Fellow Believers,This is article compelling reading.We are in the "perfect storm"with Nickel,in particular Ni Sulphide emerging projects like CTM.The recent price surge is very early in this exciting "bull run"we have seen nothing yet I suggest.IMHO
Indonesia producers could face very strong head winds with the processing waste of DST (Deep Sea Tailings) in producing BEV from laterite to class 1 Ni Sulphide battery grade product.
With the focus on "Green"environmentally friendly mining,one would have to say the dumping of tailings into the sea is NOT the most "green"way for producing Nickel.So very interesting times ahead I suggest in Indonesia.Super expensive if they have to put tailings dams in,and there is not an abundance of land one feels.
Lastly I do feel we are in some of the most exciting times in CTM history over the next 4-6 weeks.The SS will unlock the true value of CTM and I believe will take the shackles of the SP.Please take time to read the below.
I will not post again for some time as I don't need to "sell the story"anymore.I do encourage the reading of the Brokerage updates once the SS has been released,in particular Sprott , as they have the World class Geo's writing their articles and and they are very very good at what they invest in.10 Baggers are their specialty!!!
Best of luck to all,and as I have written on many post over the last 18 months, your patience will be be very well rewarded I feel.
The Bald Guy!!!
The challenges most countries are facing right now are daunting. Not only do they need to have a plan for recovering from covid-19, the supply chains that have been interrupted or broken by the virus have to be repaired.
On top of the covid crisis there is a climate crisis, and for lack of a better term, a “technology” crisis. Governments must make funding available for 5G networks so that businesses are not left behind as the world moves more into digitization and automation which require robust internet and cellular infrastructure.
The fossil-fueled based transportation system needs to be electrified, and the switch has to be made from oil, gas and coal-powered power plants to those which run on solar, wind and thorium-produced nuclear energy. If we have any hope of cleaning up the planet, before the point of no return, a massive decarbonization needs to take place.
In a recent report, commodities consultant Wood Mackenzie said an investment of over $1 trillion will be required in key energy transition metals over the next 15 years just to meet the growing needs of decarbonization.
On top of surging demand for metals needed to feed so-called “green infrastructure” programs designed to lift sagging economies out of the pandemic, we have current and emerging structural deficits for a number of metals, that will keep prices buoyant for the foreseeable future.
Over the past year, tight supply is reflected in the rising prices of copper, silver, nickel, zinc and lead, for example.
The only reason we haven’t seen metal prices spike higher, is that demand for them has come off a bit due to the pandemic. When demand is restored, the supply-demand imbalance will be striking.
Two of the most important metals to consider are nickel and graphite — both necessary for the production of lithium-ion batteries utilized in electric vehicles and grid-scale energy storage.
As this article shall prove, a combination of structural deficits, pent-up demand, and infrastructure build-outs, are the perfect storm for nickel and graphite.
Looming battery shortage?
Currently, less than 1% of the world’s vehicles are electric, but by 2030 they are expected to represent about 11% of new car sales, according to commodities consultant Wood Mackenzie.
And while there are a number of obstacles to increasing that percentage of EVs to regular vehicles, including charging station infrastructure and making the sticker prices of electric vehicles affordable to the average person, recent research suggests the battery storage market is growing in leaps and bounds.
According to an analysis by Adamas Intelligence, in 2020 a total of 134.5 gigawatt hours (GWh) of battery capacity was deployed globally into newly sold passenger BEVs, PHEVs and HEVs, an increase of 39.6% compared to 2019. The figure would be up to 40 GWh higher, if additional capacity in sales channels and automaker assembly lines were factored in, said the Toronto-based firm, which tracks demand for EV batteries by chemistry, cell supplier and capacity in over 90 countries.
Yet despite the nearly 40% rise in battery capacity to meet surging demand by automakers for EV battery packs, the industry appears unable to keep pace. In a call to investors last month, Tesla’s CEO Elon Musk said the company does not have enough battery cells to put new models like its Semi truck into production.
“The main reason we have not accelerated new products like the Tesla Semi is that we simply don’t have enough cells built. We could easily go into the production of the Semi, but we don’t have enough cells for it right now,” Musk said on the call, noting the Semi requires five times more cells as a passenger car.
“We’ve been very clear with our cell suppliers, whether it be CATL or Panasonic or LG that we will take as many batteries as they can produce.”
Nickel
Tesla has also expressed concern over whether there will be enough high-purity “Class 1” nickel needed for electric-vehicle batteries.
According to BloombergNEF, demand for Class 1 nickel is expected to out-run supply within five years, fueled by rising consumption by lithium-ion electric vehicle battery suppliers. Nickel’s inroads are due mainly to an industry shift towards “NMC 811” batteries which require eight times the other metals in the battery. (first-version NMC 111 batteries have one part each nickel, cobalt and manganese).
The Nickel Institute informs us that nickel has long been widely used in batteries, most commonly nickel cadmium (NiCd) and in longer-lasting nickel metal hydride (NiMH) rechargeable batteries. The first commercial applications of NiMH batteries came in the mid-1990s, including in the Toyota Prius, camcorders, and eventually, smart phones, laptops and other portable devices. The major advantage of nickel in batteries is it helps to deliver higher energy density and greater storage capacity, at a lower cost.
As the table below shows, nickel is an essential component for the cathodes of many secondary battery designs. (“secondary” refers to batteries that can be recharged and re-used)
The finding opens up a potentially lucrative market for lithium and other metals that go into lithium-ion batteries, beyond electronics and EVs. The energy storage market was just 1.4 gigawatts (GW) worldwide in 2017 but it could reach 8.6GW by 2022, according to GTM Research. The US and China are currently the biggest supplies of stored energy and are expected to remain so until 2022, GTM Research said in a 2018 report.
Beyond batteries, lot of nickel will still need to be mined for stainless steel and other uses. The nickel industry’s dilemma is therefore how to keep the traditional market intact, by producing enough nickel pig iron (NPI) and ferronickel from laterites to satisfy existing stainless steel customers, in particular China, while at the same time mining enough nickel sulfides to surf the coming wave of EV battery demand?
In fact the dilemma isn’t getting any easier to overcome; if anything, it’s worsening in the world’s top nickel exporter, Indonesia.
Last year the Southeast Asian nation banned ore exports amid a plan to develop a complete nickel supply chain, meaning raw ore that was previously destined for processing overseas would be “beneficiated” locally. Indonesia wants to become a global hub for EV production, from extraction to processing into metals and chemicals used in batteries, all the way up to building EVs.
Yet there is a serious flaw in this plan, and it relates to the type of nickel deposits found in and around Indonesia.
The trouble with laterites
Nickel deposits come in two forms: sulfide or laterite. About 60% of the world’s known nickel resources are laterites, which tend to be in the southern hemisphere. The remaining 40% are sulfide deposits.
Large-scale sulfide deposits are extremely rare. Historically, most nickel was produced from sulfide ores, including the giant (>10 million tonnes) Sudbury deposits in Ontario, Norilsk in Russia and the Bushveld Complex in South Africa, known for its platinum group elements (PGEs). However, existing sulfide mines are becoming depleted, and nickel miners are having to go to the lower-quality, but more expensive to process, as well as more polluting, nickel laterites such as found in the Philippines, Indonesia and New Caledonia.
Nickel sulfide deposits provide ore for Class 1 nickel users which includes battery manufacturers. These companies purchase the nickel product known as nickel sulfate, derived from high-grade nickel sulfide deposits. It’s important to note that less than half of the world’s nickel is suitable for the biggest growth market – EV batteries.
According to BloombergNEF, demand for Class 1 nickel is expected to out-run supply within five years, fueled by rising consumption by lithium-ion electric vehicle battery suppliers. It’s clear that nickel is facing some growing pains since the industrial metal was burnished by its new-found use in the transportation mode of the future.
Only around 6% of nickel ends up in EV batteries, with 70% of supply going into making stainless steel.
Class 1 nickel powder for sulfate production enjoys a large premium over LME nickel prices, but for miners to switch from lower-grade to battery-grade material requires huge investments to upgrade refining and processing facilities.
Reuters has reported on the multi-billion-dollar Chinese-led project to produce battery-grade nickel chemicals, that Indonesia hopes will attract EV manufacturers to the country. At least four high-pressure acid leach (HPAL) plants are currently under construction, led by Chinese stainless steel producers and battery makers.
The country expects to double investment in nickel processing from 2020 to $35 billion in 2035. Jakarta has also signed a $9.8 billion EV battery deal with South Korea’s LG Energy Solution.
While the Indonesian government is happy to accept the foreign investment in its burgeoning EV industry, it is no longer willing to tolerate the environmental degradation that laterite nickel production entails.
Last week, the country announced it will forbid mining companies from dumping mining waste into the ocean, a practice known as deep sea tailings (DST). To clarify: the government hasn’t actually banned DST, but by not issuing new permits, it could delay planned projects and complicate efforts to dispose of waste, Reuters reported. The lengthy wait means land tailings will eventually become “the only option,” a mining company source told the news outlet.
That, in turn, could affect the economics of any new projects — disposing of the tailings on land, in a nation of islands where space is at a premium — will surely throw a wrench into operations and significantly add to their costs per tonne.
Consider: although only one nickel mine in Papua New Guinea is using DST, according to the Nickel Institute, most of the four above-mentioned HPAL plants plan to dump their tailings waste into the sea. Reuters quotes a nickel cost researcher at Wood Mackenzie saying, “It would cost a fortune to switch from one established form of tailings disposal to another method.”
It is also very expensive to process nickel from laterites due to the complex metallurgy.
HPAL – whose performance record has been highly mixed – involves processing ore in a sulfuric acid leach at temperatures up to 270 degrees C and pressures up to 600 psi to extract the nickel and cobalt from the iron-rich ore; the pressure leaching is done in titanium-lined autoclaves.
Counter-current decantation is used to separate the solids and liquids. Separating and purifying the nickel/cobalt solution is done by solvent extraction and electrowinning.
The advantage of HPAL is its ability to process low-grade nickel laterite ores, and recover nickel and cobalt. However, HPAL is unable to process high-magnesium or saprolite ores, it has high maintenance costs due to the sulfuric acid, and it comes with the cost, environmental impact and hassle of disposing of the magnesium sulfate effluent waste.
According to S&P Global Market Intelligence, technical difficulties, high costs and low nickel prices in previous years led to problems at several HPAL projects, including First Quantum Minerals’ Ravensthorpe mine, put into care and maintenance, Sherritt International having to write down CAD$1.723 billion of its Ambatovy mine, and Vale reviewing its Goro operation in New Caledonia.
Of course, we are dealing with a different nickel market these days — one driven by electric vehicle batteries. According to a recent report by Roskill, released by the European Commission’s Joint Research Centre, nickel demand is in for an exponential growth spurt.
Based on the premise that automotive electrification will represent the better part of global nickel demand for the next two decades, the report says demand will shoot from 92,000 tonnes in 2020, to 2.6Mt in 2040, a 28X increase!
“Underpinning this growth is our expectation for EU27 OEMs to increasingly utilize high-nickel cathode chemistries from the mid-to-late 2020s and throughout the 2030s,” the report states.
In fact, the authors anticipate that, unless a sizeable “end of life” (EOL) recycling industry is established, which is a source of materials to produce nickel sulfate, “we expect a supply deficit to form in 2027 and then remain over the rest of the outlook period [to 2040].”
The research firm also believes that the availability of feedstock (ie., nickel sulfide mines), not processing capacity, will be the biggest bottleneck in the nickel sulfate supply chain and is the cause of the market potentially going into a structural deficit after 2027. For Europe, this means finding and securing sources of primary nickel supply outside of the EU’s 27 member countries.
Sulfide cupboard is bare
Where will mining companies look for new nickel sulfide deposits, from which the extraction of high-grade nickel needed for battery chemistries is economically and technically feasible? The pickings are slim.
Decades of under-investment equals few new large-scale greenfield nickel sulfide discoveries. Since 1990, the only large discoveries that have occurred, happened when exploration was going on for other metals.
Only one nickel sulfide deposit has been discovered in the past decade and a half, Nova-Bollinger in Western Australia. Capital expenditures on nickel projects plummeted from $7 billion in 2012 to $2 billion in 2017.
The result of such limited nickel exploration is a very limited pipeline of new projects, especially lower-cost sulfides in geopolitically safe mining jurisdictions. Any junior resource company with a sulfide nickel project will be extremely attractive to potential acquirers.
CTM Price at posting:
88.0¢ Sentiment: Buy Disclosure: Held
(20min delay)