NetworkNewsWire
Editorial Coverage: As the electric vehicle market sees
impressive growth, the demand for nickel is also rising. Indonesia,
which boasts 25% of the world’s nickel resources, is looking for
ways to profit from the valuable base metal.
As Indonesia benefits from the growing market, so do the
companies involved in the production of nickel, including
Pacific Rim Cobalt Corp. (CSE: BOLT) (OTCQB: PCRCF) (XFRA:
NXFE) (PCRCF
Profile). Pacific Rim Cobalt has established a bold
expansion plan following a successful exploration and development
season in Indonesia last year. Other companies with interest in
nickel production include BHP Group (NYSE: BHP),
which is expanding its nickel business and has plans to ramp up
sales for the fast-growing electric vehicle (EV) sector, and
Vale S.A. (NYSE: VALE), which is planning to
increase production of the metal by an estimated 70% in coming
years, primarily through expansion in Indonesia. One of the world’s
largest diversified natural resource companies, Glencore
(OTC: GLNCY) is also deeply interested and invested in
mining for battery metals. A major copper producer,
Freeport-McMoRan Inc. (NYSE: FCX) is also looking
to see additional revenue from the growing EV sector.
- Indonesia ideally located with ready access to markets in China
and Japan.
- Nickel one of essential minerals needed to produce batteries
for the growing electric vehicle market.
- Companies on the ground in Indonesia ideally positioned to
profit from growing production, strong EV market.
To view an infographic of this editorial, click here.
Growth in EV Market Spurs Mining Boost for
Indonesia
In many people’s minds, electric vehicles (EV) are associated
with big cities in East Asia, North America and Western Europe.
These are major markets where new vehicles are making their
presence felt, particularly as environmentally conscious consumers
seek to retain their personal mobility while protecting the planet
from carbon emissions.
But the drive to put more EV on the roads is having a knock-on
effect in other regions. Indonesia, a giant in the production of
nickel, is seeing both its economy and its global status boosted by
the need for nickel in EV batteries. This shift could help turn the
country into an economic superpower, which may have significant
consequences for companies working there.
“Mineral to Market” Strategy in Place
Among the companies developing Indonesia’s nickel supply is
Pacific Rim
Cobalt Corporation (CSE: BOLT) (OTCQB: PCRCF) (XFRA:
NXFE), a Canada-based battery metals company with
offices in Vancouver, Shanghai, Jakarta and Sentai, Indonesia.
Specializing in acquiring and developing production-grade
battery metal projects, Pacific Rim is committed to providing these
essential metals to companies producing EV batteries. PCRCF is
committed to leveraging its flagship nickel-cobalt Cyclops project
by employing a vertically integrated “mineral to market” strategy.
The Cyclops operation is nestled at the edge of the Cyclops
Mountains in the Papua Province, a region rich with nickel
deposits, where past operations have established the presence of
the mineral.
Keenly aware of growing interest in the industry, the Indonesian
government is paying special attention to licensing rights given to
extract minerals in the country. Recently the government updated
the mining registration process, in part to encourage companies in
this industry.
In light of the favorable government outlook and as a result of
consistent efforts, Pacific Rim recently secured government approvals needed from the OMBUDSMAN
of the Republic of Indonesia for the Cyclops project to move
forward. The nickel and cobalt project has been found fully
compliant with the updated mining registration process, meaning it
is clear to progress.
Pacific Rim Cobalt CEO Ranjeet Sundher commented: “2019 was a
pivotal year for us, and we’re pleased to carry this momentum into
2020. Obtaining approval from Indonesia’s OMBUDSMAN is an important
step toward our goal of securing strategic partnerships and
participating in Asia’s growing battery metals supply chain.”
Obtaining the approvals marks a significant accomplishment for
Pacific Rim, an accomplishment made possible because of the
connections the company has established. National, regional and
local support has been found for the project, which will provide
jobs in Papua Province in mining, transport and support services.
With government approval in hand, company officials have now begun
discussions with potential strategic partners and investors to
further develop the operation.
Rich Resources, Direct Trade Routes Create Global
Hub
Pacific Rim’s operation is well timed to tie in with plans of
the Indonesian government. Indonesia aims to become a global hub in
the EV industry supply chain. Not only does the country have rich
sources of nickel, it also has direct nautical trade routes to
China and Japan. These powerful neighboring countries represent
major markets for the materials Indonesia is producing, thanks to
Japan’s high-tech consumer economy and China’s powerful battery
industry. Vehicle manufacturers in both countries are focused on
becoming leaders in EV, and for that they’ll need battery-grade
nickel.
Indonesian president Joko Widodo has established rules to bolster the EV industry in the country in an
effort to make the most of this opportunity. Through a series of
incentives, the government aims to make EV 20% of the country’s car
production by 2025. This movement has attracted investment from
major EV players. Operations such as the Cyclops project should
appear ideally positioned to play a key role in making that
happen.
To support its plan to become a world-leading player in the EV
supply chain, Indonesia has stopped export of unprocessed nickel
ore. The government has also recently approved
environmental impact studies evaluation the completion of several
factories designed to produce battery-grade nickel
chemicals.
With the Indonesian government providing support for nickel
production, and factories being established to process the
chemicals, Indonesia won’t just be a source of nickel-bearing ore —
it will become a major market for the base metal.
Ambitions of Country, Companies Key for
Future
The Indonesian government’s ambitious plans for the country’s EV
industry are matched by the ambition of the companies working in
the region.
For Pacific Rim, this ambition is supported by the company’s
remarkable exploration successes in 2019. Testing on its wholly
owned site revealed substantial nickel and cobalt mineralization
near the surface.
These conclusions are based on several
successful operations in the second half of 2019. Excavation
and sampling of test pits produced 530 kg of sample materials,
which were sent to Canada for bench scale testing. Test results
indicate 75 drill holes, 51 augur holes and 11 test pits were used
to check mineral levels down to various depths. Combined with
historic results from 856 drill holes and 26 test pits, these
provide a detailed picture of the mineral profile at the Cyclops
site.
With these results in hand, Pacific Corp. has identified
ambitious milestones for development in 2020, including the
completion of a pilot plant in Canada and a demonstration plant in
Indonesia, which would produce battery-grade nickel and cobalt
material to suit the growing EV market. The operations and success
of these initial operations will be used to develop design criteria
for a full commercial scale plant.
Demand for Nickel Growing
The demand for EV batteries translates to high demand for
nickel; demand that doesn’t appear to be letting up any time soon.
According to research by Deloitte, EV sales reached
2 million units globally in 2018 and should reach 4 million
units in 2020, expanding to 21 million by 2030. At the same time,
the cost of EV battery packs has been falling by 20% per year,
making EV a more affordable option for consumers.
CRU Mobility and Energy Futures has predicted that the EV market will need 1.3 million tons of nickel per
year by 2030, compared with 600,000 tons in 2018. This means
that demand for Pacific Rim’s products could more than double in
the next decade.
With Indonesia holding 25% of the world’s nickel reserves, the
country — and companies with operating inside the country — lies at
the nexus of these developments. Spending on new nickel processing
plants in the country is expected to reach $20 billion by 2024,
thanks to the government’s efforts to create a world-leading EV
supply chain. Companies such as Pacific Rim, with an early position
in the country’s nickel market, look to be ideally positioned to
profit from this.
The EV Nickel Market
The nickel market is increasingly defined by the car
manufacturers working in EV.
BHP Group (NYSE: BHP) announced plans to start
production of nickel sulphate in the Q2 2020 as the company
anticipates increasing sales of its nickel products to the battery
industry (http://nnw.fm/6WzrB). In a presentation, company
officials noted that BHP sold about 78% of its nickel production to
the battery industry in the second half of the 2019 financial year,
up from below 60% the year earlier. BHP currently produces around
75,000 tons of nickel metal at its Kwinana refinery on the
outskirts of Perth.
The world’s largest producer of nickel, Vale S.A. (NYSE:
VALE) is looking to boost its production of the base metal
to some 360,000 tons a year, with much of the growth coming from
projects planned for Indonesia (http://nnw.fm/z53H7). “Nickel is poised for dramatic
change,” said Mark Travers, Vale’s interim executive director for
base metals. Currently there is an oversupply of high-quality
nickel, but experts anticipate that the market will tighten in
coming years as electric vehicle sales climb, observed Travers, who
also noted that Vale has two nickel projects on the drawing board
in Indonesia being developed with joint venture partners.
In addition to mining nickel, Glencore PLC (OTC:
GLNCY) is one of the world’s largest recyclers and
processors of nickel-bearing products such as batteries, extracting
the minerals from discarded goods and finding ways to reuse them
(http://nnw.fm/gCxL7). A major global producer
of platinum-group and base metals, Glencore’s nickel supply is
produced primarily from locations in Australia, Canada and
Europe.
Nickel isn’t the only metal needed for electric vehicles. Copper
producer Freeport-McMoRan Inc. (NYSE: FCX) could
see a $4 billion increase over the next five years (http://nnw.fm/5RKOy), with the EV market driving a
decent chunk of that growth. FCX has a copper mine in Indonesia,
which is currently undergoing a transition from open pit to
underground. That transition is slated to be complete in 2021, and
increased production from that mine, combined with continuing
production growth at FCX’s North and South American sites point to
copper shipments increasing from 3.8 billion pounds in 2018 to 4.8
billion pounds by 2023.
With EV production anticipated to grow dramatically in the
coming year, mining for nickel and other metals essential for that
growth takes on added value and importance. Companies involved in
that mining appear certain to benefit.
For more information on Pacific Rim Cobalt Corp., visit Pacific Rim
Cobalt Corp. (CSE:BOLT) (OTCQB:PCRCF) (XFRA:NXFE)
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