Member Info for TrickyDicky2

bluebudgie

The EU might have made what they want to to do clear. The one thing they haven't done is clarified how they're going to achieve it. That's the hard part.

TDT

“But from a broader perspective, the world is going to need every pound of nickel it can get to meet the super-charged growth in demand coming from the EV sector, with the nickel market widely tipped to go into deficit around 2023, with or without NPI sourced nickel matte.”

And

“And again from a broader perspective, many commentators have noted that nickel matte produced from NPI is unlikely to meet the clean and green requirements of European and US automakers. NPI production is energy and emission intensive itself, relying in Indonesia on coal-fired power. Then there is the energy and emissions involved in converting NPI in to nickel matte.”

https://stockhead.com.au/news/barry-fitzgerald-will-the-nickel-price-crash-pave-the-way-for-a-legend-to-rise/?utm_medium=email&utm_campaign=Stockhead%20Morning%20Newsletter-03-07-2021&utm_content=httpsstockheadcomaunewsbarryfitzgeraldwillthenickelpricecrashpavethewayforalegendtorise&utm_medium=email&utm_campaign=Morning%20ASX%20Small%20Cap%20Wrap%20Thursday%20Mar%206&utm_content=Morning%20ASX%20Small%20Cap%20Wrap%20Thursday%20Mar%206+CID_f70007d642883a4eb759926824432552&utm_source=Campaign%20Monitor&utm_term=Barry%20FitzGerald%20Will%20the%20nickel%20price%20crash%20pave%20the%20way%20for%20a%20Legend%20to%20rise

TDT

Luke 2

That's exactly what I said in my 6th March 2021 post at 10:02hrs.

There's no apparent downside for Horizonte no matter which way this goes.

TDT

"The Chinese are not increasing overall nickel supply....."

This would suggest otherwise and its not just the Chinese either.

https://www.dropbox.com/sh/htlh6dkmakiecb9/AAD0QTyYUKo8NRK8JIapiMgNa?dl=0

The map in the attached folder gives you some idea of the new mines/processing plants that have been built in Indonesia in recent years, some for stainless others for cathode. The interesting thing here is the speed with which these operations were built. Admittedly most were built to replace processing operations in China after the Indonesians made it clear that they were going to introduce an ore export ban. Nevertheless the number of projects that sprang up after that decision was taken and the speed with which they were developed is impressive. The bottom line, IMO, if they can build that quickly it would suggest they'd be able to keep on top of increasing demand. There's no shortage of nickel laterite in Indonesia.

Having said all of that I think one of the major plusses for Horizonte is we're not in Indonesia. I spent years working there and it doesn't take much to rub the locals up the wrong way, especially if you're Chinese.

TDT

fulmar29

Its interesting to read what the EU is currently saying on the issue of critical raw materials.

https://ec.europa.eu/docsroom/documents/42881

Of course this is from a European perspective but its a good indicator of how much of a problem they think nickel will be going forward. If Tsingshan has cracked the nickel laterite to nickel sulphate processing route then there's unlikely to be a problem with supply but that route is not proven just yet.

TDT

The Tsingshan development shouldn't come as any surprise. Andy Home was highlighting the same back in 2018 as this article makes clear.

https://www.reuters.com/article/batteries-nickel-ahome/column-chinas-tsingshan-rains-on-nickel-bulls-party-andy-home-idUKL8N1XA6DM?edition-redirect=uk

A nickel price just below the $20,000/tonne incentive level is no bad thing.

TDT

fulmar29

That article merely confirms just how much of the recent rise in the price of nickel has been sentiment driven and not fundamentals driven. If Tsingshan does develop a novel processing route for nickel laterite to nickel sulphate I wouldn't put it past them, in the fullness of time, to develop a carbon neutral way of doing it as well.

15/16 years ago NPI didn't exist. It was born out of the high nickel prices of the early naughties and it was Tsingshan that commercialised it. The old saying "the cure for high prices is high prices" being very much the case. With this current development, however, it seems like Tsingshan might be ahead of the game and if they are it would seem to suggest that we aren't going to see the same sky high prices. Does that matter? As long as you are in the lowest cost quartile I guess not.

TDT

Backspace57

It you want a more indepth explanation try the below link.

https://www.investopedia.com/terms/o/offtake-agreement.asp

TDT

Backspace57

"An offtake agreement is an arrangement between a producer and a buyer to purchase or sell portions of the producer's upcoming goods. An offtake agreement is normally negotiated prior to the construction of a production facility—such as a mine or a factory—to secure a market for its future output."

TDT

Luke2

I think this gives a better picutre of what's going on in the UK car market.

https://www.dropbox.com/s/su7pcmgtgxs6h6o/screenshot%202021-03-05%20at%2018.11.20.png?dl=0

February's EV share of the UK market might only be 13% but if you look at things on a year to year basis for each month and for the year to date it shows petrol and diesel in sharp decline and EV's and PHEV's on the up. By the end of 2021 diesel will more or less be gone and EV's and PHEV's combined will match petrol vehicles in number.

TDT

This one has come as a surprise.

https://www.bbc.co.uk/news/business-56288781

No hints or indication prior to this news coming out so who knows. Musk will want more than one secure supply and quite possibly several and all in different jurisdictions as well I should think.

TDT

"If it is just the chinese then they'll do as they please."

True. Then again when you're as big and as powerful as they are you can do what you like. The Yanks were and still are the same and we were no different when we were the big cheese all these years ago. The Chinese, however, will be doing their potentially dirty work in somebody else's back yard (Indonesia) and it will not take much to stir that potential hornets nest. We've seen quite a few rucks these past few years between Indonesian workers and Chinese nickel operations in places like Morowali. I don't see that changing. Brazil, on the other hand, is a relative oasis of calm.

TDT

Given that China accounts for 30% of new car sales every year I don’t think they’ll give much weight to what Goldman has to say.

TDT

There is nothing in writing that I can find that confirms the of a binding off-ftake agreement before the end of 2020. There is, however, talk of trying to convert the non-binding to binding before the end of 2020 in this interview:-

https://www.youtube.com/watch?v=DdEI_X-w-yE

Listen from 2 minutes 15 seconds in.

Converting non-binding to binding by the end of 2020, as far as I can determine, was aspirational and not a firm commitment but if anybody knows any different please say.

TDT

I do not recollect seeing a promise to tie down a binding off take before the end of December 2020 either. I must have missed that as well. Sp28, was that in an RNS or in an interview?

TDT

Max

This is the important bit IMO.

"However, there is less clarity about production costs compared to traditional technologies such as using briquettes to produce sulphate."

Furthermore any mention of ESG is noticeable by its absence. Tsingshan may have developed another route for producing nickel sulphate but at what cost?

TDT

I don't know why everybody is obsessing over current nickel prices right now. Miners, banks, off-takers don't make decisions based on what the price is doing today but where they expect it to go in the future. 2023, when Araguaia is producing , will be a completely different price environment to the one we are seeing today.

TDT

Its not just Tsingshan. Norilsk sorting out their water ingress problem which helped fuel/sustain the nickel price rise is also a contributing factor.

https://www.bloomberg.com/news/articles/2021-03-03/nornickel-to-stabilize-water-inflows-at-arctic-mine-by-next-week

The collapse in the nickel price was long over due and all it was going to take to trigger it was something like Tsingshan's announcement. A market in surplus by 85,000 tonnes in 2020, expected surplus of almost 20,000 tonnes in 2021 and LME stocks continuing to rise do not support a rising price. The sentiment bubble has burst. A more sustainable rise based on solid fundamentals might be a year or two away but its there no matter what Tsingshan is doing. Producing a matte for conversion into nickel sulphate will comes at a cost and with ESG consequences. The Chinese don't give a monkey's chuff about the latter but the former will be an issue.

Tsingshan is an interesting development and long in the making, see below article from 2017, but we still need to see the detail.

TDT

https://www.metalbulletin.com/events/articles/3860096/interesting-times-ahead-for-the-nickel-market.html

CBS

Until we get more detail on what Tsingshan is up to, what is costs and its ESG impact the jury is out.

TDT

China’s Tsingshan Holding Group, a nickel and stainless steel giant, will provide 100,000 tonnes of nickel matte to Huayou Cobalt and battery materials maker CNGR Advanced Material.

Nickel prices have surged partly on expectations of battery nickel shortage, but Tsingshan’s move could prove economically sufficient supply for the sector.

How sentiment can change

“Tsingshan’s mass production of nickel matte triggered a supply-side reform. The supply bottleneck for nickel sulfate has been broken. There’s limited room for nickel price to increase,” Huatai Futures said in a note.

Huayou also said it would produce matte from nickel pig iron.

TDT