NI for batteries, inventories, prices, & mining projects This is gonna be a bit lengthier.... Link at the bottom.
Very interesting interview by Rock Stock Channel with Matt Farnley - a professional investor and author @ batterymaterialsreview.com.
At around 12:20 it starts going into the specifics about NI-resources, chemistries, prices and investment opportunities, including mentioning of CNC.
Definitely worth listening to and a must in case you have any doubts about CNC ;-)
If you don't want to listen to the 35 minute clip, here is a recap:
General
- LFP and NMC (Ni-based) batteries will both have their markets, latter one more for higher range, LFP for mor urban focused EVs - in particular in Europe
- There will be resource bottle necks for both battery types
- LFP:
- Environmental challenges with Phospohoric Acid batteries,
- substantial pinchpoints for phosphate rocks and sulphuric acid (e.g. transportation, elemental composition needs to be right for wet production process)
- iron phosphate prices rising quickly, negating the relative price advantage of LFPs
- Much higher energy consumption in the production process compared to NMC
- There is also a disavantage in the recycling process (less efficient and less recovery)
- From discussions with all the major EV OEMs, it's obvious that there is no intention to move away from high-nickel cathodes
- LIP: Lithiom Iron Phospohate Battery Production is also facing a substantial bottle-neck due to the special iron required (either as a steel or titantium by-product) so NOT necessarily available in abundance
Nickel for batteries:
- There is a lack of understanding (or for better words complete misconception) amongst investors how important NI is in the energy transition
- Matt: "Of the battery materials, Ni is the one that excites me the most"
- First super-cycle peaked ~2007 with NI hitting $50,000 (compare that to the $~24,000 today), after that collapsed due to the new NI pig iron (which is lower class-2 Nickel) and the financial crash.
- Class 2 Nickel is simply not a suitable source for battery grade Nickel
- For batter-type Nickel (Class 1) you need to use a complex carbon intense NI pig iron conversion process and turn that into NI sulphate (which is done by chinese TsingShan). VERY energy intense!
- What most long-term investors don't understand is that batteries require a very tight NI-based chemistry with a low margin-of-error, so we are not talking about Ni as a commodity but a Ni speciality chemistry.
- E.g. For FE content, a 10 parts-per-million delivered versus a 3 ppm specification makes a huge difference in batttery performance.
- Purity of Nickel is now even more important due to abandoning Cobalt as a stabilizer.
Nickel mining projects (requirements for batteries)
- Based on above, there will be much more focus on material specifications to determine the true value of a resource with ridgid qualification processes in place.
- Qualification processes run by battery/cathode manufacturers will require mines to produce at least 1-5 tons to prove consistency and high-quality.
- Several steps involved in the qualification process:
-- testing materical specifications
-- cathode performance testing
-- pilot & demonstration plant
-- cell performance testing
- process takes about 2 years
Nickel inventories and prices
- Lots of interesting points here - apapas will love this! Inventory levels to fall further (demand increase and less-than-expected output from Indonesia's HPAL processes).
- If inventory stock levels further fall (to 7-8 days), NI price could double.
- This could happen in the next 6-8-10 months
- So there is a ton of upside for Nickel at the moment.
Nickel Jr.Mining companies
- Scoreboard is showing CNC. Thinks low-grade Ni-Sulphite sources have very good potential because they usually have also the other metals in there.
- preference is for Ni-Sulphite not laterites
- high-grade Ni-Sulphite are usually underground, fairly small, highly profitable but with a relative short life-cycle hence not very compelling for the majors.
- So, high-grade Ni-Sulphite are more of a niche (e.g. Western Areas in Australia) as majors (like BHP) are looking for >20-30 year mine life with high ebitda.
- Then talks about Talon as an exmaple and the straight-forward process of producing the NI concentrate required for EV.
IMO: CNC ticks many of the boxes to be attractive for a major: long life, straight-forward process, reasonable cap-ex with long-term ebitda that will have a big impact on someones profits.
And here is the link:
https://www.youtube.com/watch?v=8nxg5qV1_Hk
GLTA