From Collin Kettell: In this interview, metals analyst Mike Beck joins the show once again, this time to discuss the nickel story.
He feels that electric vehicles will be a game changer for the market. Electric vehicles and battery demand will drive the need for the metal. The typical electric car requires over 35kg of nickel. This amount is likely to increase as cathode battery makers migrate toward higher energy densities. The more you can put into a battery pack the better the performance.
The entire market consumes two million tons per year which is a significant metal market. There are two grades of nickel class one and class two. Half of current mine supply is of the higher quality class 1 while the balance is class 2 which is of lower quality and often used for pig iron.
If you assume that E.V. will represent 15% of passenger vehicles by 2025, this means that the world will need an additional 60000 tons per year of class one nickel. Some estimates that by 2030 we will be at 30% then we are looking at over a million tons per year.
The mining industry will need to more than double existing mine supply. This is a big ask for a metal that is very capital intensive. The lead time for a nickel mine is six to eight years and usually has a lot of technical challenges. The preferred source for nickel is high-grade nickel-sulfide deposits, and they only represent 4% of known resources.
Nickel is a story that will increasingly emerge over the next few years. Stockpiles are being exhausted as electric vehicle demand continues. If you are patient with your capital, it is good to get positioned early.
The iPath Bloomberg Nickel Subindex Total Return ETN (JJN) closed at $14.62 on Friday, up $0.02 (+0.14%). Year-to-date, JJN has gained 20.83%, versus a 22.00% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of Palisade Research.