menu

LME Nickel Stocks

lse:amc

#342

"High prices for lithium and cobalt will hinder sales growth in battery-powered vehicles the next few years, according to HSBC Holdings Plc.

Global market share by 2025 for fully electric vehicles will be lower than previously projected — 9.4 percent, compared with an earlier estimate of 10.5 percent, HSBC analysts Alexandre Falcao and Augusto Ensiki said in a report. At the same time, they doubled their forecast for plug-in hybrid EVs to 5.5 percent of the market by 2025, from 2.4 percent."


#343

https://www.fitchsolutions.com/corporates/commodities/monthly-commodities-strategy-mostly-positive-prices-2019-23-08-2018

Commodity YTD (% Chg) 1 Year (% Chg) 2017 YTD 2018f 2019f
Nickel USD/tonne 11,345 -11.1 -9.2 10,469 13,507 14,000 15,000

Well, they are wrong about 2018, will see in 2019


#344

Volkswagen will launch its final generation of models with combustion engines in 2026. The bet of the German automotive giant will be on electric vehicles.
Audi will invest 14 billion euros by 2023 in the areas of electric mobility, scanning and autonomous driving. The German brand wants to have 20 electric models in 2025.


#345

#346

TDT

What do you say about this, it is not the first time they are talking about using manganese in the chatode, in fact they are already using :slight_smile:

“it is highly likely that manganese based batteries will take a leading role in the unfolding story, with cost and supply being the two key drivers of this outcome.”

High grade, or high purity, manganese, is used as the primary cathode material in Nickel Manganese Cobalt (NMC) and Lithium Ion Manganese Oxide (LMO) batteries, which are used in the BMW i3 and Chevy Volt, among others. Additionally, Tesla has been cited to be moving away from its traditional Nickel Cobalt Aluminum (NCA) batteries to explore greater usage of NMC batteries, which it is already using in storage devices. Although currently making up only 10% of the global manganese market by volume, high grade manganese makes up about 40% of the global market value, according to Moore Stephens


#347

TDT

You already answer to this:

“Johnson Matthey’s Chief Technology Officer Alan Nelson told Reuters that while the group was monitoring various technologies, it was not developing low nickel, manganese-rich cathode materials because of “several key challenges to commercialization” including fading voltage over charge cycles.”

“A Bullish Outlook for Manganese
if the Tech Wins Out Manganese will be an interesting mineral to watch. With the increasing prominence of battery technology, it can be safely assumed that manganese will play a role.
Is manganese the forgotten battery mineral though? It’s definitely not forgotten but appears to be overlooked.
We wondered why manganese hasn’t had the same uplift as other battery commodities. In our opinion the key reason that manganese has not received the same uplift as other commodities in the battery space is due to the mining technique used to extract the ore. Manganese is a bulk commodity which is mined in high volumes. This creates a situation where small demand uplifts have minimal effect on ore. For manganese to receive the same
upside as other battery minerals, it is likely to be gained through large demand for specific ores needed to produce high purity manganese products. This could see the price for high purity manganese prices decouple from industrial steel use manganese.
Key factors that will also contribute to the direction of the manganese market are:
• Whether manganese batteries become widely adopted battery technology in the future;
• The speed at which manganese producers can meet demand increases from the battery sector;
• Whether larger players move into high purity manganese production and away from manganese alloys (which is currently profitable), and the speed this transition could occur;
• China’s ability to keep producing high purity manganese and the impact on supply of any further environmental regulation; and
• Whether the production process for high purity manganese can be more environmentally friendly and
cost effective (see Element 25 company snapshot below). While we cannot predict which battery technology will dominate, we are of the opinion that manganese’s role will
be significant and, as such, will receive significant demand uplift as a result. Not all manganese deposits will reap the benefits of this due to requirements on grade, ore type, mineralisation within deposit and clay type of ore.
This separation of ore classes could create a situation where manganese deposits that fit the scope required for battery production have exponential value growth, while deposits that do not fit the scope continue to stay tied to market forces in steel production and ferroalloys. Those that have the required ore to produce high purity manganese products, and are first movers into this growing segment, could see significant upside if EMD, EMM and Manganese Sulphate prices increase at the speeds we have seen from other battery minerals over the last 2 years”


#348

Nuno

Your take on things is slightly different to mine. You are more concerned with the nickel market per say. I’m interested in the nickel market for sure but my interests are more focused on how developments might impact Amur Minerals. For example, the link you posted to Vale’s recent decision to invest an additional $500m in their loss-making operation in New Caledonia is of interest in that I’d like to know what their costs are likely to be. If their break-even is $14,000/tonne+ then fine. That would seem to imply to me that they expect the price of nickel to be north of that figure. Anything north of $6/lb. makes Amur a very attractive proposition. Like-wise the possible option to develop manganese rich batteries. If the cost, safety and performance match nickel rich batteries and the cost is less that doesn’t necessarily undermine Amur’s prospects. The issues for me are all relative.

Until Amur releases their PFS its difficult for me to objectively assess how any of these developments might impact their prospects. It goes without saying that I’d prefer to see nickel rich batteries as the mainstay of the EV revolution for at least the next 10 years. If that doesn’t turn out to be the case, however, it’s not necessarily going to be a problem for Amur. It just means their valuation may not hit the dizzying heights I’m hoping.

TDT :sunglasses:


#349

Hi TDT

I know we have different goals, but we are both interested in the increasing demand for Nickel and its price.

Can we discuss this, or not?

Thanks,


#350

I don’t see any problem in continuing this discussion. On the contrary I think it very positive and useful. The only thing I’m highlighting is my focus is slightly different to yours so I may not place the same emphasis on certain things as you.

TDT :sunglasses:


#351

https://www.fitchsolutions.com/corporates/metals-mining/nickel-dominate-battery-metals-market-2027-24-10-2018

"Nickel To Outshine Competition

Based on preliminary findings from our calculations, global nickel demand from EV batteries will amount to 19.4kt in 2018, rising to 131.7kt by 2027, as the use of nickel-heavy NMC cathodes among manufacturers become increasingly prevalent over the same period. This will position nickel as the primary demand beneficiary of the EV revolution on the metals side, significantly ahead of lithium, cobalt or iron."


#352

This says it all IMO.

“Buffett’s Berkshire Hathaway Inc. is the largest shareholder in the Hong Kong-traded stock of BYD, with a 24.59 percent stake. Buffett made the bet two years before Tesla listed in New York.”

BYD makes NiMH batteries, Lithium-ion batteries and NCM batteries so they’re going to be very interested in nickel going forward.

Warren Buffet buying into the whole EV thing is good enough for me!

TDT :sunglasses:


#353

By Alex Newman

Picking through the wreckage of commodities markets at the end of 2018, few investors will see much hope in the debris. Recent disappointments tend to stick in the craw, after all. So even if there are some budding signs of an apparent détente between the US and China, it’s only natural that the enduring threat of a trade war between the world’s two largest economies should trump fading memories of surging demand (and metals prices) in the run-up to the northern summer.

The metallic poster-child for this slump has been copper, which is often viewed as a key barometer of global economic growth. Absent a last-minute price swing, the red metal is on course to close the year 15 per cent off its June high of $3.29 (£2.58) per pound. On its economic fundamentals, it’s a confusing situation, not least because medium-term mine supply is set to tail off, demand is expected to remain solid and London Metal Exchange stockpiles have crumbled to a five-year low.

But copper isn’t the most baffling base metal market, by a long shot. That title goes to nickel, the price of which has declined 30 per cent over the same period, despite five years of strong compound annual demand growth, a similar collapse in stockpiles (see chart) and an arguably even brighter future ahead of it than copper. After falling below $11,000 a tonne, Macquarie Wealth Management recently described nickel prices as “unsustainably low”, and in “‘bargain’ territory based on a misreading of the strong fundamentals likely for a number of years yet". The question for investors (as it always is): when will that bright future start to be reflected in prices and miners’ earnings?

image

Masked fortunes

The next few months don’t offer a wealth of hope, even if the market may already be in a deficit. A weak stainless steel market in China remains a big challenge, as year-on-year falls in output have dissuaded steel mills from purchasing the metal – even at knock-down prices. A strong dollar, and fears about European and global economic growth have also bolstered bearish trading positions, further compounding weak prices. The wide spread in analyst forecasts (see table below) only underlines the uncertainty.

Analyst forecasts ($/t) Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20
Median 13350 13500 13653 13364 12689 12250
Mean 13416 13576 13739 13268 12834 12281
High 16500 17500 18500 15500 15000 13839
Low 11949 11622 11506 11355 11129 10754
Forward 11293 11064 11145 11223 11295 11361
Difference between median and spot 2057 2436 2508 2141 1394 889
Source: Bloomberg

But in the longer term, this reliance on the stainless steel industry promises to come unstuck. That promise centres on the metal’s growing use in batteries, including the rechargeable nickel-cadmium batteries and nickel-metal hydride batteries used in electric vehicles (EVs), where demand is expected to surge in the coming years. It’s a story that will be familiar to many resources investors. Glencore (GLEN), which now pitches itself as investors’ best play on the looming electric vehicle boom, expects the looming demand to be massive.

It’s not hard to see why. Based on CRU Group projections for a compound annual growth rate in electric car manufacture above 30 per cent between now and 2030 (when sales will hit 30m a year), the commodities giant reckons that an additional 1.1m tonnes of nickel will be needed to plug the gap. That’s equivalent to 55 per cent of total global supply in 2017 – based on a 53 kilowatt hour (kWh) average battery pack, of which 30kg will be made of nickel.

This is an outlook Glencore is happy to champion. Last year, the group produced 109 kilotonnes (kt) of the metal, and plans to boost output by 30 per cent by 2020. And unlike its copper and cobalt divisions – the two other undersupplied, in-demand metals in that EV future – Glencore’s nickel assets are in less contentious jurisdictions such as Australia, Norway and Canada.

Much of Glencore’s projected nickel growth centres on Koniambo, the New Caledonian mine it jointly owns with South Pacific Mining Company, which is expected to reach full capacity by 2022. It has also identified room for growth at two more Canadian mines: Raglan in Quebec and Onaping Depth in Ontario, both of which could help to mitigate declines at Norman West and Nickel Rim Depth.

Nickels and mines

Glencore is not alone in these commitments to the metal, as you might expect given the apparent deluge in demand. Global leader Vale is investing $1.7bn in its Voisey’s Bay nickel complex. Russian giant Norlisk Nickel expects new projects to lift its copper and nickel output by as much as 15 per cent by 2025.

BHP Billiton (BLT), the largest London-listed nickel producer via its massive, fully-integrated Nickel West operations in Western Australia, is also doubling down. Last year, anticipating the shift in the sources of demand, the company “began its transition to become a global supplier to the battery materials market”. That pledge included approval of the first phase of a nickel sulphate plant at its Kwinana refinery, which is set to begin production in early 2019 and will ramp up to 100kt of nickel sulphate per year. Other pushes include mining for new ore at its satellite pit at Mt Keith, and another project at its Leinster Nickel operation – investments that don’t immediately point to the long-mooted sale of Nickel West.

Should BHP decide to sell out of nickel, presumably given its limited effect on group earnings, it’s unlikely to be short of buyers. Industry consultancy Roskill expect “major producers to… review their operations, look to consolidate costs, or realign their operations to different markets”.

Favourites

Outside of exchange-traded funds, there is no direct way for UK investors to get undiluted exposure to nickel. That could change if Brazilian Nickel, developer of the Piauí nickel-cobalt project in north-east Brazil, gets its UK initial public offering off the ground. In the meantime, investors could look to mining royalty outfit Anglo Pacific (APF), which last year paid $2m to secure a 1 per cent revenue royalty over Piauí, together with an option to expand the royalty by 3-4.5 per cent, for up to $70m. This deal, typical of Anglo’s focus on highly sought-after or undersupplied commodities, is structured to give Anglo an equity-like, low-risk carry in a low-cost battery metals project, in exchange for a staggered financing on guaranteed terms. First production is currently slated for 2021, and could arrive just as demand for the metal starts to soar.

Outsiders

SP Angel thinks investors should believe major commodity traders such as Glencore when they say the nickel market is misunderstood, because they are “in touch with the reality of physically trading and delivering commodities [and] can see this disconnect more than anyone”. Investors should be a little more suspicious of a trader-producer talking up their own book. That’s particularly true of Glencore, which expects its ramp-up at Koniambo to increase nickel costs from $1.80 per pound this year to $3.68 in 2019, reining in forecast adjusted cash profits to just $417m. Should Goldman Sachs’ 2019 price forecast of $17,250 per tonne prove prescient, cash profits would triple. In the longer term, we are steadily warming to Glencore’s battery metals pitch, even if its heavy weighting to coal leaves a major question mark above its earnings profile.

The expert’s view
The battery-powered boom

While surging electric vehicle battery demand is often seen as a distant prospect, there is evidence to suggest that the dial may be turning. “The major worldwide push to promote electric vehicles as a way of cutting emissions from fossil-fuelled vehicles has already resulted in increased primary nickel consumption in lithium-ion,” says industry consultancy Roskill.

Unsurprisingly, it is China that remains in the driving seat. “Chinese incentives and regulations are steering battery producers and original equipment manufacturers towards higher energy density batteries,” Roskill argues in a report on the nickel sulphate market due in early 2019. “Longer-range options and nickel-bearing cathodes are thus expected to be dominant cathode technologies throughout the next decade.”

At present, the market remains nascent. Despite its use in nickel metal-hydride (NiMH) and nickel-cadmium (NiCd) batteries, the metal’s penetration of the broader batteries market has not exceeded 4 per cent of total global consumption. But according to Roskill, nickel’s use in lithium-ion batteries “will soon make batteries the second-largest end-use application for nickel”, leading to a 10-fold increase in the primary use of nickel in batteries by 2030.

While traders appear to doubt this, Roskill highlights a supply chain that “is already responding to the need for new capacity for nickel sulphate production… processing capacity is rapidly being built in China, by conversions of existing plants (BHP Nickel West, Terrafame) and through new third-party processors (such as Thakadu Battery Materials)”.

However, a transforming nickel sulphate supply chain does not answer the question of where the feedstock will come from. Nickel sulphate, which is usually produced as a by-product of copper refining, or the dissolution of nickel or nickel oxides, can be found in lots of feedstock materials – including briquettes, mixed sulphide precipitate, mixed hydroxide precipitate, carbonyl pellets and powder. “Production of these feedstock materials is going to have to grow to satisfy the demand for nickel sulphate by the battery industry,” says Roskill.

From ‘Nickel Sulphate: Global Industry, Markets and Outlook 2019’ by Roskill

IC View
The consensus view is that the market has entirely mis-priced nickel. SP Angel goes further, suggesting the dislocation between real demand and short-futures prices are being “manipulated by commodity trading advisers (CTAs) and other funds in the market”. Can the market be this wrong? It’s a possibility, so long as demand outstrips supply, though investors would do well to remember the difference between projected and real demand. So while battery manufacturers are set to become nickel’s dominant customer base, for now the metal remains tethered to steel production, especially the Chinese variety. Furthermore, though demand for electric vehicles is expected to explode in the decade ahead, the industry has a series of important milestones ahead, including closing the economic gap with combustion internal combustion engine. Progress here will likely provide the tipping point.


#354

#355

#356

“Nornickel estimates that nickel prices will need to rise to incentivise increased mining output, as the current price is close to the cost-floor of production. But the company declined to give a price forecast or specify its own production costs.”


#357

#358

Andy Home’s observation, as ever, are interesting.

This article is peppered with a whole series of interesting points, all well put and credible. Well worth a read.

TDT :sunglasses:


#359

You’ve ust got to love this comment in the FT.

“To make battery-grade nickel from lateritic ore, though, miners hope to use a tricky process called high pressure acid leaching (HPAL). If you do not do things just right, you have sulphuric acid under high pressure coming out of the machine. Try not to be around when that happens. Did I mention the process is energy intensive? A Russian nickel refining engineer refers to the HPAL manufacturing complex as “the Bermuda Triangle of death”.”

https://www.ft.com/content/daabb4ad-5766-3c4b-86ca-2b9c92da4c49

TDT :sunglasses:


#360

TDT

“the Bermuda Triangle of death”.

I did not resist in comment, the Chinese are accustomed to hell “North Korea”
June 25, 1950 - July 27, 1953 China intervened in favor of the north, where thousands died …and the Great Proletarian Cultural Revolution.


#361

John Dizard

YESTERDAY
To quote a battery engineer: “For the European auto companies to change over to electric vehicles is like turning a battleship. And it’s a battleship with a mutinous crew.”

As the European policy world noticed with this week’s French government surrender on diesel taxes, going green is not that easy.

It will become even more difficult as EV production scales up. The problems are not only with public support for decarbonisation charges but with the increased burden on raw material supplies.

Attention has already been drawn to how lithium ion batteries require cobalt, the biggest reserves of which are in the Democratic Republic of Congo. The DRC government knows how important cobalt has become, and in the past week has tripled its royalty charges on the mineral. The mining companies have protested, of course, but with their huge fixed costs and few alternative sources, they will pay up.

The royalty increase, only the latest example of the DRC’s aggressive approach to increasing its take when prices go up, will tend to discourage new investment in large-scale mines in the country. So a significant part of the DRC’s cobalt output will continue to depend on energetic children scrambling around informal “artisanal” mines.

EV enthusiasts and manufacturers concerned about supply-chain audits have been working to reduce the cobalt content of batteries, with some success. However, Marc Grynberg, the chief executive of Umicore, the European battery component manufacturer (and cobalt buyer), suggests further progress will not be easy. “While you hear about designing out cobalt, this is not going to happen in the next three decades. It simply doesn’t work.”

For that matter, when policy people and the more optimistic auto manufacturers speak of reducing European dependence on the DRC and those cobalt-mining children, they have in mind increasing the proportion of nickel in EV batteries.

Nickel is a problem. Most nickel we have used for the past century comes from high-grade nickel sulphide deposits. It is not technologically challenging to refine those ores to the high purity necessary for battery manufacturing.

Readily mined nickel sulphide deposits are being depleted, however, and over the next decade we will become dependent on the more common lateritic ore deposits. These are relatively easy to refine into low-purity grades, say for stainless-steel kitchenware.

To make battery-grade nickel from lateritic ore, though, miners hope to use a tricky process called high pressure acid leaching (HPAL). If you do not do things just right, you have sulphuric acid under high pressure coming out of the machine. Try not to be around when that happens. Did I mention the process is energy intensive? A Russian nickel refining engineer refers to the HPAL manufacturing complex as “the Bermuda Triangle of death”.

The good news from the point of view of European pro-EV environmentalists is that HPAL nickel will be produced, when the process is perfected, in places such as Indonesia. The bad news is that the Indonesians are increasingly bothered by acidic mine waste and are becoming even less tolerant of foreign mining companies.

The dependence on materials imports from difficult countries is bad enough. On top of that, an EV-centric European auto industry will be dependent on key foreign technologies if it is to meet its production goals.

Most European vehicle manufacturers use Asian battery cell technologies, though they can handle the assembly of cells into battery packs. Yes, the foreign partner transfers the technology for the current generation of battery cells.

However, while the European manufacturer grapples with a rapid, policy-driven production ramp, the Asian battery cell partner is leaping into the following generation.

There is a precedent. Korean companies took 20 years to move from production based on Japanese battery technology to producing their own designs. For now, battery manufacture requires production art, which can only be acquired with experience.

It would be better to take more time to develop the science of how batteries work. That would require years of work with sophisticated equipment, and the policy requirement is for a rapid switch from fossil fuel engines. In any event, Europe and the rest of the world will depend on diesel power for large trucks for the foreseeable future.

The politics, the supply-chain difficulties and the requirement for better science all suggest that the European battery push is too frenetic to work well.