Nickel demand set to rise in 2020 along with growth in electric vehicle sales

China is stepping up its efforts to be a leader in autonomous cars and is aiming for a quarter of all cars sold in the country to be new-energy vehicles by 2025.

Independence Group NL - Nickel demand set to rise in 2020 along with growth in electric vehicle sales
500,000 tonnes of refined nickel will be used annually in lithium-ion batteries for EVs by 2025

Nickel’s demand outlook looks bright, especially from the electric vehicle sector of the automotive industry

Fastmarkets analysts estimate that 500,000 tonnes of refined nickel will be used annually in lithium-ion batteries for EVs by 2025, up from 100,000 tonnes in 2018.

That growth in nickel consumption comes even before the wider adoption of the nickel-cobalt-manganese (NCM) 8-1-1 battery, which the market expects to become an industry staple.

A recent report drafted by the Ministry of Industry & Information Technology indicates that China will step up its efforts to be a leader in autonomous cars and is aiming for a quarter of all cars sold in the country to be new-energy vehicles [NEVs] by 2025.

NEVs include electric cars, hybrids and fuel-cell vehicles.

Ban on nickel exports in Indonesia

In response to the risk of increasing demand tightening local supply, the Indonesian government announced a ban on the export of raw nickel ores, bringing the ban forward from 2022 to January 2020.

According to GlobalData director of analysis David Kurtz, this ban is intended to produce value-added nickel products, stimulate domestic processing of ore, and make the country a hub for electric vehicle production.

Indonesia is the largest global producer of nickel and a major supplier of the metal to China’s stainless steel industry. In anticipation of the ban, Chinese producers are building up nickel inventories.

This has increased the price of nickel significantly, with prices at the end of September 2019 reaching more than $16,000 per tonne, an increase of more than 60% from January.

When the ban was announced, nickel prices increased by 8.8% to reach a peak of $18,620 per tonne, the highest price since 2014.

Strong nickel production at Nova

Independence Group NL’s (ASX:IGO) strong operational performance at the Nova Operation in WA has resulted in nickel, copper and cobalt production for 2Q20 and 1H20 that exceeds the pro-rata guidance range for FY20.

Looking ahead to the second half of FY20, IGO is expecting Nova to maintain performance in line with guidance as the company continues to focus on delivering cost improvements and continuous improvement of operational efficiencies.

Nickel discovery at shallow depth

St George Mining Ltd (ASX:SGQ) is sitting on one of Australia’s best new discoveries – Mt Alexander near Leonora in WA’s Goldfields – and a continued aggressive exploration program in 2019 delivered a fourth high-grade find at Radar.

The discoveries are at shallow depths and St George is itching to drill deeper to see where the mineralisation ends.

The nickel price may have fallen towards the end of 2019, but astute long-term investors – as well as WA’s nickel producers – are keeping a close eye on St George, which has kicked off early stage scoping study work alongside its systematic exploration efforts at Mt Alexander.

Legend Mining target price raised

Legend Mining Limited (ASX:LEG) share price recently surged after the company revealed assay results for discovery diamond hole RKDD007 at its Mawson Prospect within the Rockford Project in WA’s Fraser Range.

The hole intersected 14.9 metres at 1.07% nickel, 0.75% copper and 0.06% cobalt from 114 metres including 2.1 metres at 2.03% nickel, 1.24% copper and 0.11% cobalt.

Notably, the 14.9-metre sulphide zone occurs within a larger 70.15-metre disseminated sulphide halo suggesting the presence of a large mineralised system.

Euroz has increased its price target for Legend to 11 cents per share from 8 cents per share following the discovery.

King Cobra discovery in Vietnam

Last month, Blackstone Minerals Ltd (ASX:BSX) discovered a new, near-surface higher grade zone of nickel sulphide bearing semi-massive sulphide veins (SMSV) at its Ta Khoa Nickel Project in Vietnam.

The ‘King Cobra’ discovery includes near-surface downhole intervals of up to 60 metres and visual estimates of up to 20% sulphide mineralisation.

The new discovery includes the first-ever intersection of massive sulphide vein and breccia styles of sulphide mineralisation within the Ban Phuc intrusion which may provide vectors towards the high grade ‘feeder zone’ mineralisation.

Blackstone has already commenced a scoping study on a downstream processing facility at Ta Khoa.

Savannah production expected to rise

Panoramic Resources Ltd (ASX:PAN) mined 129,522 tonnes of ore at 0.98% nickel, 0.57% copper and 0.05% cobalt from its flagship Savannah Project in Western Australia during the December quarter.

Mined tonnes were up 9% for the quarter while nickel grade was down 21% as per the mine plan during the development progress.

Metallurgical recoveries were broadly in line with target recoveries.

The Savannah North ore body was reached in November 2019 with a transition to mining at Savannah North expected to increase production and grade at the project.

Australian Mines' Sconi goals

Australian Mines Ltd (ASX:AUZ) in 2019 delivered on milestones relating to its overarching goal of becoming a major producer of cobalt sulphate and nickel sulphate chemicals.

The company is focused on the flagship Sconi Cobalt-Nickel-Scandium Project in Queensland and the Flemington Cobalt-Nickel-Scandium Project in NSW.

Priorities for Sconi in FY2020 include a binding offtake agreement and project finance as well as pre-construction work on shared-used infrastructure and further investment in the local communities in north Queensland.

The latest resource for Sconi is 75.71 million tonnes for an estimated 1.405 million tonnes of nickel sulphate, 209,000 tonnes of cobalt sulphate and 1,441 tonnes of scandium.

The Greenvale nickel deposit was put at 24.4 million tonnes in situ while the adjacent Lucknow deposit was 14.62 million tonnes.

Sconi is expected to deliver A$5 billion of free cash flow over an extended 30-year-plus mine life with expected total revenue of A$13.27 and average annual life-of-mine EBITDA has been estimated at $295 million.

Diamond drilling at Yarawindah Brook

Last month, Cassini Resources Ltd (ASX:CZI) commenced diamond drilling at the Yarawindah Brook Project near the township of New Norcia in Western Australia.

The company has an 80% beneficial interest in the project which is prospective for nickel, copper, cobalt and PGE’s (platinum group elements).

The program consists of about 1,000 metres of diamond drilling and will conclude this month after a short break for Christmas.

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