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The Nickel Market Explained – Cobalt 27 (TSX-V: KBLT)

Interview with Anthony Milewski, CEO of Cobalt 27 (TSX-V: KBLT) Nickel 28.

Pala Investments buys Cobalt 27 and creates Nickel 28. It’s been a bad year for Cobalt and we ask Anthony what he has learnt over the last 2yrs. He tells us that demand outstripped their forecasts from the IPO but that the supply-side was unpredictable. He explains why. As ever an intelligent discussion about artisanal miners, small metal market and pricing mechanisms, the need to educate analysts better so that buyers can make more intelligent investment decisions and the importance of liquidity. Nickel prices have displayed considerable volatility over the past 15 years. Historically nickel has been a boom/bust metal and since 2003, the market has seen one of the most incredible booms in this metal followed by a prolonged bust. Potentially Nickel will boom soon, mainly because of the move from combustion engines to electric vehicles. These vehicles will be powered by high-nickel lithium-ion batteries and will add 500,000t to nickel consumption pa over the next 10 years and possibly more if EV vehicles take off. As one of the main beneficiaries of the take-off in Chinese demand in the 2000s, nickel become a victim of its own success. After peaking at an all-time high of over $54,000/t in May 2007, prices fell to below $10,000/t by late-2008. High prices led to Chinese substitution away from the standard 300-series stainless steel, which contains 8% nickel, to 200-series stainless steel, containing only 1-2% nickel. On the supply side, high nickel prices led to the development of a new source of nickel in the form of nickel pig iron. Nickel pig iron is an energy intensive method of making nickel-iron units for the stainless steel industry, using low-grade laterite nickel ores mainly from the Philippines and Indonesia. Nickel pig iron accounts for 35% of global nickel supply mostly from Indonesia. Most supply growth in recent years has come from Indonesia, where, following a ban on exports of nickel ore in 2014, there was significant Chinese-led investment in the production of nickel pig iron. The recent major Greenfield projects globally had major cost over-runs and new investments will not be contemplated by non-Chinese investors until prices rise to and stay in the $20-25,000/t range for some time. Chinese building of nickel plants in Indonesia can be justified at prices in the $10,000-18,000/t range. The wide range reflects investment in nickel pig iron at the lower end and investment in high-pressure acid leach plants at the upper end (car batteries).

0:15 – Update and Recent News: Pala Investments and Nickel 28 1:04 – The Cobalt market drop 8:54 – Big issue in the space and what needs to be fixed 13:23 – What would have been done differently? Lessons learned 16:53 – Difference between Cobalt and Lithium 25:00 – Nickel 28 and how the strategy reflects Cobalt 27 28:36 – Batteries and the evolving market of Green Energy and Nuclear Power

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about the author

Picture of Anthony Milewski

Anthony Milewski

Anthony Milewski has spent his entire career in the capital markets, including as company CEO, board director, advisor, founder and investor, with a focus on the energy transition and commodities.


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