NICKEL market guru Jim Lennon has “correctly forecast six of the last three bull markets” and he’ll be doing very well to improve his strike rate in the current market market.
The Macquarie Bank consultant (who has been following the nickel sector for 37 years), told the Australian Nickel Conference in Perth this morning that given the secrecy in the battery market it was “almost impossible to forecast what is going on” in terms of potential future demand from the extremely complex and rapidly evolving sector.
However Lennon is currently expecting demand from the sector to move up to around 200,000t in 2022, up from around 80,000t now – which the numbers including nickel used in mobile phones and other electronic equipment.
However under-investment by the conventional nickel sector means the demand-supply equation “looks extremely tight” from 2023-25, and requiring “huge new investment to balance the market”.
“Indonesian greenfield NPI plants, with capital costs of US$15,000-25,000/t and cash operating costs of $7000/t or less, can meet all incremental demand to 2020/21,” Lennon said.
Further out, Lennon believes the likely next round of investments will come from Chinese investment in the Philippines and Indonesia to produce mixed nickel-cobalt hydroxides/sulphides from laterite (limonite) ore using hydrometallurgy (HPAL similar to Coral Bay, Taganito, Ramu), feeding existing and new refineries in China Still, Lennon’s takeaway message for producers is the future is “bright” given the emergence of the battery sector .
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