Demand projections mean more nickel projects in Australia will need to come online. We highlight four operations that can support the cause.
Despite its June quarter price regression, nickel has a strong long-term outlook as electric vehicle (EV) technologies continue to evolve and sales increase.
“We’re only in the foothills of the electric vehicle story,” revered metals analyst and Macquarie Bank commodities consultant Jim Lennon said at a 121 Mining Investment event in late-May.
Nickel cobalt aluminium (NCA) and nickel manganese cobalt (NMC) lithium-ion batteries are two of the most commonly used batteries in the EV manufacturing process.
NCAs and NMCs contain 80 per cent and 33 per cent nickel, respectively, while newer formulations of NMCs contain up to 80 per cent.
While nickel is becoming more and more fundamental to the EV story, the commodity’s short-term outlook is more bearish, primarily because of the COVID situation in China – a country that has been constantly in and out of lockdown.
Lennon said these COVID lockdowns had resulted in a dip in EV sales in China, while sales in Europe had plateaued.
“China’s (EV sales numbers) in April and May fell very sharply because nobody could get out to buy a car,” Lennon said.
“Europe is the other dominant market, but (sales have) been static for the last year and the reason for that is supply constraints – the European EV makers cannot increase supply fast enough to meet the demand.
“You’ve got the microchip shortage and you’ve got the steel-harness shortage because a lot of that was made in Ukraine. (So) you’ve got all sorts of supply issues starting to limit the ability of the European market to grow in the short run.”
Volkswagen Group announced in April that it had halted production several times at various factories in Germany, including its Zwickau and Dresden EV plants, due to a lack of microchips. The original equipment manufacturer (OEM) also flagged that while the shortage will ease in 2022 and 2023, semiconductor supplies wouldn’t normalise until 2024.
Looking further down the track, however, the nickel narrative is more positive.
Lennon forecast an average growth rate in the global EV market of just under 30 per cent per year from 2020–30, with total sales (including trucks and buses) to reach 38.9 million units by 2030. By comparison, a record 6.6 million EVs were sold in 2021.
Lennon said that not only will EV sales continue to increase, but he expects the nickel content in EV batteries to do the same.
“The trend in the (EV) market is towards higher nickel because that increases the energy density of the battery, increases the range between charging, and towards no nickel (lithium iron phosphate) which is for urban vehicles where there’s plenty of charging points and drivers aren’t too concerned about the range,” he said.
Lennon expects EV batteries to be consuming at least 1.36 million tonnes (t) of nickel by 2030. By comparison, EV batteries consumed 300,000–400,000t of the base metal in 2021.
There are several Australian mining companies developing new nickel projects to support the battery metal’s growing demand.
While the likes of Nickel West (BHP), Nova (IGO) and Murrin Murrin (Glencore) may immediately come to mind when talking about Australia’s established nickel producers, the names Kambalda, Savannah, Odysseus and Black Swan will be heard more and more in the future.
So who makes up nickel’s next wave, and what are these companies all about?
Mincor Resources
Mincor Resources is focused on re-establishing sustainable high-grade nickel production from its Kambalda project in Western Australia.
Between 2001–16, Kambalda became a trusted nickel producer before it was placed on care and maintenance due to historically low nickel prices.
In March 2019, Mincor and BHP renewed a long-standing relationship between the companies in the form of an ore tolling and offtake agreement. This enabled Mincor the right to process up to 600,000 tonnes per annum (tpa) of nickel sulphide ore at BHP’s Kambalda nickel concentrator once the Kambalda operations were up and running.
Mincor made a final investment decision (FID) to restart the mine in September 2020, before sending the first parcel of Kambalda ore to BHP’s nearby concentrator in February 2022.
Mincor received $25.3 million from BHP Nickel West in June 2022, marking the company’s first payment for nickel concentrate since restarting Kambalda.
“Receipt of first nickel sales is yet another outstanding achievement for the company as we complete our return to the global ranks of nickel producers,” Mincor managing director David Southam said.
“We are also particularly pleased that we have achieved this milestone, including the development of two underground mines, below our peak funding estimate.
“This is a tremendous result in one of the most challenging operational environments in recent memory and is testament to the dedication and efforts of our people and our contracting and operating partners, such as BHP.”
Mincor delivered the Kambalda restart for a $98 million peak funding outlay, below the disclosed budget of $107 million.
Kambalda nickel production is expected to peak at over 16,000tpa in the 2022–23 financial year (FY23).
Panoramic Resources
Panoramic Resources initially operated its Savannah nickel-copper-cobalt project in WA between 2004 and 2016, when it was placed on care and maintenance due to low nickel prices.
The mine was recommissioned in 2018 following the discovery of the Savannah North orebody, before operations were temporarily suspended in April 2020 due to COVID-related disruptions.
Panoramic Resources recommenced operations at Savannah in July 2021, producing first nickel-copper-cobalt concentrate in October 2021 and delivering its first shipment in December 2021. This saw a 10,865t, $US14.8 million ($21.7 million) shipment of nickel-copper-cobalt concentrate depart the Wyndham port for delivery to offtake partner Jinchuan in China.
By June 2022, Panoramic had delivered its fourth shipment of nickel-copper-cobalt concentrate, with 10,489t attracting a $US18.1 million ($26.5 million) payment from Jinchuan.
“Our concentrate production is tracking to plan as operations continue to ramp up at Savannah,” Panoramic managing director and chief executive Victor Rajasooriar said.
“As an unhedged producer, we participate fully in commodity price moves and the pricing received on the fourth shipment is one of the best we’ve had since production resumed.”
Savannah has annual production guidance for FY23 of 6600–7100t of nickel, 4100–4500t of copper and 400–500t of cobalt. Panoramic hopes to achieve nameplate production at Savannah in FY24.
IGO/Western Areas
IGO completed its acquisition of Western Areas in June, representing a “logical consolidation” of key nickel assets in WA.
In doing so, IGO complemented its Nova operation with the Forrestania mine, regarded as one of the country’s highest-grade nickel mines, as well as the Cosmos operation.
Cosmos includes the emerging Odysseus mine, which is on track to deliver first concentrate in the December quarter of 2022.
Prior to its acquisition, Western Areas produced first ore from Odysseus in October 2021, which was stockpiled as the company completed construction of its concentrator complex.
Odysseus is expected to produce nickel in concentrate for 10 years from its planned commencement in FY23, with IGO suggesting its strong balance sheet would help de-risk and fund Odysseus’ continued development.
IGO also inherited Western Areas’ Mt Goode deposit within the Cosmos operation, with an ongoing scoping study evaluating the possibility of underground and open-pit mining at the prospect.
The development of Mt Goode’s pre-feasibility study will be a key priority for IGO in the near-term.
Poseidon Nickel
Poseidon Nickel’s Black Swan project in WA is poised to become another important piece in the global nickel puzzle.
On care and maintenance since February 2009, Black Swan boasts a 2.2-million-tonne-per-annum (Mtpa) processing plant, and a disseminated mineral resource estimate of 28.9 million tonnes at 0.63 per cent nickel containing 181,000 tonnes of nickel at a 0.4 per cent cut-off grade.
Poseidon Nickel has been advancing a ‘fill the mill’ strategy as it looks to leverage off of Black Swan’s existing infrastructure and large resource base.
In mid-July, the company said it was making good progress on Black Swan’s bankable feasibility study, which is predicated on a 1.1Mtpa base case restart scenario to produce a smelter-grade concentrate.
“The recently announced Black Swan disseminated mineral resource update, together with the previously announced high-grade underground resources update, means total resources are now just over 206,000t contained nickel,” Poseidon Nickel managing director and chief executive officer Peter Harold said.
“The mineral composition of the Black Swan disseminated resource is primarily serpentinite and talc-carbonate ore types, with varying levels of talc content.
“As the quantity and distribution of talc can impact the concentrate quality and nickel recovery, we have undertaken significant metallurgical test work on the different ore types at Black Swan to determine the most suitable route to market for our nickel concentrate.”
Harold said the test work demonstrated the potential of producing a mixed hydroxide precipitate for downstream processing predominantly into the growing battery market.
Poseidon is currently engaged with Pure Battery Technologies about supplying such feed to their proposed Kalgoorlie battery material refinery.
Initially developing a 1.1Mtpa option at Black Swan, Poseidon Nickel has also included a 2.2Mtpa throughput scenario into its feasibility studies, which would maximise the plant capacity.
This feature appeared in the August issue of Australian Resources & Investment.