Nickel supply: Deposit types and where to find them Nickel ore exists in the Earth's crust in two main deposit types: laterite and sulfide. According to the US Geological Survey's most recent report on nickel, identified land-based resources averaging 0.5 percent nickel or more contain at least 300 million metric tons (MT) of nickel; of that amount, around 60 percent is in laterite deposits and 40 percent is in sulfide deposits.
Each deposit type presents unique challenges to nickel mining. Sulfide deposits are found very deep in the crust, making extraction difficult. They also tend to be smaller than laterite deposits and often have variable grades. The US Geological Survey notes that the discovery of sulfide deposits has long been on the decline, leading exploration companies to search in trickier locations such as East-Central Africa and the subarctic.
In 2021, the world's top nickel producers were Indonesia, the Philippines, Russia and New Caledonia. Indonesia produced 1 million MT of the metal, the Philippines generated 370,000 MT, Russia's output totaled 250,000 MT and New Caledonia contributed 190,000 MT. Glencore (LSE:GLEN,OTC Pink:GLCNF) and Vale (NYSE:VALE) are two of the world's largest nickel companies.
While stainless steel still accounts for about 70 percent of nickel use, it's worth noting that nickel also ranks highly among battery metals and is widely used in the lithium-ion batteries that power electric vehicles (EVs).
The rise of EVs has led experts to predict that nickel will become one of Indonesia's biggest industries; it could even surpass palm oil, the country's second largest export. Forbes reported in 2021 that the country is on track to raise its share of worldwide nickel production from 28 percent to 60 percent by 2029.
Once extracted, nickel ore is primarily used as a refined metal; as mentioned, more than two-thirds of the global market is put towards the production of stainless steel. The aerospace industry prizes refined nickel for its resistance to corrosion and uses it in spades as a component of superalloys. The metal is also used in coins, catalysts and chemicals, foundry products and plating.
As stainless steel is the largest source of demand for nickel, increasing nickel consumption is often fueled by developing countries in the midst of infrastructure expansions. Indeed, since the early 1990s, the nickel price has seen steep climbs and descents due to changes in economic growth.
For instance, the collapse of the Eastern Bloc led to significant nickel oversupply and a plummet in the metal's price that was not corrected until the early years of the 21st century. Nickel peaked at US$54,050 per MT in May 2007 after the market registered a deficit of 44,000 MT the previous year.
Nickel is included in many broad-based metals ETPs, including the Invesco DB Base Metals Fund (ARCA:DBB) and the iPath Series B Bloomberg Industrial Metals Subindex Total Return ETN (ARCA:JJM). These products offer exposure to baskets of metals, including copper, zinc and aluminum. For those seeking targeted exposure to nickel, the iPath Bloomberg Nickel Subindex Total Return ETN (ARCA:JJN) may be an interesting choice; this product is linked to an index of nickel futures.
Nickel futures themselves trade on the London Metal Exchange under the symbol NI. These nickel futures contracts represent 6 MT of nickel, and are priced in US dollars per MT. Clearable currencies include the US dollar, yen, pound and euro.
Finally, investors can buy shares of companies engaged in nickel production, discovery and its extraction. Some major nickel miners trading on the TSX include First Quantum Minerals (TSX:FM,OTC Pink:FQVLF), Lundin Mining (TSX:LUN,OTC Pink:LUNMF) and Hudbay Minerals (TSX:HBM,NYSE:HBM), but there are many junior companies exploring for the base metal around the world.
The demand for nickel has been rising in the past few years as it becomes important to the electric vehicle industry. Nickel, previously used as a corrosion resistant material by the steel industry, has exploded in value with the mass production of cheap electronic devices, most of which make use of the metal in manufacturing. According to Research and Markets, the global production of the metal is expected to cross 2.76 million tons within the next two years. This represents a compound annual growth rate of close to 3% for the nickel industry.
Meanwhile, BHP Group (NYSE: BHP) has also been enjoying a stellar start to the new year. On May 18, CEO Mike Henry spoke at a mining conference and said that the future outlook for commodities was compelling as the COVID-19 stimulus packages of the government helped lift the demand for raw materials for an extended period of time. Henry also outlined that the industry was evolving to the advantage of BHP, which had close to 25% of its mining portfolio in futuristic commodities like nickel and copper.
Rio Tinto Group (NYSE: RIO), the second-largest mining firm in the world, has also been adapting to changes in the mining sector by engaging in projects that make the firm more environmentally stable in the long-term. As one of the largest nickel producers, the company feels it has a responsibility to the clean energy industry to develop a sustainable market ecosystem. In this regard, the firm has recently pledged to stop using hydrogen in aluminum refining in order to cut down on emissions.
With this context in mind, here is our list of the 10 best nickel stocks to buy now. These were selected keeping in mind their relevance to the nickel industry, hedge fund sentiment, and the business fundamentals driving the earnings of each company.
PolyMet Mining Corp. (NYSE: PLM) is a mining company with interests in copper, nickel, cobalt, gold, silver, and platinum, among other metals. It is placed tenth on our list of 10 best nickel stocks to buy now. The stock has offered investors returns exceeding 29% over the course of the past four weeks. One of the top projects of the firm is the NorthMet, a polymetallic project located in Minnesota and covering an area of more than 4,000 hectares. Copper-nickel mines are part of the natural resource project.
Sibanye Stillwater Limited (NYSE: SBSW) is a South African mining company that focuses on precious metals. The company produces gold, nickel, copper, chrome, and other metals. The firm has mining interests in Africa and South America. The company has seen profits soar in recent weeks as the prices of basic materials rise and demand for nickel, used in premier electronic products, rises. It is placed eighth on our list of 10 best nickel stocks to buy now. The stock has returned 106% to investors over the past twelve months..
Mechel PAO (NYSE: MTL) is a Russian mining company that has stakes in the power and steel businesses as well. It is placed sixth on our list of 10 best nickel stocks to buy now. The stock has returned 20% to investors over the past twelve months. The company is one of the top suppliers of nickel to the Russian government through the Southern Urals Nickel Plant. This nickel is used for defense needs when countries in the West refuse to export nickel to the Russian Federation.
Tesla (NASDAQ:TSLA) founder Elon Musk shared his concerns on nickel prices and production in 2021. Come 2022, nickel futures prices exploded. Honestly, the recent 250% price spike in nickel futures in two trading sessions on the London Metal Exchange (LME) to hit the $100,000 per metric ton mark in March is by no means a bullish indicator to invest in nickel.
However, rising demand growth from electric vehicle battery manufacturers, global economic growth and increasing construction activity could combine to support strong nickel prices. Although the Nickel Institute claims that about 72% of global nickel production is primarily used in stainless steel manufacturing and just 7% is used in batteries, growing electric vehicle battery production could lift nickel demand significantly going forward.
They can invest directly in the metal through the futures market or trade options on nickel futures contracts. Another less common alternative could involve buying physical nickel bars, taking delivery and suffering persistent storage and security costs throughout the holding period. The easiest way to invest in nickel is through buying stocks of nickel mining companies, processors and key players in the nickel value chain.
Below is an assortment of seven nickel stocks investors could consider. They range from diversified multibillion-dollar mining and commodity trading giants to very small development stage pure-plays that could offer better upside yet with higher equity risk.
Higher productivity and firmer prices in 2022 and beyond make Glencore a good nickel stock to buy right now. Investors could capture a 4.3% yielding dividend while waiting to capture a promising nickel upside.
Through a joint venture with a Cuban nickel company, Sherritt mines for nickel in Cuba and runs high-purity nickel and cobalt refinery operations in Canada. In a recent 2022 production guidance provided in February, Sherritt expects nickel production to increase from 31,184 metric tons in 2021 to between 32,000 and 34,000 metric tons in 2022.
Centaurus Metals stock is a speculative play on nickel upside investors could consider. U.S.-based investors buying the nickel play on the over the counter market may want to utilize stop buy and stop sell orders to minimize trading risks due to thin trades on CTTZF stock.
Panoramic Resources (OTCMKTS:PANRF) is another Australia-based speculative nickel stock that could offer investors exposure to both nickel and cobalt upside. The company restarted its nickel, copper and cobalt production project in Western Australia recently and has since made its third nickel-copper-cobalt concentrate shipment to China this month.
Soaring nickel and cobalt prices helped shine the spotlight on Panoramic Resources stock, which has gained 107% in value over the past twelve months and 27% year-to-date. However, investment risks are high on the volatile penny stock. Shares have posted a 5% decline in the trailing month. 041b061a72