The nickel juniors are back near their 52-week lows after the most volatile of the metals did what it does best by staying volatile.
The past six months, in particular, has been a shocker for the nickel price, with earlier price gains wiped out with a retreat from $US7/lb down to $US4.90/lb this week.
The price is now just ahead of last (calendar) year’s average of $4.73/lb. All hope that the $US10.36/lb prices of 2011 were on the way thanks to projections of supply deficit are lost, so you might think.
But Deutsche and others reckon this is a temporary setback for nickel caused by trade war-related slowdown in demand from what is currently the dominant customer, the stainless steel sector.
The argument goes that a whole new wall of demand is coming from the lithium-ion battery sector as the electric vehicle and renewable energy storage revolution gathers pace.
In a report earlier this month, Deutsche said nickel was headed for a “massive’’ supply shortage in the next three years. It went further to suggest demand from lithium-ion batteries (where increased nickel use equals greater energy density) would outstrip stainless steel by 2025.
Take all that in and it might be time to have a second look at the juniors with a clear pathway to production well before 2025 is upon us as rest assured, the nickel price will run hard ahead of time if Deutsche and others are right.
Today’s interest is in Mincor (MCR), trading at 35.5c compared with its 52-week high of 47c and its low of 31c.
It was a highly successful nickel producer from its Kambalda operations until the post 2011 crash in nickel prices prompted it to suspend operations in the March quarter of 2016. It has kept itself busy since by getting up a small toll gold treatment operation to pay some bills.
But the plan has always been to return to nickel production, with something like 10,000t a year (in concentrates) in mind.
A reminder that Mincor continues to plot its return came during the week with the announcement that the finance director of nickel producer Western Areas, David Southam, is to become managing director.
His strong commercial background is just what Mincor needs as it starts to put the pieces in place for a return to nickel producer status. Read more +
