Nickel is on the cusp of a new era as the lithium-ion battery...

Nickel is on the cusp of a new era as the lithium-ion battery revolution spawns a huge market for the commodity that has been traditionally fed to the steel sector. The novel situation has turned investors’ attention to ASX-listed nickel stocks – particularly those exploring or producing nickel sulphate.

With both industries vying for the metal, nickel supplies have been placed under increasing pressure – pushing the commodity’s price to its highest level in four years and leaving investors wondering if the price will revisit its pre-GFC peak of more than US$22 per pound.

Nickel stockpiles on the London Metals Exchange (LME) slipped to 276,312t, falling through the 300,000t “psychological barrier” in May.

Rox Resources (ASX: RXL)

Rox Resources is actively exploring two projects in WA that are prospective for nickel sulphides.

Diamond drilling is ongoing at the Fisher East nickel project, while aircore drilling is underway at the Collurabbie project, which yielded 32m grading 0.48% nickel, 0.28% copper, 0.03% copper, 218ppb platinum and 347ppb palladium.

Fisher east hosts about 50,600t of contained nickel, while Collurabbie is estimated to hold 13,500t.

Development studies are evaluating the best way to unlock the projects’ value.

Dry pipeline

The main reason for the current nickel supply deficit is a dry pipeline of advanced nickel projects.

This has been caused by minimal investment in nickel exploration and development over the past decade, due mostly to surplus stockpiles and the commodity’s uneconomic price.

Battery and electric vehicle manufacturers have started targeting miners and explorers directly to guarantee nickel supplies.

Advanced nickel explorers and producers alike have reported offtake arrangements and discussions in recent months.

Laterite nickel versus sulphide nickel

Manufacturers have two potential main sources: nickel laterite and nickel sulphide deposits.

Nickel laterite deposits are more common and comprise 60% of the world’s nickel resources. This form of nickel covers a larger area, is usually near surface, and is therefore amenable to a less costly open pit mining method.

However, laterite deposits can contain iron and other gangue elements, which make the material more complex and costly to process to generate a higher grade concentrate suitable to the battery sector.

In contrast, sulphide deposits are found both near surface and at depth. Although only accounting for 40% of the world’s nickel resources, the material makes up 60% of mined nickel, according to Monash University.

Due to less complex processing requirements, nickel sulphide deposits usually need less capital expenditure to exploit and process into a battery grade concentrate.