Miners race for nickel as electric-car revolution looms

Mining updates

In northern Ontario, hundreds of kilometers from the nearest railroads and paved roads, the world’s largest mining group and Australian metal giants are participating in a bid war for millions of tonnes of nickel-containing deposits.

The battle between BHP and Andrew Forrest’s Wyloo Metals over asset owner Noront Resources takes place as miners compete to meet the surge in demand for battery metal as electric vehicles become mainstream.

According to the International Energy Agency, the demand for nickel, which is used in the batteries of more powerful electric vehicles and is the key to heavy-duty vehicles such as electric trucks, will increase 19-fold by 2040 if the world meets Paris’ climate targets. Expected to grow. ..

However, most of the supply increase over the last decade is set to come from Indonesia, a market that is overwhelmingly powered by coal-fired power, where Chinese companies are building nickel processing projects.

As companies in rich countries are forced to significantly reduce their carbon dioxide emissions, it has encouraged competition to secure new sources.

Australian miner IGO said last month that it was in preliminary talks about the acquisition of the Australian nickel miner western region, but Rio Tinto supported a US nickel mine under development by Talon Metal. Glencore-managed PolyMet is developing a large copper and nickel project in Minnesota.

Nickel consultant Stephen Brown said: “Nickel M & A is increasing driven by the need for sustainable nickel and nickel outside China’s supply chain.” There was a bit of geopolitics that influenced it. People are in a country. We are trying to reduce supply chain risk by reducing our reliance on. ”

BHP’s bid on Noronto on July 27 was part of an effort by CEO Mike Henry to increase exposure to “future-looking metals” following a decision to sell oil assets last month.

However, Forest-founded company Wyloo Metals, which already owns 24% of Noronto, countered last week with an offer 27% higher than BHP’s $ 325 million bid.

“As we have shown from day one of this process, Wyloo Metals is committed to working swiftly and collaboratively to formalize good, binding proposals for the benefit of Noront’s shareholders. “More,” said Luca Giacovazzi, head of Wyloo.

Noront’s stock has risen 146 percent since BHP offered to trade at 0.80 cents.

Noront CEO Alan Coutts said mine sustainability is a key factor behind the profits of the acquisition. The company plans to dispose of its waste “tailings” underground rather than behind onshore dams, relying on hydropower and nuclear power rather than coal.

“I think the source is important. Ontario is a very attractive jurisdiction because the power grid does not depend on any form or form of carbon. All coal-fired power plants have been abolished,” he said. Said. “It gives us a competitive advantage.”

Coots said the state government had promised to build a 300km road to the Eaglenest deposit in consultation with many indigenous communities passing through its territory. He said he hopes the road will be built by 2027.

According to analysts, car companies are willing to pay a price premium for nickel produced sustainably outside Indonesia. EU from 2024 suggestion It is difficult to rely on Indonesian supply as only batteries with a carbon footprint declaration can be sold in Europe.

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Tesla has already signed a contract to purchase nickel from a consortium backed by BHP in Australia, Veil in Canada and Trafigura in New Caledonia.Korean battery company LG Chem signature Last month, a six-year contract to buy nickel from an Australian mine developing a project in North Queensland.

The Joe Biden administration is also keen on developing a North American-based supply chain for minerals such as nickel, said Henri Van Ruen, CEO of Talon Metals. Currently, the only nickel produced in the United States is being sent to China to enter the battery supply chain, he added.

However, according to Macquarie analyst Jim Lennon, western mining companies will have a hard time competing with the amount of nickel from Indonesia, Macquarie analysts said Indonesia’s supply by 2027. It is expected to account for 60% of the world’s supply. ..

“The difference is that while China is actually building something like this, projects outside of China are virtually not under construction,” he said. “These projects are part of the supply solution, but most of the supply comes from Indonesia. There is no alternative.”

Mr Brown said Chinese companies involved in Indonesian projects, such as stainless steel maker Kiyoyama and cobalt producer Huayang Cobalt, will also clean up their businesses and switch to renewable energy at the request of their customers. ..

“It’s not impossible for Indonesian producers to move to more environmentally friendly products,” he said. “When they do, the Green Premium disappears.”

Miners race for nickel as electric-car revolution looms Source link Miners race for nickel as electric-car revolution looms

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