More Solid Than Steel!

AN ELEMENTAL INVESTMENT: This One’s More Solid Than Steel!

When Tesla CEO Elon Musk voices his opinion, the world listens. After all, he’s one of the world’s wealthiest individuals and, of course, he knows a thing or two about the electric vehicle market.

So, it was nothing less than market-moving when Musk declared on social media, “Nickel is our biggest concern for scaling lithium-ion cell production. That’s why we are shifting standard range cars to an iron cathode. Plenty of iron (and lithium)!” It’s a stark statement, but that’s not out of character for the mercurial Musk.

Moreover, he wasn’t just venting on social media as Tesla actually invested in a nickel mine and signed a deal to buy $5 billion worth of nickel products in the country of Indonesia. All of a sudden, nickel was on the map as the most famous electric vehicle manufacturer was willing to pay billions for this underappreciated industrial metal.

The next thing you know, commodities investors are researching nickel and asking us how to trade it. They were so hyper-focused on lithium and copper that they overlooked one of the most essential minerals on the planet.

You may already be aware that nickel is an integral ingredient in stainless steel. Plus, nickel is known for its resistance to corrosion. Additionally, nickel is used in the semiconductor-manufacturing industry and, perhaps most significantly, nickel is crucial for the cathodes of electric vehicle batteries.

Most people hardly give much thought to nickel and its wide variety of use cases. It took a famous billionaire like Elon Musk to bring some much-needed attention to nickel, but now the cat is out of the bag and there’s no going back.

It’s amazing to consider that a multi-billionaire had to plead with nickel miners to produce more of it. Musk doesn’t just represent Tesla, though. His plea reflects the global underinvestment in nickel production in recent years. Both governments and private enterprise have dropped the ball on this, it seems.

This will only get worse if the underinvestment continues. Don’t assume that governments, which are typically slow to act where there’s a crisis, will solve the nickel problem. Sure, governments have mandates to build more electric vehicles, but they don’t understand what it takes to actually build those vehicles and the batteries that power them.

Of course, it didn’t make the situation any better when the COVID-19 pandemic happened in 2020, followed by Russia invading Ukraine a couple of years later. The mainstream media focused on how supply-chain disruptions would affect the oil and natural gas prices, since it’s always headline news if gasoline prices go up and electric bills skyrocket.

Yet, hardly any of the pundits on TV wanted to talk about the fragile supply-and-demand dynamic of nickel in the 2020s. The one-two punch of the pandemic followed by Russia’s invasion of Ukraine set off a domino effect that practically ensures a critical undersupply of nickel for years to come.

Even to this day, the media typically only focuses on oil, natural gas, and sometimes lithium. Occasionally they’ll mention copper, but the world simply cannot function without nickel.

Beyond Elon Musk shouting it to the rooftops (or tweeting it to the masses, to be more precise), what will it take to get governments and businesses ramping up their nickel production? It’s a process that has to start now, as miners can’t just snap their fingers and commence nickel-mining operations today.

It’s something that needs to happen now, so that humankind can have what it needs in the coming years and decades. So, don’t be too surprised if the imbalance becomes more severe, leading to significantly higher nickel prices.