At Paydirt’s sixth annual Battery Minerals Conference held in Perth, the nickel producers and explorers, which account for about one-quarter of presenters, are riding the wave of exploding demand as the world scrambles to electrify transportation and develop more compact, high-capacity batteries.
The wild nickel price, in the wake of the Russian invasion of Ukraine on 24 February, sent shockwaves through the industry. However the consensus among presenters this morning was that this short-term anomaly is overshadowing the long-term upside for the key battery and stainless-steel ingredient.
Western Areas (ASX: WSA) chief financial officer Joe Belladonna told delegates the driving question we should be asking about nickel is, “Not how much are you going to pay for your nickel, but where are you going to get it from?”
The nickel price tear, which topped $100,000 per tonne, started shortly after 24 February with a wide-reaching range of sanctions placed on Russia, one of the world’s biggest producers of nickel. That initial spike forced Chinese nickel player Tsingshan to move quickly to cover a series of short bets it had made that the nickel price would fall, forcing the LME to take the unprecedented step of canceling nickel trading.
Mr Belladonna acknowledged it had indeed been an abnormal couple of months, but that the upward trend of the nickel price was still there, even before the Russian invasion of Ukraine, and that the sustained increase over the last 12 months would be equivalent to an increase in the gold price from $2,000 per ounce to $3,000 per ounce.
“If we extrapolate on that, I think it’s pretty clear where the nickel price is going,” he said.
It may be a short-term spike but, fellow presenter IGO’s (ASX: IGO) bid to acquire Western Areas hit a roadblock after an independent expert’s report by KPMG found the original price was neither fair nor reasonable to Western Areas’ shareholders.
In December 2021, IGO and Western Areas entered a $1.1 billion board recommended scheme of arrangement to acquire 100% of Western Areas at $3.36 per share, to be paid fully in cash.
Earlier this morning, IGO CFO Matt Dusci told delegates, “No doubt the short-term volatility of the nickel market has made this transaction difficult and complex.”
There are 13 nickel producers and explorers at the Battery Mineral Conference including:
- Poseidon Nickel
- Western Areas
- Panoramic Resources
- St George Mining
- Blackstone Resources
- Azure Minerals
- Lunnon Metals
- Cannon Resources
- Charger Metals
- Impact Minerals