Valuation, page-23

DS in the AFR if you can get through paywall

https://www.copyright link/markets/commodities/nickel-spikes-90pc-as-supply-fears-trigger-wild-short-squeeze-20220308-p5a2nm

Relevant text quoted below

Mincor ‘in a good spot’
But if prices stabilise around $40,000 a tonne in Australian dollar terms, a company such as Mincor would add about $1 billion of revenue from when it completed its last pre-feasibility study.“Never in my career have I seen a commodity move that much overnight, and our leverage to the increase in nickel prices is pretty significant,” said David Southam, Mincor’s managing director.“Given we’re the next company to be producing nickel in Australia and there’s not too many others around, it puts us in a good spot to be invested in.”Nickel markets were already the tightest they had been since the commodity supercycle of the 2000s as global stockpiles dwindled significantly since April last year. The metal’s available stock has fallen by 250,000 tonnes since the end of 2020, equal to 8.9 per cent of annual consumption, according to Macquarie.The overnight spike followed a near-20 per cent surge in prices last week as some shippers stopped taking bookings for Russian commodities, and banks stopped financing transactions due to fears of being caught up in financial sanctions or pre-empting a backlash.This was exacerbated at the weekend on news that the US is considering a ban on Russian oil imports, triggering anxiety that similar sanctions will be applied to other Russian-produced commodities.The West is yet to place direct prohibitions on Russia’s energy market or raw materials.Russia is the third-largest producer of nickel ore, but more important, it makes up 17 per cent of global production of the higher purity Class 1 metal used in electric vehicle batteries. EV battery production makes up about 7 per cent of nickel demand.However, the sector most adversely hit by high nickel prices is the stainless steel industry, which accounts for about 75 per cent of nickel consumption.Australian benefitAustralia makes up 6 to 7 per cent of global nickel supply and, like Russia, has a more pronounced effect on Class 1 supply because of its high exposure to sulphide deposits from which low-cost, high-quality product is derived.On the ASX, Western Areas, IGO and Mincor control sulphide deposits.