Nickel has long been tied to steel manufacturing to drive value, but this year its driver appears to be more automotive…
2019 has been a banner year for the metal, with it gaining more than 40 percent since the start of the year, and there are signs that nickel is quickly becoming a bet on electric vehicles.
In the middle of this month, Adamas Intelligence reported that nickel’s use in electric vehicle batteries had skyrocketed.
It said that manufacturers have, in effect, deployed 57 percent more of the metal in passenger electric vehicle batteries in May this year than last May.
That outpaces the growth of the EV market more broadly, with EV battery capacity growing 48 percent year-on-year in May.
Adamas reported the increasing content in batteries is down to shifting chemistry of battery cathodes.
For example, first generation NCM111 batteries had a chemical composition of one part nickel, one part cobalt and one part manganese.
But it reports that NCM622 (a nickel-cobalt-manganese ratio of 6:2:2) and NCM523 (a nickel-cobalt-manganese ratio of 5:2:3) are becoming more popular in China as worries over the supply of cobalt loom.
Add to that news that Volkswagen is set to spend more than $50 billion on batteries by mid-2023, and that it would be using the NCM811 (a nickel-cobalt-manganese ratio of 8:1:1) from mid-2021, and you have a heady mix for nickel.
The new paradigm for the metal in EV batteries means that it has another price driver — it’s not just about stainless steel production anymore.
Luckily, Australian investors have lots of opportunities to investing in nickel producers both current and emerging.
For example, Blackstone Minerals (ASX:BSX) recently bought into the Ta Khoa project in Vietnam with a 90 percent stake.
The Ban Phuc nickel mine is currently in care and maintenance, but previous owners put more than $136 million into the mine, and were able to generate $213 million in revenue during three and a half years.
It also has a slew of exploration targets at Ta Khoa to keep it busy
This content is produced by Star Investing in commercial partnership with Blackstone Minerals. This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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