industry. She is an expert in several areas including corporate governance, continuous disclosure, financing transactions and regulatory filings and compliance. She also holds corporate secretary positions with other publicly listed companies.
Jay Oness - Director
Jay Oness has rich experience in all aspects of corporate management including strategic planning, business development and investor relations for public companies. He has over 20 years of experience and has served as a director, senior executive and consultant to public companies in the resource and non-resource sectors. He is currently VP of business and corporate development of Southern Silver Exploration.
Robert Setter - Director
Robert Setter holds a degree in economics and has over two decades of experience in business development, marketing and research. Previously, he has served as the senior financial editor for Report on Mining. He currently sits on the boards of three other listed mining companies.
Ali H. Alizadeh – Director
Ali H. Alizadeh is a senior geologist possessing extensive experience in mineral exploration & project management. He has been responsible for several uranium, gold and base metal projects during his exploration career with various exploration companies. He graduated with a geology degree in 1991, a M.Sc. in petrology in 1995, and an MBA at Queen’s University in 2010. He is also a member of the Association of Professional Engineers and Geoscientists of British Columbia.
Jeremy Hanson - Geological Advisor
Jeremy Hanson is a professional geoscientist with a decade of experience in mineral exploration in Canada. He is also a founder of Hardline Exploration, a geological consulting firm focused on Western Canada.
Steven McMillin - Geological Advisor
Steven McMillin boasts over 35 years of hands-on experience in mineral exploration within the United States, particularly in Nevada, earning him widespread recognition as a seasoned exploration geologist. Currently serving as the field operations manager at Rangefront Geological, he spearheads the coordination and execution of drill programs. His role includes liaising with vendors and regulatory bodies, ensuring drill safety measures, overseeing drilling and sampling procedures, and managing site reclamation efforts.
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Nickel and the Battery Boom in 2024
Nickel Price Update: Q1 2024 in Review
At the start of the year, experts were predicting that nickel prices would be rangebound in 2024.
With the first quarter in the books, that story seems to largely be playing out. After opening the year at US$16,600 per metric ton (MT) on January 2, nickel was stable during January and February. However, March brought volatility to the sector, with strong gains pushing the base metal to a quarterly high of US$18,165 on March 13.
Nickel's price rise failed to hold, and it once again dropped below the US$17,000 mark by the end of the month. Ultimately, the metal fell to US$16,565 on March 28, resulting in a slight loss for the quarter.
Indonesian supply dampens nickel prices
Lackluster pricing in the nickel market is largely the result of the metal's ongoing oversupply position.
The largest factor is elevated production from Indonesia, which is the top producer of the metal by far. The country produced 1.8 million MT of nickel in 2023, according to the US Geological Survey, representing half of global supply.
Indonesia's output has climbed exponentially over the past decade, and has been exacerbated by government initiatives that placed strict limits on the export of raw materials to encourage investment in production and refinement.
In an email to the Investing News Network (INN), Exploration Insights Editor Joe Mazumdar wrote, “The growth in electric vehicle (EV) production and the escalating demand for nickel in batteries prompted the Indonesian government to mandate increased local refining and manufacturing capacity from companies operating in the country.”
Despite the lower quality of material coming from Indonesia, the investment was made to shore up supply lines for Chinese battery makers and was earmarked for EV production. However, EV demand has waned through 2023 and into 2024 due to high interest rates, range anxiety and charging capacity, increasing nickel stockpiles.
A report on the nickel market provided by Jason Sappor, senior analyst with the metals and mining research team at S&P Global Commodity Insights, shows that short positions began to accumulate through February and early March on speculation that Indonesian producers were cutting operating rates due to a lack of raw material from mines.
The lack of mined nickel, which helped push prices up, was caused by delays from a new government approval process for mining output quotas that was implemented by Indonesia in September 2023. The new system will allow mining companies to apply for approvals every three years instead of every year. However, the implementation has been slow, and faced further delays while the country went through general elections.
The nickel market found additional support on speculation that the US government was eyeing sanctions on nickel supply out of Russia. Base metals were ultimately not included in the late February sanctions, and prices for the metal began to decline through the end of March as Indonesian quota approvals accelerated.
Western nickel producers cut output on low prices
According to Macquarie Capital data provided by Mazumdar, 35 percent of nickel production is unprofitable at prices below US$18,000, with that number jumping to 75 percent at the US$15,000 level.
Mazumdar indicated that nickel pricing challenges have led to cuts from Australian producers like First Quantum Minerals (TSX:FM,OTC Pink:FQVLF) and Wyloo Metals, which both announced the suspension of their respective Ravensthorpe and Kambalda nickel-mining operations. Additionally, major Australian nickel producer BHP (ASX:BHP,NYSE:BHP,LSE:BHP) is considering cuts of its own.
Nickel price, Q1 2024.
Chart via the London Metal Exchange.
Meanwhile, the nickel industry in French territory New Caledonia is facing severe difficulties due to faltering prices.
The French government has been in talks with Glencore (LSE:GLEN,OTC Pink:GLCNF), Eramet (EPA:ERA) and raw materials trader Trafigura, which have significant stakes in nickel producers in the country, and has offered a 200 million euro bailout package for the nation's nickel industry. The French government set a March 28 deadline for New Caledonia to agree to its rescue package, but a decision had not yet been reached as of April 11.
Earlier this year, Glencore announced plans to shutter and search for a buyer for its New Caledonia-based Koniambo Nickel operation, which it said has yet to turn a profit and is unsustainable even with government assistance.
For its part, Trafigura has declined to contribute bailout capital for its 19 percent stake in Prony Resources Nouvelle-Caledonie and its Goro mine in the territory, which is forcing Prony to find a new investor before it will be able to secure government funding. On April 10, Eramet reached its own deal with France for its subsidiary SLN’s nickel operations in New Caledonia; the transaction will see the company extend financial guarantees to SLN.
The situation has exacerbated tensions over New Caledonia's independence from France, with opponents of the agreement arguing it risks the territory's sovereignty and that the mining companies aren’t contributing enough to bailing out the mines, which employ thousands. Reports on April 10 indicate that protests have turned violent.
While cuts from Australian and New Caledonian miners aren’t expected to shift the market away from its surplus position, Mazumdar expects it will help to maintain some price stability in the market.
“The most recent forecast projects demand (7 percent CAGR) will grow at a slower pace than supply (8 percent CAGR) over the next several years, which should generate more market surpluses,” he said.
Miners seek "green nickel" premium for western products
In an email to INN, Ewa Manthey, commodities strategist at financial services provider ING, suggested western nickel producers are in a challenging position, even as they make cuts to production.
“The recent supply curtailments also limit the supply alternatives to the dominance of Indonesia, where the majority of production is backed by Chinese investment. This comes at a time when the US and the EU are looking to reduce their dependence on third countries to access critical raw materials, including nickel,” she said.
This was affirmed by Mazumdar, who said the US is working to combat the situation through a series of subsidies designed to encourage western producers and aid in the development of new critical minerals projects.
“The US Inflation Reduction Act promotes via subsidies sourcing of critical minerals and EV parts from countries with which it has a free trade agreement or a bilateral agreement. Indonesia and China do not have free trade agreements with the US,” he said. Mazumdar went on to suggest that the biggest benefactors of this plan will be Australia and Canada, but noted that with prices remaining depressed, multibillion-dollar projects will struggle to get off the ground.
Western producer shope their material may eventually see a "green nickel" premium that plays into their focus on ESG. However, this idea hasn’t gained much traction. The London Metal Exchange (LME) believes the green nickel market is too small to warrant its own futures contract, and Mazumdar said much the same. “There is little evidence that a premium for ‘green nickel’ producers or developers has much momentum, although an operation with low carbon emissions may have a better chance of getting funding from institutional investors in western countries,” he noted.
Even though there might not be much interest in green nickel on the LME, there are vocal proponents, including Wyloo’s CEO, Luca Giacovazzi. He sees the premium as being essential for the industry, and has said participants should be looking for a new marketplace if the LME is unwilling to pursue a separate listing for green nickel.
The calls for a premium have largely come from western producers that incur higher labor and production costs to meet ESG initiatives, which is happening less amongst their counterparts in China, Indonesia and Russia.
Western producers were caught off guard early in March as PT CNGR Ding Xing New Energy, a joint venture between China’s CNGR Advanced Material (SHA:300919) and Indonesia’s Rigqueza International, applied to be listed as a “good delivery brand” on the LME. The designation would allow the company, which produces Class 1 nickel, to be recognized as meeting responsible sourcing guidelines set by the LME.
If it is approved, which is considered likely, the company would be the first Indonesian firm to be represented on the LME. There has been pushback from western miners on the basis of ESG and responsible resourcing challenges.
Investor takeaway
As the nickel market faces strong production from Indonesia, experts expect more of the same for prices.
“Looking ahead, we believe nickel prices are likely to remain under pressure, at least in the near term, amid a weak macro picture and a sustained market surplus,” Manthey said. The continued surplus may provide some opportunities for investors looking to get into a critical minerals play at a lower cost, but a reversal may take some time.
Don’t forget to follow us @INN_Resource for real-time news updates!
Securities Disclosure: I, Dean Belder, 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 the interviews it conducts. 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.
Nickel Price Update: Q2 2024 in Review
The first quarter of the year saw the nickel price under threat from a market glut as Indonesian supply flooded the market, forcing western producers to begin cutting production amid low profitability.
March brought a great deal of volatility, with nickel breaking through the US$18,000 per metric ton (MT) mark; however, by April 1 the base metal had once again slumped, opening the second quarter at US$16,568.
As Q2 progressed, commodities saw broad gains and nickel hit a year-to-date high of US$21,615 on May 20.
After reaching that high point, nickel couldn't find support and fell rapidly to close the second quarter at US$17,291. Since then, the price of nickel has continued to decline, approaching yearly lows of US$16,090 on July 30.
Nickel prices, April 1 to August 8, 2024.
Chart via Trading Economics.
Russian nickel faces western sanctions
During Q1, nickel prices were negatively affected as Indonesian producers continued to flood the market; however, the base metal began seeing positive momentum as the country experienced delays in approving mining output quotas, and amid speculation that Russian nickel could be sanctioned by the US and UK.
Ultimately, nickel wasn't sanctioned by those countries at the time, and as mining quotas began to work their way through Indonesian red tape, nickel prices once again experienced declines.
However, momentum began to shift again for nickel at the start of Q2. On April 12, news broke that Washington and London had banned US and UK metal exchanges from admitting new aluminum, copper and nickel from Russia. Taking immediate effect, the prohibitions also halted the import of those metals.
In July, the London Metal Exchange extended trading sanctions to Russian miner Norlisk Nickel’s Finnish operations for the trading of briquettes and cathodes; these restrictions are set to come into effect in October.
Joe Mazumdar, editor of Exploration Insights, suggested this move will have little impact on the sector.
“That nickel is still going to make it into the market, it’s just going to go to a different exchange, probably Shanghai … So I could still see that nickel moving and getting consumed in the global market — it’s just not coming to the west,” he explained to the Investing News Network in an interview.
Nickel continued to climb through April and May as a combination of factors drove metals prices more broadly. Dovish statements from the US Federal Reserve helped provide momentum, as did cooling inflation data.
Ultimately nickel prices fell back, with London Metal Exchange stockpiles of the metal increasing through the second quarter, rising from 77,604 MT on April 1 to 95,436 MT on June 28.
Western nickel producers cut output amid low prices
The overhang in the nickel market caused producers to begin curtailing their production in the early part of the year. This trend continued into the second quarter as more producers started to slow output or shut mines altogether.
Among the hardest-hit regions in the latest round of closures has been Australia, where low prices and high operating costs forced First Quantum Minerals (TSX:FM,OTC Pink:FQVLF) to place its Ravensthorpe operations on care and maintenance at the end of April. The mine had been operating at lower capacity through the start of the year as it worked through aboveground stockpiles and used a lower-cost atmospheric leach circuit to process ore.
BHP (ASX:BHP,NYSE:BHP,LSE:BHP), which had been considering cuts earlier in the year, announced on July 11 that it would be suspending operations at its Nickel West operations and West Musgrave project.
In its announcement, it cites oversupply in the global nickel market and indicates consensus that nickel prices will be lower over the next half-decade due to growth in alternative, low-cost supply. BHP said it would begin transitioning its operations starting immediately, with the full suspension being completed between October and December of this year. The company notes that the closure is temporary and said it will review its decision in February 2027.
Mazumdar explained that Indonesia has a competitive advantage, but as more operations begin to cut production it will start to eat into the market surplus, which will be a positive for the nickel market.
“They can’t compete on a cost basis with Indonesia, nobody can. So Indonesia continues to oversupply the market, and now there’s an overhang. What happens is once you get these production cuts, there’s less supply in the market and then that overhang will recede. That’s the best thing that can happen to the nickel market,” he said.
Can government incentives boost western nickel output?
Amid these challenges, the US has set up a number of programs, including tax credits through the Inflation Reduction Act (IRA), to bolster domestic and allied production of nickel and other critical minerals.
The IRA was announced in 2022, but more recently, the Biden administration authorized the US Department of Energy’s Clean Energy Financing Program, which establishes a US$72 billion fund that will be used to provide guaranteed loans to “projects that increase the domestically produced supply of critical minerals.”
Mazumdar doesn’t think incentives like this will be enough to get new projects into the nickel space.
“The west can offer cheap loans to get people to build it, but they’re not going to make any money to pay back the loan no matter how cheap it is unless they give them a grant,” he said.
He explained that to get these projects off the ground, the nickel price would need to go higher to incentivize development, or governments would need to provide a guaranteed price to buy the nickel and build their own stockpiles.
Back-and-forth pressures between government initiatives and Chinese dominance have created a bifurcated market and left Indonesia with few options to diversify its exports, even as it negotiates a trade partnership with the US.
This has led to attempts from Indonesia to restructure investment deals with Chinese firms that would allow Indonesian nickel products to qualify for incentives under the IRA.
What factors are driving nickel demand?
Despite the nickel market's oversupply, there is still high demand, much of it from China.
China is the largest consumer of nickel in the world, accounting for around 65 percent of total consumption, with the bulk of it destined for steel products. However, as China’s real estate market has stalled out, so too has demand for steel products, with consumption slumping 3.3 percent during the first half of the year.
Total 2024 consumption is projected to fall to around 900 million MT, down from 933.4 million MT in 2023.
Despite the decline, nickel demand has been bolstered by increasing sales of battery electric vehicles (BEVs) in recent years. Even though reports indicated that demand for BEVs had waned at the start of 2024, growth in the segment has remained resilient, with BEVs' global share of the light vehicle market expected to reach 19.2 percent in 2024.
In China, the uptake has also been enormous, with sales from Chinese BEV producer BYD (OTC Pink:BYDDF,SZSE:002594) projected to exceed those of North American rival Tesla (NASDAQ:TSLA) in 2024.
Additionally, demand for hybrid vehicles is expected to exceed demand for traditional internal combustion engine (ICE) cars. While batteries for hybrids aren’t as large, they still use more nickel than ICE vehicles.
The amount of nickel used in batteries has been increasing in recent years as consumers demand greater range. BEVs use 25.3 kilograms of nickel on average, while hybrids use an average of 6.5 kilograms.
What will happen to the nickel price in 2024?
While production cuts should bring the market more into balance, the nickel price is likely to be determined by supply coming from Indonesia and demand from Chinese steel and battery production.
Even though governments have created initiatives to stimulate western production, they’re not likely to have much ability to increase mining operations as long as nickel prices remain depressed.
As pricing for nickel bottoms out, there may be opportunities for investors who are willing to be patient; however, it could be some time before prices rebound sufficiently for miners to begin restarting their operations.
Long-term predictions show nickel in the US$17,000 range for 2024, slowly improving to US$23,000 level in 2028.
Don’t forget to follow us @INN_Resource for real-time news updates!
Securities Disclosure: I, Dean Belder, 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 the interviews it conducts. 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.
Top 3 Canadian Nickel Stocks of 2024
After trending down in 2023, nickel prices climbed to a 10 month high in late May; however, they've since pulled back. While this environment has been tough for nickel companies, some stocks are still thriving.
Supply is expected to outflank demand over the short term, but the longer-term outlook for the metal is strong. Demand from the electric vehicle industry is one reason nickel's future looks bright further into the future.
“Global nickel consumption is expected to increase due to recovery of the stainless steel sector and increased usage of nickel in electric vehicle batteries. Batteries now account for almost 17 percent of total nickel demand, behind stainless steel," Ewa Manthey, commodities strategist at financial services firm ING, said in the lead-up to 2024.
“The metal’s appeal to investors as a key green metal will support higher prices in the longer term."
As for Canada's nickel market, the critical metal is listed as one of the top priorities in the Canadian government's Critical Minerals Strategy, which was announced in 2023. The country is the world's fifth largest producer of nickel, with much of its production coming from mines in Ontario's Sudbury Basin, including Vale’s (NYSE:VALE) Sudbury operation and Glencore's (LSE:GLEN,OTC Pink:GLCNF) Sudbury Integrated Nickel Operations.
In February, Canada Nickel Company (TSXV:CNC,OTCQX:CNIKF) announced its subsidiary NetZero Metals is planning to develop a US$1 billion nickel processing plant in Ontario that will become North America’s largest once complete.
How are Canadian nickel stocks performing in 2024? Below are the top nickel stocks in Canada on the TSXV and CSE by share price performance so far this year. TSX stocks were considered, but didn't make the cut.
All year-to-date and share price data was obtained on July 30, 2024, using TradingView’s stock screener. The top nickel stocks listed had market caps above C$10 million at that time.
1. Class 1 Nickel and Technologies (CSE:NICO)
Year-to-date gain: 233.33 percent; market cap: C$32.66 million; share price: C$0.20
Class 1 Nickel and Technologies' flagship property is its Alexo-Dundonald nickel project near Timmins, Ontario. The past-producing asset hosts four nickel sulfide deposits. The company’s pipeline also includes the past-producing Somanike nickel-copper project near Val-d’Or, Québec, and the River Valley platinum-group metals project near Sudbury, Ontario.
Class 1 Nickel released resource estimate updates for the Alexo South and Alexo North deposits in April and May of this year, respectively. The company said it expects to start work on a preliminary economic assessment for Alexo-Dundonald in the near term as part of its plan to bring the asset back into production.
The Canadian nickel exploration company's share price started off the year at C$0.06, and it began climbing in April to reach a year-to-date high of C$0.21 on July 26.
2. Power Nickel (TSXV:PNPN)
Year-to-date gain: 158.33 percent; market cap: C$119.22 million; share price: C$0.62
Power Nickel is developing its 80 percent owned Nisk polymetallic property in Québec, which hosts nickel, copper, platinum and palladium mineralization. According to the company, it plans to create Canada's first carbon-neutral nickel mine. The polymetallic nature of the project is a plus for the economic case for future nickel production in a low price environment.
This ongoing work has generated positive news flow for the company so far in 2024. After starting the year at C$0.24, Power Nickel began gaining in mid-April following two key announcements. First came drill results from the newly discovered Lion zone 5 kilometers northeast of the main Nisk deposit. Shortly after, the company announced the completion of its option to earn an 80 percent stake in Nisk from Critical Elements Lithium (TSXV:CRE,OTCQX:CRECF).
Power Nickel’s share price jumped more than 15 percent on May 10 to reach C$0.64 following news that drilling continued to expand the high-grade, near-surface Lion discovery, with notable assays including 14.42 meters at 0.59 grams per metric ton (g/t) gold, 69.14 g/t silver, 8.17 percent copper, 6.25 g/t palladium, 8.44 g/t platinum and 0.58 percent nickel.
In June, Power Nickel commenced an 8,000 meter summer drill program at Nisk, and closed a flow-through offering for gross proceeds of over C$20 million. Some of the biggest names in mining — Robert Friedland and Rob McEwen — participated. The company continued to climb before peaking at a year-to-date high of C$0.88 on June 21.
3. EV Nickel (TSXV:EVNI)
Year-to-date gain: 83.33 percent; market cap: C$48.01 million; share price: C$0.55
EV Nickel’s primary project is the 30,000 hectare Shaw Dome asset near Timmins, Ontario. The property includes the high-grade W4 deposit, which has a resource of 2 million metric tons at 0.98 percent nickel for 43.3 million pounds of Class 1 nickel across the measured, indicated and inferred categories.
Shaw Dome also holds the large-scale CarLang A zone, which has a resource of 1 billion metric tons at 0.24 percent nickel for 5.3 billion pounds of Class 1 nickel across the indicated and inferred categories.
EV Nickel is working on integrating carbon capture and storage technology for large-scale clean nickel production, and has procured funding from the Canadian government and Ontario's provincial government. In late 2023, the company announced it was moving its carbon capture research and development to the pilot plant stage.
The company's news so far in 2024 includes the closure of a flow-through financing in March that ultimately saw EV Nickel raise C$5.12 million to fund the development of its high-grade, large-scale nickel resources.
In April, EV Nickel launched its 2024 exploration program, which is aimed at advancing the CarLang trend and exploring other nickel targets. The most recent news out of the program came in mid-June with the announcement that diamond drilling on the Langmuir 2 high-priority nickel target had commenced, and plans were in place to begin drilling on high-grade nickel targets contained within the Shaw Dome project starting in mid-June.
The Canadian nickel exploration company's share price started off the year at C$0.30 before steadily climbing to reach a year-to-date high of C$0.79 on May 17.
Don’t forget to follow us @INN_Resource for real-time news updates!
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Canada Nickel Company is a client of the Investing News Network. This article is not paid-for content.
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