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Cleantech
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EV metals, nickel, lithiumTo generate a little wider interest I posted this on the Energy Investing board: Re: EV's and metals, nickel, lithium"Look at the price of Nickel and you will see it has a nice run and almost above recent highs. EV's require high grade nickel, not the 'pig nickel' that Indonesia can produce in quantity. High nickel is more expensive and harder to find. As a result, you start putting all this nickel into cars- think millions of cars AND make huge batteries for the power grid, where are you going to find all this nickel? More importantly how fast can you bring high grade nickel online?" The recent uptick in nickel prices is due to Chinese industrial demand, not EVs. ‘High nickel’, pure nickel, is made, not found. Nickel sulphate, which is what the battery cathode makers use, can be produced from any nickel ore. The most common ore in major producers Canada and Russia is nickel sulphide. While there are metallurgical recovery problems with some kinds of sulphide ore for the most part they are easily processed. In the tropical countries nickel is found as oxide in laterite deposits and as nickel silicate in saprolites, partially weathered bedrock. Recovery of nickel from laterite is by expensive high pressure acid leaching (HPAL). Saprolites can be cheaply smelted into a nickel matte – so called pig nickel used in low quality steel. Mining costs are often lower for laterites/saprolites because they are open pit operations and grades are higher. Most sulphide ore is mined underground or from very low grade open pits. Making pure nickel for alloys and plating or producing nickel sulphate is more complex and expensive from laterite/saprolite than from sulphide ores. Laterite nickel is to suphide nickel kind of like heavy oil is to medium/light crude. So assuming we are going to 10% EV's, what are the requirements on these metals? Only about half the world’s lithium battery production uses nickel. The Chinese use lithium iron phosphate batteries for buses, most EV cars, all 2 and 3 wheel EVs and for their grid storage batteries. Western auto makers use nickel manganese cobalt batteries because they are higher energy density, or were - the Chinese have closed the gap with their latest LFP batteries which do not have the overheating/safety issues that nickel based batteries do. 2.7 million t/yr of nickel was produced worldwide in 2019. Production has increased about 5% annually for 10 years. 10% EVs, expected by 2025, won’t change the dial on nickel demand much. 30% EVs, expected by 2030, would. NOBODY has brought a large nickel mine online at cost and on time. NOBODY! It's far harder than it looks. Almost all mines brought on in the last nickel cycle by mining majors BHP, Rio Tinto, Vale Inco, Glencore, Sumitomo/Sherritt were wildly over budget and behind schedule. They were mostly laterite mines except for Inco’s Voisey’s Bay, which was on budget and on time. A Chinese state company got the Ramu laterite mine in PNG into production on budget, on time while cutting corners on safety and enviro protection (they dump very acid, toxic tailings into the ocean). Tiny Conic Metals (NKL- TSX) has 8% of Ramu. Norilsk brought several sulphide mines into production in Russia on budget, on time over the last 20 years. They too cut corners but are cosy enough with Putin to get away with it, more or less - they are now cleaning up some major messes. While demand for nickel for EVs has yet to have an impact some of the nickel explorers are already in play driven partly by the Elon Musk herd who are looking for new speculations with their Tesla gains. I hold Blackstone, Canada Nickel and FPX Nickel, all junior cos., all years from production. I recently sold half of my Blackstone holding, still my largest nickel. The juniors will stay very volatile – the market is mostly sentiment driven but as EVs take hold the new demand will set a floor on the sentiment. The bottleneck in EV production will be because of lithium supply shortages, likely in 1-3 years. All lithium ion battery cathodes use lithium as carbonate or hydroxide. The coming step change solid state batteries use lithium metal. The world lithium market is tiny, $3 billion total for about 310,000 tonnes only half of which is battery grade. Low impurity battery grade Li is difficult to produce and there is not enough investment or chem engineer tech knowledge to enable a fast ramp up in production (despite what Musk says). I’ve posted more on lithium supply/demand and lithium stocks on the Cleantech board. There’s more on nickel and other battery metals there too, also on Public Heel’s Mining board. |
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