Also posted in SGQ thread.
From todays The Australian. Nickel sulphides day appears to be coming. Looks like the Ni market could start to split due to the requirements of the power storage & ev makers.
How EVs split the nickel market
A truck at BHP’s nickel mine in Western Australia. Picture: Supplied.
The contrast could hardly have been starker.
On Wednesday night, just hours after BHP Nickel West boss Eddy Haegel delivered an upbeat presentation about the bright battery-inspired future for the once moribund business, Canada’s First Quantum Minerals announced it would shut down its Ravensthorpe nickel laterite mine in Western Australia’s south west.
The two events clearly illustrate the emerging bifurcation in the global nickel market.
On the one side are nickel sulphide producers like BHP, Western Areas and Independence Group, who are increasingly excited about the potential surge in demand from the battery industry for their output. The sort of nickel powder produced by the nickel sulphide miners is a key ingredient in the lithium ion batteries that will be used in the millions of new electric vehicles and power storage systems being built around the world.
And on the other hand are the nickel laterite mines such as First Quantum’s Ravensthorpe, whose output is not suited for use in batteries and which instead is almost entirely exposed to the stainless steel industry.
The nickel sulphide miners are preparing for a major new source of demand from an industry that is willing to pay significant premiums for the right product, while the laterite miners are at the mercy of a stainless steel sector, with comparatively modest growth prospects and particular sensitivity to price.
Not that long ago, it was Nickel West that looked doomed.
After a prolonged sale process failed to find a buyer, the business was rated a 90 per cent chance within BHP of closing by 2019 or earlier.
Now, thanks to some clever thinking from the Nickel West team and buoyed by a battery-inspired outlook, the business is looking as far ahead as 2040 and has grown its workforce from 2,000 to 2,500. It has also signed off on a $US43.2 million investment in a new nickel sulphate plant at Kwinana, the biggest single capital spend in the division for years.
At Ravensthorpe, however, the 270 First Quantum employees and the hundreds of additional contractors face a particularly bleak future.
In a statement, First Quantum chief executive Philip Pascall described the decision as “disappointing”.
“Ravensthorpe is an excellent operation with an outstanding workforce and supportive community but the continuing depressed nickel market conditions, over some years, leaves us no option,” he said.
The reality is that Ravensthorpe has now been shut twice in its history. BHP spent $US2.2 billion building the mine only to shut it within months of its opening in 2009.
First Quantum bought it later that year for $US340m but simply hasn’t been able to make the project work in the current market.
First Quantum’s pain, however, is another’s gain.
Both Western Areas and Independence were two of the best-performed stocks in the ASX 200 index on Thursday, with their shares surging by 5.8 per cent and 4.7 per cent apiece, respectively.
