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What’s MM’s outlook for Nickel Industries (NIC)?

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    What’s MM’s outlook for Nickel Industries (NIC)?

    Thanks for taking this question. Ford US just announced it would build a new factory in the US with technology from a Chinese Partner. It will produce new Lithium Iron Phosphate batteries or LFP, as opposed to pricier nickel cobalt manganese batteries, which Ford is currently using. Using LFP batteries will reduce the amount of Cobalt needed to procure to make battery cells more affordable. EV market leader Tesla also use LFP batteries in a portion of its vehicles. Will this new development also reduce the demand for Nickel, and affect the Stock Price of Nickel producers such as Nickel Industries (NIC). Thanks again.

    Answer

    Hi Peter,

    High energy lithium-ion batteries use nickel, cobalt and manganese, whereas LFP batteries use lithium iron phosphate, a non-toxic material, as the cathode material i.e. no nickel.

    The EV battery is a rapidly evolving space and the LFP battery appears to be the next step in what will be long and exciting journey. However this move away from nickel is one of the reasons we haven’t increased our exposure to the metal through NIC, we already hold IGO in or Flagship Growth Portfolio which provides dual lithium/nickel exposure.

    Hence the answer to your question is yes if LFP batteries continue to grow market share i.e. they’re already over 30%!

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