High Voltage: Nickel tops global investment wish list

The world needs $US66 billion of nickel investment by 2030 to meet battery demand, says Benchmark … great news for ASX stocks with advanced projects.

'Dear Santa, all I want for Christmas is a bunch of nickel stocks' Picture: Getty Images

Stockhead’s High Voltage column wraps the news driving ASX stocks with exposure to lithium, cobalt, graphite, nickel, rare earths, manganese, magnesium, and vanadium.

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Benchmark Intelligence analysts believe that, globally, $US66 billion will need to be sunk into producing nickel by 2030, the highest cost of any battery-related commodities.

Lithium has its struggles too (as explained here when we talked about Benchmark’s new battery arms race analysis).

Most nickel demand is for items found in people’s kitchens, such as stainless steel pots and pans, which account for about 50 per cent of its use.

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But another major user is increasingly making its mark.

The booming batteries market is driving demand way above nickel supply forecasts.

This year, that sector accounts for 15 per cent of total demand, yet Benchmark analysts envisage this to rise to about 32 per cent by 2030.

Because of this, the Australian government’s new Critical Minerals Strategy 2023-2030 aims to help fast-track local production and refinement.

Under the strategy, $500 million in funding, through the Northern Australia Infrastructure Fund (NAIF), will be directed towards enhancing project development over the next seven years.

“The new Critical Minerals Strategy outlines the enormous opportunity to develop the sector and new downstream industries which will support Australia’s economy and global efforts to lower emissions for decades to come,” federal Resources Minister Madeleine King said.

However, it may not be enough.

Benchmark says the battery industry, as a whole, requires at least $US514 billion across the entire supply chain to meet expected demand by 2030.

It adds that we’ll need an extra $US406 billion in the following five years to 2035.

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And producing the critical raw materials will require $US220 billion (43 per cent of the total), with nickel and lithium accounting for more than half of that.

“The energy transition is still in its early stages and massive capital deployment is going to be needed in order to meet the goals of industry and policy makers,” Benchmark COO Andrew Miller said.

“Energy storage might form a relatively small piece of the overall financing required, but it is a strategically critical piece of the puzzle. Batteries are the platform technology for clean energy goals, so financing these supply chains is at the heart of the race towards net zero.”

So it looks like a good time to have an advanced-stage nickel projects, as these ASX stocks do:

ARDEA RESOURCES (ASX:ARL)

In WA’s goldfields, ARL is in the midst of developing its flagship Kalgoorlie Nickel Project (KNP), which is touted by many observers as the largest nickel-cobalt resource in Australia.

It has a resource of 830Mt at 0.71 per cent nickel and 0.046 per cent cobalt for 5.9Mt of contained nickel and 380kt of contained cobalt.

It’s on the cusp of a big milestone – the release of KNP’s long-awaited pre-feasibility study (PFS), for which potential partners are keenly waiting as they consider entering into offtake agreements.

At this stage, Ardea still retains 100 per cent of nickel-cobalt offtake, so partnerships will be key to funding project development.

The PFS is due any moment now, and if it’s a cracker, Ardea could well become a beneficiary of some extra funding from the government, via the aforementioned critical mineral strategy.

As a sweetener, Ardea is also in advanced-stage exploration activities at its nearby Emu Lake nickel-sulphide project and at target areas for critical minerals such as scandium and REE’s throughout its KNP tenements.

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CENTAURUS METALS (ASX:CTM)

CTM is the proud owner of one of the world’s largest undeveloped nickel sulphide projects.

Its Jaguar project in Brazil has a current proposed output of 20,600t of nickel and 600t of cobalt annually over a 12-year mine life.

The company is on its way to completing a definitive feasibility study (DFS) after it confirmed its ore could be processed into battery-grade nickel-sulphide concentrate.

CTM also recently unveiled a deal to buy the off-take rights for Jaguar from Brazilian mining giant Vale, clearing a path to pursue strategic investment to develop a large-scale nickel asset.

As well as completing the DFS for Jaguar, the nickel developer is conducting further drilling for another resource upgrade.

ALLIANCE NICKEL (ASX:AXN)

Alliance is well on its way to becoming a nickel-cobalt producer from its NiWest project in the WA Goldfields.

It’s currently in the middle of a DFS for NiWest, which aims to produce 456,000t of nickel in nickel sulphate and 31,400t of cobalt in cobalt sulphate over its mine life, with an annual production of 19,200t of nickel and 1400t of cobalt over the first 15 years of an anticipated 27-year mine life.

Recently, it signed a huge offtake deal with automaker Stellantis, which produces the Peugeot, Chrysler, Alfa Romeo, Jeep, Dodge and Fiat car brands.

Stellantis has agreed to take 40 per cent of nickel and cobalt sulphate produced over the first five years and has spent $15 million for an 11.5 per cent shareholding in AXN and the right to nominate a director to the board.

This content first appeared on stockhead.com.au

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Originally published as High Voltage: Nickel tops global investment wish list