“Please mine more nickel... Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way.”
-Elon Musk
Electric vehicles are the future of transportation.
According to Deloitte’s global electric vehicle (EV) forecast, total EV sales will grow from just 2.5 million in 2020 to over 11.2 million in 2025.
By 2030, sales are expected to reach a staggering 31.1 million vehicles - and represent roughly 32% of the total market share for new car sales.
In fact, because of the explosive growth of this sector, the EV market is projected to achieve a remarkable compound annual growth rate of 29% over the next 10 years.
Unfortunately, there is one big problem.
Electric vehicles require batteries, and batteries need nickel.
Today, the annual traded value of nickel is around $35 billion. But demand for the commodity is projected to soar due to its intensive use in lithium-ion batteries to power electric vehicles.
The problem is that new discoveries of nickel sulfide deposits (currently the most reliable source for battery-grade class 1 nickel) have been rare, which could constrain class 1 nickel supply in the coming years.
This shortage has electric car makers extremely worried - so much so that Tesla’s CEO Elon Musk recently pleaded to the nickel industry to mine more nickel. In a July 2020 earnings call, he announced that Tesla would give any mining company a big contract if they could produce more of the much-needed metal.
For investors, this has created a perfect storm.
Nickel stocks have quickly become some of the most interesting opportunities in recent months before demand explodes and sends their share prices sky-high.
To guide you through this rare opportunity, we’ve compiled a list of some of the best nickel companies below:
Vale S.A. (NYSE:VALE)
Glencore plc (OTCMKTS:GLNCY)
BHP Group (BHP)
Talon Metals Corp. (OTCMKTS:TLOFF)
Vale S.A. was founded in 1942 and is headquartered in Rio de Janeiro, Brazil.
The mining company has operations in Brazil, Canada, Indonesia, and New Caledonia as well as fully-owned and joint venture refineries in China, South Korea, Japan, the U.K. and Taiwan.
Vale produces and extracts a wide range of natural resources. For example, the company produces and extracts iron ore and pellets, manganese, ferroalloys, and other ferrous products. The company also produces metallurgical and thermal coal and also metals such as copper, gold, silver, cobalt, precious metals, and platinum.
However, the company is also the world’s largest producer of nickel.
Annually, their Canadian operation in Sudbury, Ontario produces almost 65,000 metric tons of this metal and the company also has nickel operations in Brazil, New Caledonia, and Indonesia - which is the largest nickel producer in the world, with 800,000 tonnes of nickel produced in 2019.
Glencore plc was founded in 1974 and is headquartered in Baar, Switzerland.
It is one of the world’s largest globally diversified natural resource companies that employs over 145,000 people around the world. The company produces and markets more than 60 commodities, through approximately 150 mining and metallurgical sites and oil production assets and offices in over 35 countries.
On the energy side, Glencore produces thermal coal, crude oil, oil products, and natural gas. On the metals and minerals side, the company produces copper, cobalt, zinc and lead, ferroalloys, aluminium/alumina, iron ore, gold, silver, and of course, nickel.
The company is a leading producer and marketer of nickel, with assets in Australia, Canada, and Europe.
Glencore produces some of the world’s purest nickel – and they are also one of the largest recyclers and processors of nickel-bearing materials, including batteries.
Their marketing business deals in nickel metal as well as concentrates, intermediates and ferronickel.
The company generated adjusted EBITDA of $591m from their nickel assets in 2020.
BHP Group was founded in 1851 and is a multinational metals, mining, and petroleum company headquartered in Melbourne, Australia.
In Western Australia, BHP’s Nickel West is the company’s fully integrated mine-to-market nickel business.
Here’s how the metal is produced.
First the nickel sulphide ore is mined at their open-cut and underground operations in the Northern Goldfields. The ore is then crushed and concentrated at two large nickel concentrators using nickel sulphide flotation technology.
Next the concentrate is dried and transported by rail to the Kalgoorlie Nickel Smelter where it’s continuously fed to a flash furnace. The furnace process produces a granulated matte product containing approximately 68% nickel.
Finally, the matte product is transported by rail to BHP’s Kwinana Nickel Refinery where it is converted to nickel metal in the form of powder and briquettes, at 99.8% nickel grade.
This highly-pure nickel matte and metal are then exported to overseas markets via the Port of Fremantle.
Talon Metals Corp. is a mineral exploration company that is headquartered in Road Town, the British Virgin Islands. It is hoping to become the next low-cost producer of nickel in the U.S.
The company’s flagship project is the Tamarack Nickel Project, which is a joint venture with mining giant Rio Tinto.
Located in Tamarack, MN, the project contains high-grade nickel, copper, and cobalt, and is the only high-grade development stage nickel project in the U.S.
According to the Tamarack North Project’s NI 43-101 compliant resource estimate, as of Jan. 28, 2021, the project had an indicated resource of 3.926 million tonnes of ore with a nickel grade of 1.91% and an inferred resource of 7.163 million tonnes of ore with a nickel grade of 1.11%.
Talon’s current strategy is to expand the present resource with more exploratory drilling targeting 2.3 km along strike, complete a feasibility study, and explore the remaining 16.5 km of the Tamarack Intrusive Complex (TIC) which had historical grades of >9% nickel.
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