The Nickel Mines Ltd (ASX: NIC) share price has been fluctuating today after the company announced it will diversify into nickel matte production for lithium batteries.
The Nickel Mines share price is down 0.4% to $1.13 at time of writing.
Nickel Mines is engaged in acquiring, exploring, and developing nickel projects. The company owns an interest in hengjaya mines in China, with its partner Shanghai Decent Investment. Let’s take a look at this latest update.
Nickel Mines expanding into lithium battery industry
Shanghai Decent (Tsingshan) has signed an MoU with Nickel Mines, allowing two of Nickel Mines’ four 80%-owned Rotary Kiln Electric Furnace (‘RKEF’) lines to undergo the necessary modifications to allow them to produce a nickel matte product suitable for sale into the electric vehicle (EV) battery market.
The specific details of capital modification costs, operating costs and selling arrangements with Shanghai Decent remain commercial-in-confidence and subject to a definitive agreement. However, the company released the following information.
“The required modification cost for each RKEF line is expected to be minimal (approximately US$1M per line) and the cash operating costs for producing a tonne of nickel in matte are expected to be comparable to the cash costs of producing a tonne of nickel in nickel pig iron.”
Despite the relatively comparable cost in production, the company says nickel matte achieves a higher price on market than nickel pig iron.
Nickel Mines management comments
Managing director Justin Werner said that the agreement offers exciting potential for Nickel Mines in the EV market.
We are delighted that Nickel Mines has been given this opportunity to participate in this exciting transition into the EV battery supply chain, a development that further reflects and enhances our relationship with Tsingshan and our standing in the global nickel market. Our future ability to sell nickel matte into the EV battery supply chain provides a diversification of not only Nickel Mines’ production base but offers a broader exposure to the pricing dynamics of individual nickel markets that are expected to emerge over the coming years.
We believe the ability to become a meaningful supplier of nickel across multiple enduser markets will make Nickel Mines a truly unique investment proposition amongst other global producers and lay the platform for a broader array of future growth opportunities.
Nickel Mines share price snapshot
The Nickel Mines share price has fallen by more than 11% over the past week and month. It is, however, still up more than 113% over the past 12 months.
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Motley Fool contributor Lucas Radbourne-Pugh has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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