[00:01] Eric: So here we are, six episodes in and we've talked about everything from battery cathodes to saving the planet to making money. But there's one thing in particular that we should take away when it comes to nickel in the electric revolution. You can't have one without the other. As the world clamors for more nickel to fuel our EV needs and dreams, the spotlight falls on those holding the biggest nickel deposits, mining companies.

So when you're talking about finding the big opportunities in this space, this is where you need to look because this is where the nickel is. It's as simple as that. Of course, not everything obvious is necessarily simple or clear cut. When you're talking about overhauling one of the world's biggest industries, things can get a little complicated and it can take time to see the forest through the trees.

But as everyone was taking their time, nickel prices blew up and the market essentially broke. So, it seems time is up. We spoke with Mark Jarvis about this, the CEO of Giga Metals, a Canadian mining company with one of the world's largest undeveloped resources of sulfide nickel and cobalt. He shared the point of view of a mining company in these incredibly volatile times and how it feels to suddenly have a whole lot of attention from a whole lot of important people, a.k.a. the ones with a whole lot of money.

Here's some of that conversation So, Mark, tell me this. The world needs more nickel and well, you seem to have a lot of it. So, what's it like being in that position? What's a nickel mining company perspective on everything that's happening in this booming space right now?

[01:20] Mark Jarvis: Well, it's an extremely interesting time right now. Just a step back a little what we've got here is an extremely large deposit of nickel and cobalt and sulfides in Canada that has economics that are marginal at the low end of the nickel price range or what the price range has been. And so, we spent ten years in the wilderness with this project because we were just out of the money.

Then the rise of electric vehicles has led to increased demand for nickel. And people are looking around for deposits because more nickel is needed for electric vehicles. And you've got a group of deposits around the world that are big enough to make a difference, including ours and that have poor economics at the lower end of the price range.

That's why they're undeveloped. But now you've got the price of nickel moving up to a price range that can get these projects developed. Otherwise, you couldn't have an electric revolution if you don't have these deposits.

Eric: Right. Yeah.

Mark Jarvis: So that's happening. And then people are also looking at well, what's the difference between the deposits? Now, I'll say I've got the best deposit in the world.

I'm extremely biased. But they're also looking at comparing the deposits in terms of things like carbon footprint and environmental impact. And it gets into a very interesting discussion because if I buy an electric vehicle, am I really saving the planet? And the answer is it depends. It depends where the raw materials for that car come from.

I mean, if your raw materials are coming from a jurisdiction like, say, Canada or Australia or Europe, you're dealing with jurisdictions that have higher environmental standards. And so, you've got baked in that you're not destroying the planet by mining these materials. If you're in a jurisdiction with lower environmental standards, well, that's quite different. And so, when I look at the competition, if you will, I mean, we are a giant low grade sulfide nickel project and there are others like that in the world, including in Canada.

But the other main source is high pressure, high temperature ice of leach projects in places like Indonesia and Papua, New Guinea. And these are strip mines. In order to get the nickel-- these are strip mines and a lot of these projects are owned by the Chinese. And so, to get the nickel and cobalt out of the clay and dirt, they're mowing down in some cases not all cases.

I mean, there's all sorts of different mines and everyone is different. But in a lot of cases, they're mowing down tropical rainforests to get the dirt and when you look at islands and the biodiversity of tropical islands, I mean, you can have a whole ecosystem with species in one valley. The next valley over is completely different species.

And so as they mow down these tropical rainforests to get it, the nickel cobalt, how many species are being destroyed? Like nobody's monitoring this stuff but it's pretty ugly. And then they process this dirt and clay and then they dump the tailings into the ocean. What's happening there? Nobody really knows. And so, if that's your source of nickel, boy, you're not saving the planet, you're mowing down tropical rainforest. What are you thinking?

Also, the nickel that's produced in these areas, like a lot of the power is provided by coal. And so, you've got these enormous carbon footprints to produce the nickel and the cobalt as compared to Canada, where we've got tough environmental regulations. We think we've got a shot at being a carbon neutral mine.

[05:21] Eric: That sounds incredible. I mean, it's great that Canada and I'm sure others are doing a good job where the environment is concerned. But it's definitely scary when you think about the lack of regulation globally.

[05:33] Mark Jarvis: Yeah, absolutely. But your question also highlights something else, Eric, which is that geopolitical risk is real. People think about geopolitical risk but they don't think about it much until something like the war in Ukraine happens. And so, it kind of underlines I mean, if you're going to build your supply chain and you're relying, if you're a car company, if you're relying on China for your batteries or if you're a battery company, you're relying on China for your inputs of nickel and lithium and so forth, well, what happens if China decides to invade Taiwan? And this is kind of theoretical but you know that they really want to invade Taiwan.

[06:16] Eric: Yeah. Yeah.

[06:18] Mark Jarvis: So, what happens then? And so, people are kind of figuring out their supply chains and going “It would be better if my supplies were coming from closer to home for one thing, and with less geopolitical risk.” Let's have our supplies from stable countries that rely on the rule of law. Our challenge compared to deposits in jurisdictions with less stringent environmental assessment is that we've got a three-year process to go through an environmental assessment.

And that makes us uncompetitive with other jurisdictions. However, it also is a good thing. So, I don't mind that I'm just pointing out that in pure financial terms, it's not competitive. And I think there's maybe a middle ground here. If you look at Australia, they've got a strong environmental assessment process, but it doesn't take them three years to get it done.

So I think Canada could be taking a closer look at how we do a proper job with the environmental assessments but also not take quite so long with it? I think it's possible to do both.

[07:37] Eric: Yeah, you'd hope so. Okay. You mentioned that there are a number of undeveloped deposits out there including yours that could make a big difference in meeting the world's nickel needs. So as the price and demand for nickel goes up and the economics start to make more sense, what has to happen next? How does a million company build a billion dollar mine?

[07:55] Mark Jarvis: That's really a core question, Eric, and it's really a core question in our industry. Because frankly, the large companies are generally not good at finding things. So, they're not good at exploration. They're not set up for it or they don't reward exploration success. They don't reward risk-taking. So as a result, the small companies in general are the companies that find things and take the chances.

And if you find something great, you've got options and you can get an outsized reward and so forth. So, it does happen again and again where you've got a very small company finding an extremely large resource and now figure, okay, now what? How do I develop this? For us, we've got about a $40 million market cap.

We're kind of trading sideways and I think to get from where we are to where you got to actually start building this, you're going to have to spend another. And the numbers keep changing because there's inflation going on right now. But let's say somewhere between 40 and $50 million just to get through all of the engineering work you need to do plus to get through the environmental assessment.

That's also not true. Where in Canada which has very high environmental standards and so getting through an environmental assessment is time consuming or expensive and so forth. Put it all together and we're looking at spending $40 or $50 million just to get to the point where we can start building [09:30?]. So, to answer your question, how does a $40 million company build a $2 billion project? Well, the answer is you have to find the right partners.

[09:44] Eric: Makes sense. And how's that going for you?

[09:46] Mark Jarvis: I'm happy to report that people are actually starting to call us now. And it's interesting to me that it's taken a while for the end users to kind of do the math and figure out, well, okay, I've announced that I'm going to build these big giga factories, we're going to produce all these batteries, we're going to produce all these electric vehicles. And it's just now that they're starting to go, “Okay, well, wait a minute, where am I going to get my nickel?”

And also lithium. I mean, to me, lithium and nickel are the two choke points in this whole raw material supply chain. So, we're actually starting to get calls. We got a call just a couple of weeks ago from an unexpected source, a car company. And if you'd asked me a year ago, I would have said there's no way that any big car company is going to invest in a mining project because it's just so far out of their wheelhouse.

But they phoned us up and they're not the only ones. But they told me that they've announced that they're going to be building giga factories. And I said, “well how much nickel do you need?” And they said, “Well, North America, we need a hundred thousand tons a year.” And I said, “Well where do you think you can get this?”

And they said, “Well, that's the point.” I was talking to a guy who within the company is the champion of-- look we need to acquire raw materials, we need to be getting in there early because if you think about it, if you build giga factories and you don't have your raw materials figured out, you're going to have these multi-billion dollar warehouses full of expensive machinery that are sitting idle because you can't make batteries without nickel.

At some level, they're realizing, my God, I don't think there's enough nickel around. And some of them, the most advanced car company that I'm aware of, they're actually starting to hire mining engineers, they're trying to hire mining engineers because they realize, my God, there's these people who specialize in evaluating projects. It's a slow process. I think what's going to happen is nothing, nothing, nothing.

[11:58] Mark Jarvis: And then all hell is going to break loose. All sort of stuff is going to happen all at once.

[12:03] Eric: But why is it been nothing, nothing, nothing when the need has been so obvious? And why now? What's finally clicked?

[12:09] Mark Jarvis: Well, I think these big companies, I mean, you can't, nothing happens quickly there. They're huge, huge bureaucracies. I think they finally did the math and they went, “Okay, if we need this much nickel and my competitor needs that much nickel and this much nickel is-- Okay. How much nickel is produced worldwide? How much of it is produced in a form that’s suitable to take to the cathode?”

And they've just done the math, and they realized, oh, my God, this electric vehicle revolution is dead in its tracks if we don't find more nickel and more lithium and more copper. I mean, but copper has a bigger market. The impact isn't as severe. But yeah, you're going to need a lot more copper as well. So, you have to think strategically.

You have to think five years out, ten years out and so forth. And frankly, my view, I'm not running a big car company. What do I know? But if I was running a big car company, I would be in a hurry to tie up projects. Because if you don't have your supply chain figured out ten years from now, you're not going to be in the electric vehicle business.

And if you're not in the vehicle business, in the electric vehicle business ten years from now, you may not be in the car business, but you may be out of business. So, to me, I look at this and I think, well, vertical integration is going to be a necessity for survival for these car companies. It just seems to me that that is obvious.

I've been involved with markets for a long time and it's not often that something is obvious. But every once in a while you get something where you go, “well, that's stunningly obvious.” And so, here's what you do. And here's how you make the money. So, I think this is one of those times. If you look at what's happened with the rise of electric vehicles that all of the people that have predicted how EVs would be adopted have been wrong.

The most bullish predictors, the ones with the crazy predictions were too low. I mean, that's what's happening. People are really enthusiastic. Everybody wants an electric vehicle and it's just happening so quickly. We're at the steep part of the hockey stick right now. And it's just a very interesting time to have the kind of asset that we've got. I'm just kind of sitting here in the middle of all this with a dinky little market cap and I'm seeing lights go on and nickel was out of favor for about a decade and we were kind of like a wallflower.

And then suddenly, with the rise of electric vehicles, everyone is starting to notice how wonderful we are. At the end of the day, I find myself sitting here in our big nickel deposit, we're trying to develop it. We're moving it along as best we can. And I guess we're just waiting for all the lights to go on.

[15:17] Eric: I don't think Mark and his nickel mining friends are waiting much longer. This whole thing is clearly happening now. The automotive world is starting to make its big nickel move. And while they have moved slowly so far, they're definitely going to make a big impact. As Mark said, if you're not in the electric vehicle business in ten years, you're not in the vehicle business, you're out of business.

And these companies are much too big, too powerful, too smart to let that happen. So, if you're a nickel mining company, start watching the phones. But get ready to answer some tough questions too. Because as Mark shared and as we learned in previous episodes when you're talking about nickel and electrification, it's all about what's beneath the surface. A little mining joke for you.

The electric revolution is about saving our planet and you can't do that without ensuring every step of the process is carefully considered and accounted for. That means 360 degrees total footprint. Questions matter, they're everything. How is the nickel being mine? What governance and regulations are in place? What are the geopolitical implications? The list goes on and on but then so do the opportunities.

So again, if you're in the business of nickel and you're also in the business of checking boxes where ESG and investors are concerned, get ready because the lights are coming on. Thanks for listening to The Charge Podcast. This concludes our series for now because clearly this nickel story is just getting started. So, stay tuned for more episodes by following our show on Spotify, Apple or wherever you get your podcasts.

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