Increasing global battery demand will drive higher nickel & cobalt prices, predicts Highlands Pacific MD

As demand for electric cars gather pace, Papua New Guinea’s Ramu nickel mine is perfectly placed to be a big provider of the nickel and cobalt that are essential ingredients for hi-tech batteries. Craig Lennon, Managing Director of Highlands Pacific, told the Business Advantage Papua New Guinea Investment Conference in Sydney that both commodities are ‘hot’.

Seventy per cent of the nickel produced in the world is used in stainless steel, but the battery market is having a huge impact on demand for both nickel and cobalt, according to Lennon, Managing Director of Highlands Pacific, which is a joint venture partner in the Ramu mine near Madang.

‘In the investment community at the moment, cobalt is a very hot commodity. A lot of people are out there exploring for it.

‘What we have with Ramu here is that we’re not exploring for it, we’re actually producing it,’ he told the PNG Investment Conference.

Electric cars

Highlands Pacific’s Craig Lennon speaking at the Business Advantage International PNG conference

‘The electric vehicle revolution is happening and it’s happening faster than people were expecting. All the automotive players now are working on electric vehicle technology and governments are mandating reduced emissions.

‘China wants electric battery cars and plug-in hybrids to account for at least one-fifth of its vehicle sales by 2025.’

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Chinese-owned carmaker Volvo said in July that all its new car models would have an electric motor from 2019. Geely, Volvo’s Chinese owner, aims to sell one million electric cars by 2025.

The Chinese government wants electric battery cars and plug-in hybrids to account for at least one-fifth of its vehicle sales by 2025.

Lennon said that while the lithium-cobalt-oxide battery used in laptops and portable devices has been a source of major growth in the past, the most prospective demand will be for batteries that have nickel-cobalt-manganese and nickel-cobalt-aluminium. These are used in electric vehicles.

Significant resource

The Ramu’s nickel and cobalt mine Source: Highlands Pacific

The Ramu mine has 124 million tonnes of nickel and cobalt—‘a significant resource’, says Lennon.

He added that it means the Ramu mine, with a projected life of up to 35 years, is ‘going to be around and benefitting PNG for decades’.

‘We are ramping up our production steadily,’ he said. ‘After a production downturn in 2016—after a fatality at the project shut down the mine for three months—the company is now at its nameplate capacity, producing 33,000 tons of nickel and 3,300 tons of cobalt in 2017. Most goes to China.

‘We should see better nickel prices.’

‘While we’re increasing production, we are also reducing costs. The nickel industry has been quite depressed in recent years. We’re producing nickel for about US$5,500 a tonne. The market price is around US$12,000 a tonne and cobalt is around US$60,000 a tonne, so it means there is a good margin being made.

Lennon told the conference that demand will grow. ‘We should see better nickel prices.’

Production methods

Ramu Mining uses two production methods, Lennon said. ‘As well as the conventional digging with excavators, hydro sluicing is in 30 per cent of the process.’

He claimed this method, developed by Highlands Pacific, is ’40 per cent cheaper than the conventional method’.

The Ramu mine and processing plant is a joint venture between China’s MCC Ramu Nico Ltd (85 per cent), Highlands (8.56 per cent), and the PNG Government and landowners (6.44 per cent).

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