Chalice is bruised and battered from the relentless shorting,...

Chalice is bruised and battered from the relentless shorting, margin calls and fear driven selling, but the flood of dirty nickel is unsustainable and having a destructive impact on the Indonesian environment.

When the going gets tough, the tough get going!
It's time for CHN to flex some muscle

Below is a snippet from todays 'Next Investor' subscription article:

Looking past “Dirty Nickel”...
Nickel… sigh…

One of the most beat up battery metal sectors right now.

A number of mines have been shut down, major players in the space are writing down nickel assets and the prospects for the commodity are looking grim.

The growth in the nickel market was leveraged to battery metals macro thematic because of its use in high range, high performance EV batteries.

Remember back in 2020 when Elon Musk said at the infamous Tesla Battery Day - “We Need More Nickel”?

(Source)

From there, the nickel price soared, but has since cooled significantly with relatively cheaper supply coming out of Indonesia flooding the market.

It led to most of the industry participants calling for the end of the nickel boom.

BUT, as Benchmark analysts argued, nickel as a battery metal hasn't had time to mature yet…

Only 16% of nickel supply is used in batteries right now with most nickel going into producing stainless steel.

It isn't until ~2035 when nickel demand from the battery sector is expected to surpass the steel market.

Adding to that momentum will be the IRA incentives that will force nickel to come from ESG friendly sources, from inside countries that have free trade agreements in place with the US.

Like most other battery metals, the short term outlook for nickel looks poor.

However, if the long term demand picture for battery metals plays out as expected, then the cycle will turn in the long run.

And, when it does, all of the projects that were taken offline during the cycle lows will exacerbate the supply deficit leading to much higher prices than the market expects.

Last weekend we wrote about how companies that pick up projects at cycle lows often end up performing the best when the cycle turns.

We gave the example of Champion Iron, who bought an iron ore mine in Canada at cycle lows and then had it back operating when the iron ore price started moving back up to <US$100 per tonne.

Champion’s share price went from ~9c at the bottom of the cycle to a peak of $8.50 per share this year.

We are Investors in the nickel space in the long run and hope that we can pick the best companies during the downturn so that they can deliver us performance in the up cycle