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Nickel demand is set to outstrip supply as soon as 2023, Amur Minerals chief executive officer Robin Young told Fastmarkets in an interview on Wednesday February 27.
The junior mining company owns the Russia-based Kun-Manie project, the world’s largest Asia-adjacent unexploited nickel deposit, home to an estimated 1.2 million tonnes of mineable nickel ore.
And if nickel demand outstrips supply as Young envisages, he believes that the current London Metal Exchange three-month nickel price, which closed trade at $13,160 per tonne on March 1, will rise accordingly.
“An $17,636 per tonne nickel price, yes that’s optimistic compared to today, today let’s just call it $13,227 per tonne. When you look at the long-term pricing, [pricing agencies are] saying $19,841-22,046 per tonne about the time we come into production,” he told Fastmarkets.
UK on-warrant nickel stocks are down 50% year on year in 2019, while Shanghai Futures Exchange-listed inventory is down further by 75%, with inventory drawdown continuing in a market forecast 3% growth in 2020.
The International Nickel Study Group forecasts that nickel production will continue to grow. Production of the metal has already increased by 319,000 tonnes in 2019, rising to 2.39 million tonnes from 2.07 million tonnes in 2017.
But Amur Minerals is confident that there will be healthy demand for their mined output despite this when they come into production, slated for 2023.
Kun-Manie’s production is forecast at 24,000 tonnes per year of nickel concentrate should the company opt to toll smelt the mined ore, or 26,000 tpy of low grade material should they opt to build their own furnace or flash smelter.
Looking to export their product to the Asian market, Young pointed out that continued demand for stainless steel in the region must be sated as the market grows.
And with anticipated nickel battery demand from electric vehicles (EVs) projected to materially affect the market in 2025, he believes that supply will soon be unable to satisfy demand.
Young projects that 700,000 tpy of nickel will be required for nickel matte batteries alone, even before the new 8:1:1 nickel, cobalt manganese battery chemistry becomes an industry preference.
Kun-Manie’s deposit of just 1.2 million tonnes of nickel ore would satisfy less than two years of EV battery consumption.
But EVs aside, Young believes that the market for nickel-based batteries for grid and non-automotive energy storage is an underrated key target market which is ripe for exploitation.
“[There is] a shift to create batteries that capture that energy and save it so it’s available for on demand usage. A complete market that few are even discussing,” Young told Fastmarkets.
Source Fastmarkets