Nickel supply isn’t what you think The US nickel supply chain is vulnerable. Indonesia, with the help of heavy Chinese investment, has become the
Nickel supply isn’t what you think
The US nickel supply chain is vulnerable. Indonesia, with the help of heavy Chinese investment, has become the world’s largest supplier of the critical metal producing more than 40% of the market, and on track to produce 70% of global production in the coming decades Indonesian nickel goes to meets China’s need first.
This unhealthy concentration puts the nickel supply chain at risk and nickel consumers like the United States in an untenable position.
“Nickel is needed for the development of the electric vehicle sector, which is going to benefit the environment and the path to greening the global economy and meeting climate change targets,” said Jason Sappor, Senior Analyst at S&P Global Commodity Insights.
Considering America’s current geopolitical tensions with China, it needs to bring domestic nickel production online quickly. The demand for nickel is expected to balloon over the next twenty years. In fact, the US alone anticipates a substantial nickel demand increase for EV batteries, with an expected growth of 211,000 metric tonnes betwe2023 and 2028.
One of America’s largest nickel deposits
Alaska Energy Metals (AEMC.V), a north American mineral explorer, is currently sitting on approximately 8.1 billion pounds of nickel (3,9 billion pounds at the higher-confidence Indicated category and 4.2 billion pounds at the Inferred) with its flagship Nikolai Project located in the Alaska interior.
To give some context, according to Statistica, the world consumed 3.1 million metric tonnes of nickel in 2022. This is roughly equivalent to Nikolai’s total indicated and inferred resource estimate. Alaska Energy Metals could become a major domestic source of this critical metal.
What is even more impressive is the tremendous resource expansion potential at Nikolai, and for the discovery of high-grade nickel – copper – platinum group element mineralization.
Boots on the ground
On completion of the company’s 2023 exploration program, which resulted in their February 2024 43-101 compliant resource estimate, AEMC also identified four high-grade Ni-Cu-PGE prospects (Canwell, Odie, Glacier Lake and Emerick) that warranted drilling.
AEMC launched a follow up 1,200 metre drill campaign in July focused on targeting these high-grade nickel zones. If successful, these drilling efforts could reveal higher concentrations of nickel, which would greatly improve the project’s economics and viability.
The Nikolai deposit already has over 8 billion pounds of confirmed nickel, but CEO Greg Beischer says there could be a lot more, “The deposit looks like it could get substantially bigger as well, as it’s open and can be extended through further exploratory drilling in both directions and even in the down-dip direction deeper into the ground.”
The Canwell prospects, which are close by the Eureka deposit, have shown signs of very high-grade, massive sulfide nickel on the surface. As high-grade massive sulfide nickel deposits are rare, a discovery of this type could break things wide open for AEMC. If near-surface deposits are discovered it would allow rapid capital payback, improving project economics and significantly accelerate the project’s development.
Freedom to explore
Mineral exploration is expensive and can dilute shareholder value as juniors go to market with offerings to finance their campaigns.
AEMC is working to sidestep that undesirable outcome as it has applied for over $29 million in grant funding under the US government under the Defense Production Act. If granted, this funding would seriously propel AEMC’s exploration activities without the adverse dilutive financing.
Nothing is for sure, but company CEO Beischer commented on the process in a recent interview, “… I think we have an excellent chance of getting these grants and it would be absolutely transformative for the company… We’ve hired experienced, connected consultants that know how to guide our application through the selection process.”
Strong Government Support
Alaska Senators Lisa Murkowski and Dan Sullivan who represent the state in Washington DC are ardent proponents for critical and strategic metals development in Alaska.
This government support combined with the U.S. Air Force’s “Arctic Strategy” which “recognizes the immense geostrategic consequence of the region and its critical role for protecting the homeland and projecting global power,” could be beneficial not only in securing the aforementioned grants but also in streamlining the permitting process for the project.
Now is the time
Now is a good time for contrarian investors to consider investing in nickel producers and nickel development companies like Alaska Energy Metals, as nickel prices are relatively low. As the metals market is typically cyclical, past cycles, like uranium have benefited early investors who went in on the tail end of the downturn with significant gains on the upswing.
AEMC is still cheap considering what it already has under the hood, but with the on-going drill program, potential new discoveries and the possibility of receiving substantial grant funding all make this a critical time for investors to pay attention to Alaska Energy Metals.
In conclusion
In a global nickel market, which is expected to reach $83.77 billion USD by 2034, AEMC is poised for significant near-term developments, which could rapidly increase its value and attract more interest from both the retail and institutional investment community, leaving late comers to pick through the crumbs. Don’t be one of them, join AMEC’s journey today!
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