I'm actually quite bullish on recycling. I think it will be a good growth sector as EV's rise.
However, there's not enough EV's to justify a recycling sector on scale yet. And from all the predictions I've seen, there won't be for a long time. These sort of things are best run at scale and once 50% of the population has an EV, it's game on for recycling. I actually plan to be an early adopter as I think it has good potential.
That's in the long term though, because to have 50% of the population driving an EV requires immense amounts of nickel, cobalt, lithium and most importantly copper that we simply do not have.
Sure, we can recycle now, but we can't do it at the scale required and it won't make a dent at all on the new production being brought online.
For ARL in particular, I'm under no illusions that it's the absolute best nickel project out there and I don't think it's the absolute best economics. However, it does not need to be the best in that field alone to succeed, because it has a number of things others do not have which are just as critical.
1. Size. It's just monstrous and there's not a lot that compares. Clarion clipperton zone? Good luck the moral outrage has already begun on that. As we all know, majors want size. The bigger the better. They like to run things at scale for very long time periods. This is because it falls in line with their obligations to shareholders and their much larger market caps. I can explain more if people are interested.
2. Location. It has easy access to power, roads, workforce.
3. Location again. It's in a tier 1 jurisdiction, without ethical concerns. This is of great importance to manufacturers.
4. No disgusting tailings being dumped in the ocean.
5. High initial capex, but once it's rolling it will be a cash generating machine. Potential partners are going to see this if we can see it.
6. Easy ore to dig up. Low acid consumption.
7. If the EV rollout continues, we're going to need not just ARL, but 10 ARL's or more. The question quickly turns to "where do we find that many".
8. Good management. This can make or break a company and ARL management has proven themselves very well over the last few years. Less hype and more chugging away doing good work.
It's really more of a play on the macro than anything, the company itself happens to fall into a pretty nice levering situation to (in my opinion) act like an option with leverage on the nickel macro trends where the downside risk is not also leveraged. Worst case is I lose my capital, not 100x my capital.
The above is not financial advice and obviously to any new people you should understand this is hyper-speculative. But it's my favorite kind of hyper speculative.
