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Nickel is the rising star of the base metals world, and is quickly gaining more prominence beyond its traditional role in industrial applications through the creation of stainless steel.
Moonlighting as a key ingredient in the electric metals world, nickel is a major component in the creation of the lithium-ion batteries used in electric vehicles and other electric applications.
Australia is positioned to take advantage of rising demand for the metal, with the continent-spanning nation sitting on some 20 percent of global nickel reserves, behind only neighbouring Indonesia.
Australian government data estimates that the country had some 19.7 million tonnes of economic demonstrated reserves of the metal in 2018.
According to US Geological Survey data, Australia produced 180,000 tonnes of nickel in 2019, making it the fifth most prolific producer in the world — a title it shares with Canada.
Well ahead of Australia is Indonesia (800,000 tonnes), the Philippines (420,000 tonnes), Russia (270,000 tonnes) and New Caledonia (220,000 tonnes).
Australia’s production of nickel comes from 12 operating mines. All are in the state of Western Australia, which makes sense since that state is home to over 90 percent of the economic demonstrated reserves in the country. The remaining nickel is held in New South Wales (4 percent) and Queensland (5 percent).
There are plenty of deposits, however. The country’s 19.7 million tonnes of economic demonstrated reserves can be found across 84 deposits, while there are 233 known deposits in Australia.
It’s worth noting that interest in nickel is being helped along by the growing push to diversify global production of cobalt. Cobalt is frequently produced as a by-product of nickel and copper mines, and as more miners seek to move away from the unrelentingly unstable Democratic Republic of Congo, which has a near-monopoly on global cobalt production, more explorers are sniffing around Australia, a nation that is known to be an attractive mining jurisdiction.
The largest nickel reserves in Australia are all located in the southern half of Western Australia, where operators such as Canada’s First Quantum Minerals (TSX:FM,OTC Pink:FQVLF), the Anglo-Swiss Glencore (LSE:GLEN,OTC Pink:GLCNF) and Australia’s own BHP (ASX:BHP,NYSE:BHP,LSE:BHP) operate the Ravensthorpe, Murrin Murrin and Mount Keith mines, respectively.
Those top mines account for a large share of Australia’s total output.
Ravensthorpe, which is near the south coast of Western Australia, has been in the hands of First Quantum since 2010, when it acquired the then-mothballed mine and associated processing facility. Since then, it has been ploughing money and time into the project to bring it online.
Ravensthorpe produced nickel between 2011 and 2017, but as mentioned was placed into care and maintenance due to low nickel prices; since early 2020, it has been producing again, accounting for 5,113 tonnes of nickel in Q3 of that year. Murrin Murrin is a larger producer. Owned by Glencore through local operator Minara Resources, Murrin Murrin produced 17,800 tonnes of nickel in the first half of 2020 — some 32 percent of all of Glencore’s global nickel production.
The big cheese in Western Australia, however, is Australia’s own BHP, which owns and operates its Nickel West division in the centre of the state.
Four mines are operated by BHP with a focus on nickel: the low-grade Mount Keith mine and the higher-grade Cliffs, Leinster and Rocky’s Reward mines. Ore mined by BHP is sent to Nickel West’s Kalgoorlie smelter, where it also processes ores and concentrates purchased from third parties.
BHP has a fully integrated operation, with premium nickel powder and briquettes shipped from its Fremantle port facilities. Seventy-five percent of its nickel is sold to global battery material suppliers.
No surprises, then, that BHP is top dog when it comes to nickel production in Australia, accounting for 22,000 tonnes of nickel in Q3 2020. Its guidance for the 2020/2021 financial year puts its total expected output at between 85,000 and 95,000 tonnes — almost half of Australia’s nickel production.
With 75 percent of that going to battery material suppliers, Australia is shaping up to be an integral part of the technology supply chain.
The future of nickel in Australia is bright, with the metal already building from a strong base. The export value of nickel for Australia in 2018 was AU$4,285 million, according to government data, with Canberra noting that “if accessible economic demonstrated reserve is used as an indication of long-term potential supply, then Australia’s nickel resources could last 133 years at 2018 rates of production.”
Projects that are progressing through exploration and development are popping up elsewhere in Australia besides Western Australia — the Sconi battery metals project in Queensland, owned by Australian Mines (ASX:AUZ,OTCQB:AMSLF), and the Sunrise nickel-cobalt project, owned by Clean TeQ Holdings (ASX:CLQ,OTCQX:CTEQF) in New South Wales, are in the development stages.