[00:00] Eric: With every new EV battery tech and electrification target we set, nickel seems to get a little shinier and shinier in the eyes of investors. How could it not? Well, the story isn't quite that simple. Yes, nickel demand is up, but today's investors need more than just increased demand when making a decision. As we discussed in the last episode, mining has historic stigmas and misconceptions associated with it. And as the world looks to build a better clean energy future people, businesses and governments will want to ensure it's built with pieces that support a clean energy ethos. As a global community, we have certain criteria to meet. So, the question from an investor point of view is simple. Does nickel check all the boxes? In this episode, we're going to look at Nickel through the eyes of an investor as we seek to better understand not just the overwhelming demand and market pressures, but also what the big picture opportunity really is. My first guest is Robert Morris, senior mineral advisor at Morris consulting and director at Giga Metals and the leading expert on battery metals from mine to active cathode materials. Mr. Morris was formerly executive vice president in charge of worldwide base metals, sales and marketing at Vale, one of the largest nickel producers in the world. Few people have his depth of knowledge about nickel and other critical battery metals. Mr. Morris, tell me as the world pursues a clean energy future, what does a man of metals and minerals have to say about it? How will going electric impact the global demand and economics of key materials?

[01:23] Robert Morris: So really, when we're talking about electrification and decarbonization globally, we look at some called critical minerals or critical metals. And in the base metals world, we have things like nickel and cobalt, which are very crucial to the inner workings of lithium ion battery cell. And then we have copper which we find that electric vehicles are much more copper intensive than internal combustion engines so the legacy cars. So, you're going to have a lot more copper in every electric vehicle. And then you have others, electric cars need to be light so there's going to be more aluminum also in those cars. So, there's a suite of these metals that are going to go along with the electric vehicle revolution, as we call it. And from a market perspective, it's all about supply and demand. And, I feel that some of these key metals, there's going to be much more demand than supply. Hence, higher prices for these metals. When you look at mining companies that have nickel in their portfolios, you would expect share prices to increase accordingly.

[02:43] Eric: Okay, so clearly EVs are driving nickel demand. But that doesn't mean there aren't other demands for nickel. Take stainless steel, for example. Historically, it's been the biggest nickel player, but how will emerging battery tech influence and reshape demand? Is there enough room for everyone to play nicely? Is stainless steel still the biggest driver of nickel demand?

[03:02] Robert Morris: Yes, by far. And today, it's somewhere in the neighborhood of 70%. So, your typical high-grade stainless steel that you see everywhere contains about 8% nickel by content. We call this a 300 series stainless steel which is probably the most common. And if you look at perhaps there's between 30-35, 40 million tons of stainless steel being produced annually, if you do the math, it's a big number. But then you have the chemical side of nickel, nickel sulfate, for example, which is used for lithium ion batteries. Like I explained before the cathode part of lithium ion battery is very nickel intensive. You have things like nickel and cobalt and manganese. But the trend is to stop as much nickel in those cells as you can. So here we have a challenger to stainless steel going forward, because the market itself is likely to grow in the neighborhood of 18 to 23% annually for the foreseeable future. And that's a tremendous growth rate in terms of demand. Whether it can be supplied as a different story, but in terms of demand, that's a tremendous growth rate. And I would say by 2030 in terms of market shares, the battery chemical side could go up to 30 to 35% of the demand and that would bring stainless steel down accordingly. Stainless steel will still be dominant but it'll be growing much slower and batteries will have more influence on the nickel price then stainless steel, even though it will ultimately have a smaller market share. It's just because you have the ability to substitute nickel to a certain degree in stainless steel. But in the current battery technology you don't. So, as we move forward, batteries will be the main driver of price for nickel in my opinion.

[05:22] Eric: Okay. Again, as a layman, those numbers you just said, they seem like incredible. Does anything else have projections like that in the markets now?

[05:32] Robert Morris: Not that I know of. I mean, when you're talking about, you have copper and you have cobalt, Cobalt has similar projections. Despite the fact that a lot of people think that they're going to engineer cobalt out of the batteries, just because of the cost, the price, also related to geopolitical issues in the Congo, child labor, things like that. But my view is that you're going to continue to need much more cobalt. Copper, you're going to see much more copper but copper is such a bigger market that these growth rates are not going to hamper. The growth rates themselves will be smaller even though EVs are going to consume a lot more copper. So, when you're looking at the real high flyers here, in my view, you're talking about three elements. You're talking about nickel, you're talking about cobalt and you're talking about lithium. It's these metals that are going to have stupendous growth rates for the next decade at least. And as a result, it's going to shake these markets up. It's already shaking these markets up.

[06:50] Eric: It sounds like some exciting times ahead for nickel and friends. From a pure demand perspective, the growth potential is clearly there. But as we touched on earlier, this is only part of the story. Yes, the world wants more nickel but expect a few questions. Investor mindsets are changing as are the criteria for investment decision making. This is the focus of my conversation with our next guest. Meet Angela Durrant, Principal Analyst for Wood Mackenzie with almost 20 years’ experience in metals research specializing in nickel costs and markets. Angela, can you please give us your take on the general investor attitude out there when it comes to EVs and nickel specifically?

[07:25] Angela Durrant: I think investors are becoming more and more environmentally aware. And certainly, there are those that are-- if you're going to go and buy your electric vehicle, which is obviously I suppose, a choice for the planet, in a way, you want to make sure that all the materials that are going into the battery but also into the car itself are sourced sustainably and as economically sustainably as possible.

[07:52] Eric: Makes sense. Clearly investors have some power and influence to wield, given that I would expect they have significant impact and influence on business decision making policies etc. Yes?

[08:02] Angela Durrant: Yes, yes, yes. I mean, investors are king, right? You got to this is why companies are on these quarterly reports and so on-- various public presentations every quarter. I mean, that's the benefit of their investors. So, no, I think it's actually-- it's crucial. It's absolutely crucial that they're crossing all the T's and dotting the eyes in this regard. So, I think, over time, it will become increasingly more important. I think, certainly with EVs and batteries, what we're looking at now is also what happens after their life and how we can manufacture or repurpose those batteries or how we recycle those batteries and then most economic and efficient ways of doing that.

[08:57] Eric: Everything you say makes perfect sense. We all need to be more aware and held more accountable. So, let me ask you, what are your thoughts when someone like Elon Musk waves a big bag of money around attempting to spark the nickel supply chain? Does this kind of promotion pose a potential risk to due diligence and process? Will people look to cut corners in an attempt to chase dollars?

[09:17] Angela Durrant: Obviously, Elon Musk is very much a first mover, I suppose. And so, when you see someone like that actually make statements about nickel, I think many industry players and people that are watching energy transition markets and so on and so forth really take notice and then start actually assessing it. So, I wouldn't say that it makes it more risky. I would suggest that it actually forces more due diligence in a way because if you're actually going to invest in a nickel play or lithium or any of the battery raw material sectors, I think, it forces you to actually investigate even further. So that's a good thing.

[09:59] Eric: It sounds like the more attention nickel gets, the better we are for it. Because that means we ask more questions and demand better answers. So, in the spirit of seeking better answers, let's ask Robert Morris some more questions. Mr. Morris, we talked earlier about the applications in economics of nickel, and as you called it, its stupendous growth potential. But what about the nickel story from a carbon footprint perspective? What should investors know when it comes to nickel and its impact on our NetZero goals?

[10:26] Robert Morris: I think it's important to qualify that mining, any type of mining in general is carbon intensive, and nickel is no different. However, the method of Mining and smelting and refining means a lot in terms of carbon emissions. Mining in Canada, for example, is generally lower, has a lower carbon footprint than the global average. And that's because really, the miners and the government, consumers are demanding that mining improve their carbon footprint then, and a lot of things have been done. The provincial governments and the federal government's mandate emission levels which the miners in Canada have to comply. Also, there's other things that they're doing to reduce that and one of them is carbon capture, we can talk about a little bit about that later. And it's also dependent on geography. I talk a little bit about Canada, if you look at the largest nickel producing country in the world today is Indonesia. And there's a big concern about the CO2 levels that are being generated when you produce nickel there. Part of the reason is that the method of smelting and refining is naturally carbon intensive. And you also have mostly coal fired power plants that are operated that are used to power these smelters. So, it really depends on geography, it depends on the method of mining, the method of smelting and ultimately the method of refining. It varies, but we believe that there are opportunities, particularly with Giga metals which is a company I'm a director of. The project that we have for nickel there, we intend it to be carbon neutral, because of the fact that we intend to use hydroelectric power, as well as using the technology that actually has the ability to capture the carbon that's being emitted and have it absorbed into the ground, basically, allowing for hopefully a carbon neutral nickel. Other nickel companies, one in Brazil that I'm familiar with is actually looking to be a negative in terms of its carbon footprint. So, mining naturally is carbon intensive. But when we speak about nickel there is the opportunity to improve and ultimately reach very low levels of carbon emissions, and in some cases have neutrality or negatives.

[13:28] Eric: So, I mean, just hearing that is good. Any other major concerns with mining when it comes to the environment?

[13:33] Robert Morris: Well, there always is but there's always remedies. Mining sometimes your stripping, stripping land, taking down trees. But from that perspective again-- and I always refer to Canada because Canada is a great jurisdiction for mining and regulations. So, here you have to rehabilitate all of the land that you disturb once the mining has been completed. I've seen this in action in Sudbury when I worked for Valley. It's incredible how they do that. Other emissions, there's a lot of mines and smelters, refiners, there's S02. But there is technology that's in place and that's actually mandated by the government to capture most of that. So, the levels that are being emitted today are extremely low.

[14:29] Eric: For an industry that has been viewed as a problem re-carbon emission, this is a serious revelation. Nickel not only empowers the end solution in the form of battery tech, it can also create unique carbon capture benefits within the mining process itself, win-win. But let's for a moment focus on the battery tech story specifically, because let's face it, people which investors are, are typically more attracted to the end user applications. So, Mr. Morris, can you please share with us your thoughts on the EV battery space? Who are the big players out there and where do you see things trending?

[15:02] Robert Morris: So primarily, the battery space, this is an interesting topic because it has implications for the entire electric vehicle supply chain. The battery side is dominated by Asia, particularly South Korea, China and Japan. In South Korea, you have LG, you have Samsung. In Japan, you have Panasonic. And in China, you have a very large battery producer, the world's largest, which is CATL. And they are leading in terms of the [inaudible 15:40] lithium batteries that have been produced globally today. That is the status quo. But what we're seeing is a big push within the European Union and within North America to have these, which everybody's familiar with Giga factories installed in these locations. Now, some of them, these Giga factories that are going to be in Europe in the US will be owned by these companies that we just spoke about. But there is also a lot of homegrown battery technology companies that are about to go into production. And eventually they could be competitive with the Asian companies. Also, there's a big concern from the car companies. We call them OEMs. You have Volkswagen and you have GM and you have Ford. All of those companies consider battery technology to be core to the company. And that's because the battery itself-- if you don't have it, you don't have a car. And like old internal combustion engines, having the better technology means that you have a better marketing ability to move these electric vehicles. So, battery technology is essential. I mean, at Tesla, we know that and Tesla's been talking about this for 10 years and putting their money where their mouth is and developing their own battery technology and eventually having their own battery production. The legacy carmakers as we call them today, have come to realize that and they're also spending a lot of r&d money on developing their own battery technology that they can put into production in the future. So, when you're talking about from now, through the next 10 years, I would say that Asian companies will still be very strong. But you will see the North Americans and the Europeans and the rest of the Western world catch up in this regard, because it's considered so critical to the car companies themselves.

[17:52] Eric: Right. It almost seems like the wild west right now. Like if you get in, and really pay attention and do your legwork, you can find some great success when it comes to these markets.

[18:02] Robert Morris: Absolutely. This is the Wild West, this is once in 100-year phenomenon

[18:08] Eric: Really.

[18:08] Robert Morris: And I'm not just talking about automotive, I'm talking about in a larger scale. I mean, we had the internet which of course shook up the world, for sure. But we're looking at a similar transition here. We've had these internal combustion engine cars for over 100 years, and we're implementing electric vehicles that will require the supply chain itself to be turned on his head. And there's going to be a lot of casualties as well as opportunities in this space. A lot of traditional car parts manufacturers will simply not survive. But on the other hand, you're going to have opportunities in the battery space, in the software that's going to be required for autonomous driving. All of these things, you're going to see a massive amount of opportunities. I focus particularly on the metals and minerals side of things, which we're seeing, like I mentioned before, the revolution of sorts in things like supply and demand fundamentals over the next decade.

[19:16] Eric: I have to admit; the Wild West sounds equal parts exciting and terrifying. But I guess that's what change is. And there's no escaping the fact that when it comes to clean energy and saving the planet, things most definitely need to change. But because this is an episode about investment, let's focus for a moment on something more synonymous to investment, I'm talking money. Robert, tell me as a newly converted nickel investor, where do you see the price of nickel in say 10 years from now?

[19:43] Robert Morris: If I knew that I probably wouldn't be talking to you right now. I'd be sitting in a beach somewhere in the Maldives. But if you look at the way things are going, if you look at the data that is presented, the data is forward looking so it's always difficult to draw a definitive conclusion. But if you look at even the median projections of growth for nickel over the next 10 years, the growth is astounding. And we don't or I don't believe, I think this is a consensus that at some point along this 10-year continuum, we're not going to have enough nickel. And it's going to have a corresponding impact on price. So, you could see $30,000 per metric ton. You could see 35 or $40,000 per metric ton, we don't know.

[21:26] Eric: There is no disputing the EV and electrification movement or revolution, if you will it's happening. Just as there is no disputing the investment potential there in-- as Mr. Morris pointed out earlier, this is a once in 100 years kind of phenomenon, Allah the internet, but it's also a little like the wild west out there. And there is still a lot of uncertainty when it comes to investment winners, losers and so on. One thing that we know for sure, is that electrification relies entirely on the supply of key materials. And at the top of that list is nickel. Historically, we've seen investors clamor for the next big battery tech or renewable energy opportunity, but they tend to avoid mining due to stigmas and misconceptions, etc. That's changing. Better information regulation, innovation, and yes, investment is giving mining the attention it deserves within the broader clean energy story. And as we said before, you can't have electrification without nickel, and you can't have nickel without mining. In our next episode, we're going to focus in on the EV and electrification revolution. As we look to learn a little more about the why and why nickel and how going electric might be more than just the smartest option available. It may become the only option we have to move forward.

Thanks for listening to the charge podcast. Make sure you catch our next episode by subscribing or following our show on Spotify or Apple or wherever you get your podcasts.
For more info, visit thechargepodcast.com or follow us on LinkedIn [https://www.linkedin.com/company/the-charge-podcast/] and @The_Charge_Pod on Twitter.
And if you feel so inclined, please leave us a review at Apple Podcasts and Spotify. We love to hear from our listeners.
The Charge is a Giga Metals [https://gigametals.com/] Podcast, produced & marketed by Podium Podcast Company [https://www.podiumpodcastco.com/].