In this Commodity Update, everything about nickel. Humans have used this silvery-white metal for thousands of years. However, the demand for nickel is increasing. So it's time to dive deeper into this element.
Atomic number 28Nickel is the 28th element in the periodic table (symbol: Ni) and belongs to the transition metals. These are collected in the so-called d-block, in columns 3 through 12 of the periodic table. In this aqua-colored block, in addition to nickel, you will find cobalt (Co), copper (Cu), and zinc (Zn), among others.
Nickel through the agesThe oldest traces of nickel use leads back to 3500 BC. Historical Chinese writings show that minerals containing nickel were used in Syria to impart a green colour to glass. An example of such a mineral is nickeline or niccolite.
A Swedish mineralogist tried to extract copper from nikkolite in 1751, but to his surprise was left with a silvery-white powder that he called "nickel," derived from the German word "Kupfernickel." Miners used this word to describe the unusable ore that contained only nickel and no copper. This was attributed to evil earth spirits called "Nickeln."
From 1860, nickel was used along with copper for coinage. This still applies to our current 1 and 2 euro coins. The edge of the 2 euro coin consists of copper/nickel (75% to 25%). The core consists of three layers. The middle layer is pure nickel, and the two outer layers are nickel brass (75% copper, 20% zinc, and 5% nickel). With the 1 euro coin, it is precisely the other way around.
Today you can find nickel mainly in stainless steel. However, nickel is now an essential building material for batteries in connection with the "green transition." And therefore, the demand for the metal will only increase further.
What are nickel's main properties?
Six properties make nickel a versatile metal that is highly useful in various types of industries, including automotive, chemical, aerospace, electronics, construction, and power generation:
The applications of nickelSo nickel is resistant to corrosion, heat, and wear. And it is easily machined. Consequently, interest in nickel alloys has increased dramatically in recent decades. About two-thirds of the total reserves are used for stainless steel production. And nickel plays an important role in various renewable energy technologies:
Nickel miningNickel is mined mainly from two types of ores: laterite and sulfides.
Lateritic ores contain relatively low concentrations of nickel and are mainly found in tropical areas such as Indonesia, the Philippines, and New Caledonia. Mining nickel from laterite is usually done through a mining process in which the top layer of the ground, called laterite, is removed. The ore is then separated by an extraction process, usually through the use of solvents and chemicals.
Sulfides contain higher concentrations of nickel and are found mainly in countries such as Canada, Russia, Australia, and Indonesia. The process of extracting nickel from sulfide ores is more complex and involves several steps. First, the ore is ground and processed to separate the nickel-containing mineral from other minerals. Then, the nickel concentrate is further processed through smelting and refining to eventually produce nickel metal.
Nickel reserves and productionWhere in the world does most nickel come from? Well, there are two different answers to that. Namely, you can distinguish between reserves (1) and production (2).
The total amount of nickel reserves worldwide is estimated at 95 million tons. Australia and Indonesia have the largest reserves. Both countries have about 21 million tons (1 ton = 1000 kg) of nickel in the ground. These are followed by Brazil, New Caledonia (a French archipelago in the Pacific Ocean, east of Australia), Russia, and Cuba, among others. Consequently, most nickel exploration takes place in these countries. Well-known regions include Ontario (Canada), Western Australia (Australia), and Sulawesi (Indonesia).
Although the nickel reserves of Australia and Indonesia match, their production does not. Whereas Australia supplies "only" 170,000 tons per year, Indonesia produces some 800,000 tons per year. Other major producers include the Philippines, Russia, New Caledonia, and Canada. At the corporate level, Russia's Norilsk Nickel is one of the world's largest producers. They have extensive mining operations in Russia and supply a significant portion of global production. Vale SA, a Brazilian mining company, is also a major player in nickel production. And China's Tsingshan has an 8% share, ranking third.
TradeThe metal is traded on exchanges like the London Metal Exchange (LME). In the chart below, the price trend over the last five years. The sharply rising price coincides with the rise of electric cars. In 2022, for example, 14% of all new cars sold were electric, according to the International Energy Agency, up from about 9% in 2021 to less than 5% in 2020. The parabolic movement upward in early 2022 is due to Western sanctions against Russia, one of the world's largest nickel exporters, in retaliation for the invasion of Ukraine. With the sanctions, almost all commodity prices rose, but nickel thus skyrocketed.
UnderinvestmentApart from the rise of EVs and the economic sanctions against Russia, the exploration sector has suffered from massive underinvestment for years. This will lead to a very limited number of new nickel projects in the short term, let alone new nickel mines, as it takes years for a project to be developed into a mine and go into production.
All the more striking is that valuations within the sector remain historically low. With Commodity Discovery Fund, we are positioning for this and ensuring the optimal stake in the best companies. We have invested in the most significant nickel discoveries globally. Of these, Talon Metals and FPX Nickel are the most prominent positions. Tesla has now signed a deal with Talon Metal to ensure future production. The second reportedly has Volkswagen on board as an investor.
If you want to know more about the fund, download our brochure without obligation or contact our Investor Relations Managers. This will allow you to be informed about the latest developments and your opportunities in the market.
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