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Australian nickel players boosted by six-year price highs

Consistent global predictions of battery demand have sent the price of nickel to highs not seen since September 2014.

Chalice Mining Ltd - Australian nickel players boosted by six-year price highs
The nickel price has risen almost 20 per cent this year as demand increases.

The price of nickel has risen nearly 20 per cent in 2021, as the demand for the key battery metal rises around the globe.

As the world continued to grapple with the COVID-19 pandemic late last year and into January, analysts looked at growing demand for nickel - whilst the majority of nickel is used in the production of stainless steel, the fast-growing battery sector is requiring more supply.

Woodmac is forecasting that nickel demand will rise by up to 10 per cent this year to reach 2.5 million tonnes, while Morgan Stanley is predicting the market may move from an 85,000 tonnes surplus in 2020 to an 18,000 tonnes deficit in 2021.

And looking further ahead, nickel demand from the electric vehicle sector is expected to grow globally by 2.6 million tonnes in 2040, up from only 92,000 tonnes in 2020, according to market analyst Roskill.

Price movement

At close on Friday, the nickel cash price was sitting at US$19,496 per tonne on the London Metal Exchange, with three-month futures at US$19,512 per tonne.

Trading Economics, which tracks commodity prices, says nickel has gained about 18 per cent in 2021, which is reflective of a wider trend - coal, palladium and gold are the only commodities that have lost ground so far this year.

Nickel’s fellow battery metals copper, lithium and cobalt have risen 17 per cent, 45 per cent and 55 per cent respectively since the start of the year.

Metals needed for shift to batteries

As previously reported by Proactive, the electric vehicle market is expected to hit A$1.1 billion by 2027.

According to Woodmac vice chairman of metals and mining Julian Kettle, the energy transition starts and ends with metals.

He said: “If you want to generate, transmit or store low/no-carbon energy you need aluminium, cobalt, copper, nickel and lithium.”

For renewable energy generation and storage and electric vehicles and associated infrastructure, the world will require an additional 50 million tonnes of aluminium, 23 million tonnes of copper, 500,000 tonnes of cobalt, 3.5 million tonnes of lithium and 3.1 million tonnes of nickel.

“These heady growth scenarios will double the aluminium, copper and nickel market over the next 20 years,” Kettle said.

Australian players

Rising demand and skyrocketing prices are good signs for ASX-listed nickel hopefuls, including Chalice Mining Ltd (ASX:CHN) (OTCMKTS:CGMLF), Blackstone Minerals Ltd (ASX:BSX) (OTCMKTS:BLSTF), Auroch Minerals Ltd (ASX:AOU) (FRA:T59), Legend Mining Limited (ASX:LEG) and Galileo Mining Ltd (ASX:GAL).

Auroch this month extended its Nepean Nickel Project with up to 5.57 per cent nickel and Chalice’s flagship Julimar project has in the past week seen metallurgical tests produce two commercially attractive palladium-nickel-copper concentrates.

Blackstone is continuing to strike massive sulphide vein mineralisation at its King Snake project in Vietnam, Legend has just produced premium nickel and copper concentrates in metallurgical tests at its Mawson project and Galileo’s EM surveying has defined new strong Fraser Range nickel targets.

- Daniel Paproth

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