Electric Cars Could Decide the Winners and Losers of the Nickel Boom

nickel boom

It’s no secret that electric vehicles (EVs) are driving a battery boom (no pun intended). Which has boosted demand for lithium, cobalt and more.

Battery Makers Turn to Nickel

Now battery makers are turning to the next in-demand metal, nickel. Except that only half of the world’s nickel miners are going to come out winners, according to analysts and executives.

It seems EV producers have to be a bit snobbish. Only high-grade nickel will suffice for their cars. Which means suppliers of ferronickel and nickel pig iron grades won’t make the cut, according to UBS analysts. And these grades account for almost half the world’s nickel supply.

It’s good news for a collection of Aussie miners with a premium product, though. Which as Reuters reports, includes the likes of BHP Billiton Ltd [ASX:BHP], Independence Group NL [ASX:IGO] and Western Areas Ltd [ASX:WSA].

BHP is trying to lockdown some long-term supply deals, while the smaller miners, like Independence Group and Western Areas, look to alternative means:

These producers are building plants to convert the metal into a powder-like sulfate that is particularly suited for use in batteries. Sulfate nickel regularly fetches a price premium over London Metal Exchange-traded nickel.

And while this is a great alternative for smaller producers, the demand for raw materials is still the real focus. The metal has been a steady performer on the London Metal Exchange this year, as Reuters reports:

Benchmark prices on the London Metal Exchange have jumped 17 percent in the year to date to $11,725 per tonne, but remain well below the 2014 peak of more than $21,400, and over 75 percent off the all-time high of just over $51,000 in 2007.

In a sign of how much the electric car industry is changing the market, the London Metal Exchange this week said it may offer a nickel contract specifically targeting the battery market.

Will Nickel Reach Eye-Boggling Gains?

There are going to be interesting times ahead. Whether nickel will reach the eye-boggling gains of other in-demand battery metals, will remain to be seen. Though it seems that the industry has a compelling case that it should.

At least our Aussie miners still have some legs left thanks to their premium product. And if you want to see some our top picks for mining stocks that could boom, check out our free report.

Regards,

Ryan Clarkson-Ledward,
Junior Analyst, Markets & Money

Ryan Clarkson-Ledward

Ryan Clarkson-Ledward

Ryan has degrees in both communication and international business. His priority is bringing you the latest price updates on stocks through ASX updates, as well as supporting Sam Volkering with background research. As part of the team at Markets & Money his aim is to provide unbiased and relevant news for readers.

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