I would add 2 more reason, scarcity and geopolitics.
Scarcity ----------- Wonder why lithium companies with poor fundamental are still rocketing to the moon? Scarcity, there is just not enough lithium to satisfy the demand of the consumer market. The market is taking this scarcity into account, betting that more juniors will go into production because the supply chain is in dire need for it.
Nickel is currently in a spot where conventional grade are plentiful, but there is a degree of scarcity for battery grade Nickel Sulphate NiSO4. Most nickel producers currently matte to refine Nickel sulphide ore to Nickel sulphate. Nickel sulphide deposits are scarce and there are only a few world class deposits around the world. BHP's Nickel West is one of them. Alternatives, you can use HPAL to process laterite ore (specifically limonite) to Nickel sulphate. Also, in 2021, Tshingshan has annouced a new way via Nickel Pig Iron (NPI).
How current refinement works (Ore to NiSO4): * Matte: Nickel sulphide ore → Nickel matte → Nickel briquettes → NiSO4 * HPAL (MHP): Nickel laterite (limonite) ore → MHP → NiSO4 ; Very CAPEX/OPEX intensive * Tshingshan-way: Nickel laterite ore → NPI → Nickel matte → NiSO4 ; Economic feasibility is arguable
QPM decides to use DNi: * DNi: Nickel laterite (limonite, saprolite, etc) ore → MHP → NiSO4 ; accepts more ore types as feed, more by-products, 100% saleable by- products, scalable, better acid recovery
Meanwhile, Iron ore/Magnetite is a game of numbers, plenty of world class deposits, no scarcity issue. Thus Iron ore is a market where you can only ensure your survivability by putting out big numbers, or having a very feasible capex/opex.
Geopolitics ---------- Increase in trading with like minded nation. State and Federal government's support for this TECH project, as they are aware of the significant of the TECH project in terms of securing local technological expertise, upskilling local workforce and rejuvenating the Central QLD economy. They are also aware of the criticality of having a sovereign supply of high-value, critical, battery grade metal export in a gradually de-globalising economy.
Summary ---------- QPM 2023, right place and the right time, that is what many of us believe. Remember how Apple invoked the handheld phone to smart phone transition back in 2007. For the nickel and cobalt industry, if QPM can pull this off, you wont be hearing the word "HPAL" in the next 5-6 years.
QPM Price at posting:
17.0¢ Sentiment: Hold Disclosure: Held
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