Nickel’s price paralysis could see mines ‘gobbled up’ cheap Miners say pricing mechanisms for nickel have struggled to keep pace with the industry’s shift to supplying the specialised needs of battery and electric vehicle makers, creating an opportunity for acquisitions on the cheap.
Australian nickel was traditionally sold to stainless steel producers in briquettes or powders, but miners such as BHP now sell the bulk of their nickel to electric vehicle manufacturers like Tesla, which want nickel for the cathodes of lithium-ion batteries.
BHP has built a new processing plant at Kwinana in WA to make nickel sulphate crystals, a form of the metal that is particularly desirable to battery makers.
No public daily market price for nickel sulphate crystals exists, leaving battery makers and other newcomers to negotiate premiums above the nickel price index the London Metals Exchange has published since 1979.
“The nickel product suite has evolved quite rapidly and we need the pricing mechanisms to evolve with that as well,” BHP nickel boss Jess Farrell said at The Australian Financial Review Mining Summit.
Billionaire Andrew Forrest has spent the past two years buying nickel assets such as Canada’s Noront Resources and Australia’s Mincor Resources through his private company Wyloo Metals.
Wyloo chief Luca Giacovazzi said he planned to take full advantage if markets did not properly value nickel for its role in batteries.
“I would definitely say it’s an opportunity. I’m quite happy for everyone to keep mispricing nickel so we can gobble up assets,” he joked.
Mr Giacovazzi said the split between new types of nickel for batteries and traditional nickel products was not the only challenge facing the nickel price setters.
“The other interesting aspect with nickel is obviously we can make it out of two different forms of geology. There’s sulphides and there’s laterites,” he said.
“I think the world will start to pay a premium for nickel that’s produced in a greener way and that’s really sulphide nickels that you find in places like Australia and Canada, which is the two areas that we’re heavily invested.
“If it’s not a premium for that nickel [sulphide geology] then the others are certainly going to get a discount and I think you’ll start to see that play out with some of the car companies as they’re making batteries for these vehicles that they’ve been selling to customers who are quite conscious about these ESG [environment, social and governance] factors.”
https://www.afr.com/companies/mining/nickel-s-price-paralysis-could-see-mines-gobbled-up-cheap-20230525-p5db9x