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Activity in the Australian nickel industry has continued unabated over the last 18 months, said Angela Durrant of Wood Mackenzie.

Nickel prices have been trading with volatility in the past years, but the attention given to this metal key in electric vehicle batteries has been growing exponentially.

Demand from the electric vehicle segment is expected to continue to increase in coming years, although stainless steel remains the top market for nickel.

Despite the coronavirus pandemic, activity in the Australian nickel industry has continued unabated over the last 18 months, Angela Durrant of Wood Mackenzie told the Investing News Network.


"Rebounding demand for nickel in 2021, which is up an estimated 17 percent year-on-year, has supported prices ― which increased to push almost US$20,000 per tonne nickel in early August, up from an annual average of US$13,772 per tonne nickel in 2020," she said.

In terms of trends, the local industry has seen some successful and unsuccessful merger and acquisition activity, project development and vertical integration, as well as investment in exploration for the first time in years for companies such as BHP (ASX:BHP).

"The strength in demand and prices as well as the optimism surrounding nickel demand from the battery sector for electric vehicles has supported all of this activity," Durrant said. "In Western Australia in particular, many projects have moved forward."

Australia's production of nickel comes from 12 operating mines, all in Western Australia. The state is home to over 90 percent of the economic demonstrated reserves in the country.

Mincor Resources (ASX:MCR) is expected to restart its operations within the next 6-9 months and will feed the BHP concentrator at Kambalda, which is due to restart in March 2022. Western Areas (ASX:WSA) will start mining operations at its new Odysseus mine in the last quarter of this year and concentrate will follow towards the end of next year. Panoramic's (ASX:PAN) Savannah mine is also expected to restart before the end of the year.

When asked about the role of the government in helping miners, Durrant said there is always underlying support for the mining sector in Australia.

"What has been extremely challenging for this country's producers is the skills shortage that has occurred due to COVID-19 lockdowns and restrictions," the analyst said. "Mining operators are struggling to acquire the specialists required for normal operation and development."

She added that uncertainty around border closures, which have differed by state, has made the working environment difficult for producers dependent on fly-in fly-out workforces, resulting in higher labor rates following the pandemic.

EVs and nickel mining in Australia

The electric vehicle industry has been picking up pace in the past year, with raw materials used in batteries getting more and more interest from investors. Nickel has been no exception, with even Tesla's (NASDAQ:TSLA) Elon Musk calling for more nickel mining last year.

Nickel production takes place mostly in Indonesia and the Philippines, but Australia is also a top ten producer. The country's total nickel output reached 170,000 metric tons in 2020.

Going forward, Durrant is expecting more nickel mining to take place in Australia to feed the growing need from the EV space.

The expert pointed to some recent deals and news from the local sector, such as BHP announcing it has reached 85 percent sale of its nickel to the battery/EV sector, signing an offtake with Tesla in July.

Moreover, IGO (ASX:IGO) has vertically integrated, buying into lithium production at Greenbushes and lithium hydroxide at Kwinana, "meaning that the company is gearing itself towards battery manufacture, even if it is not directly doing it with nickel."

IGO is also looking to expand in nickel, recently mooting a plan to takeover Western Areas, which is about to start up the Odysseus mine.

"IGO's Nova mine is about half way through its life and if further nickel tonnes aren't discovered on the Fraser Range the company will need to source nickel elsewhere," Durrant said. "IGO attempted to buy the Savannah mine last year but was unsuccessful, so this recent attempt with Western Areas is not surprising."

In terms of nickel processing, the BHP Nickel West assets, formerly Western Mining, remain fully integrated, from mines through to concentrating, smelting, refining and now nickel sulphate production at Kwinana. The company is expanding and investing in exploration for the first time in years, Durrant pointed out.

"Many of the other miners in WA have been able to sell their concentrates and ores directly to BHP under long-term offtake agreements," she said. "They have also been able to sell concentrate to China and elsewhere in Asia, which is another advantage for these producers, having Asia on the doorstep."

Commenting on Australia's challenges to process nickel to be used in batteries, Durrant explained that sulphide mining and processing is relatively straightforward, while processing of laterites is far more complex and capital intensive.

"Laterite deposits such as Cleanteq Sunrise and SCONI are still looking for funding, these projects are expensive to develop and often take some time to reach nameplate capacity and steady state operation," she said. "Murrin Murrin in Western Australia has been successful, but only after many years, while Ravensthorpe has been a difficult project in many aspects."

For Durrant, another disadvantage for all miners in Australia is the depletion of grade and scarcity of deposits.

Partnerships in nickel

As OEMs look to produce electric vehicles from sustainably sourced nickel, Durrant expects more supply deals to take place.

"However, if consolidation occurs in the domestic industry this would likely change the number of deals that are penned going forward."

BHP is already signed up to sell nickel to Tesla, while Western Areas is in talks with LG and Samsung ― and has already sold its Mill Recovery Enhancement Project product to Sumitomo ― as are many of the other producers.

"Many have already had long-term offtakes with the likes of Jinchuan and Tsingshan so these relationships are already well established," Durrant said. "I have no doubt that these connections to markets and supply chains outside of Australia will continue."

For Durrant, the challenge for BHP will be to secure a long-term offtake agreement with a battery-precursor producer to take its nickel sulphate product.

"There is no market of last resort for this intermediate product and so it is essential to have a buyer, otherwise one would be forced to sell into China's spot market which will not likely offer a premium," she said. "When you produce nickel metal this can always be sold to the LME which can provide somewhat of a safety net for producers."

Don't forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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Gold isn't all that glitters in the land down under — silver in Australia is a major industry, and the country is home to both large and small players.

When it comes to precious metals, Australia has long punched above its weight — the nation was born riding the wave of a gold rush.

Gold isn't all that glitters through — Australia is also a major global producer of silver. It's among the 10 top producers, and was ranked seventh in 2020, with 1,300 tonnes coming from the many operational mines in the country. By comparison, the world's top producer, Mexico, produced 6,300 tonnes that same year.

Other key players in the silver market are Peru, China and Russia, which produce more silver than Australia, and the US, Argentina and Bolivia, which produce less.


Australia is sitting on quite a lot of the precious metal, with the world's second largest reserves, behind only Peru.

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Overall, Australia is well explored when it comes to silver, and since the mid-1800s it's had a constant stream of silver production. Aside from that, the country boasts metals-processing facilities in South Australia that separate the precious metal from its commonly mined counterpart metals, lead and zinc.

Silver companies in Australia

Those looking at the Australian silver market have options. There are plenty of big players with interests in Australian silver, and many smaller players for investors to consider researching too.

Most silver comes from mines dedicated to other metals — Glencore's (LSE:GLEN,OTC Pink:GLCNF) Mount Isa in Queensland produces mainly copper, zinc and lead, but silver is separated by the company's integrated processing streams. Glencore also operates the McArthur mine in the Northern Territory, which is primarily zinc, but between its copper and zinc assets, Glencore produced 7,404,000 ounces of silver in Australia in 2020 — over 200 tonnes.

Elsewhere, BHP (ASX:BHP,NYSE:BHP,LSE:BLT) produces a lot of silver as well at the Olympic Dam operation in South Australia. Perhaps best known for the production of uranium and copper, it also yields significant silver resources to the tune of 984,000 ounces in 2020 (or almost 28 tonnes).

According to Geoscience Australia data from 2016, over 20 mines in Australia produced silver in that year, while there are dozens of other resources identified in each state.

A primary producer of silver is the Cannington mine in Queensland, where South32 (ASX:S32,OTC Pink:SHTLF), a company that was spun off from BHP in 2015, mines silver and lead. Cannington is a big one, producing 11,792,000 ounces in 2020, or 334 tonnes of silver.

Tasmania boasts the Rosebery mine, which has seen 85 years of continuous operations and is currently owned by MMG (ASX:MMG,HKEX:1208). Rosebery, like all the others here, is polymetallic, and besides silver also produces copper, zinc, lead and gold. MMG also has the Dugald River mine in Queensland which also produced silver.

Getting into smaller companies, there are those like New Century Resources (ASX:NCZ) which restarted the Century mine in the Northern Territory for zinc and silver.

The future of silver in Australia

So, you get the picture — there's a lot of silver to be mined in Australia by way of mining everything else.

It's worth noting that because silver operates both as a precious and an industrial metal, and is mined most often alongside base metals, it can be pulled in many directions. However, it traditionally follows (and lags behind) its precious metal sibling, gold, making it a valuable investment commodity to keep an eye on.

Looking forward, the future of the commodity in the land down under — especially given Australia's significant reserves and operator diversity — is as bright as you'd like it, and depends on what investors are most interested in, given the by-product nature of the metal.

Don't forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.

Australia took a stand against Facebook and Google earlier this year, and the move could have long-term implications for tech investors.

It was a ban that sent Australians wild and had the whole world watching.

Back in February, Facebook (NASDAQ:FB) stopped users in Australia from posting news in a week-long blackout, reacting to proposed legislation that would have forced the social media behemoth to pay publishers for content.

What prompted Facebook to "friend" Australia again, and what are the potential long-term implications of the squabble? Read on to learn what tech-focused investors in Australia should know about the situation.


Australia squares off against Facebook

On February 25 of this year, Australia's federal government passed the News Media and Digital Platforms Mandatory Bargaining Code. It was developed after extensive analysis by the Australian Competition and Consumer Commission, and is aimed at ensuring that news media businesses are fairly remunerated for their content.

It stipulates that digital platforms such as Facebook and Google (both named in the documentation) must pay news outlets whose content they feature — for example, if content is shared on Facebook or shows up in Google search results. The idea is that this will help to sustain journalism in Australia.

Unsurprisingly, Facebook and Google didn't react well to the code, which was first introduced in 2020.

Google didn't make any moves after it passed, but Facebook quickly made it impossible for Australian users to share news content, and pages for both local and international news organisations went blank — a major concern given the COVID-19 and wildfire concerns that were circulating at the time.

Australian Prime Minister Scott Morrison was scathing about Facebook's decision — which he ironically shared in a Facebook post — declaring the tech giant's actions "as arrogant as they were disappointing." He added, "These actions will only confirm the concerns that an increasing number of countries are expressing about the behaviour of BigTech companies who think they are bigger than governments and that the rules should not apply to them."

Despite strong feelings from both Australia and Facebook, the dispute was resolved fairly quickly, with the country agreeing to make four amendments to the legislation and Facebook restoring Australian's access to news.

Implications for Big Tech and news organisations

Both Australia and Facebook have claimed victory in the dispute, with a Facebook representative saying the company will be able to decide if news appears on the platform — meaning it won't automatically have to negotiate with any news businesses. Changes were also made to the arbitration process.

Tech experts have pointed out that larger news companies may ultimately benefit from the changes, but smaller ones could be pushed to the side. Major publishers that have struck agreements with tech giants, such as News Corp, Nine Entertainment (ASX:NEC,OTC Pink:NNMTF), Seven West Media (ASX:SWM) and Guardian Australia, may be able to increase their market share while smaller independent players lose out.

A business that is in full support of the laws is Microsoft (NASDAQ:MSFT). During the conflict, President Brad Smith came out loudly in favour of Australia's law, and advised that his company is willing to step up with search engine Bing should Google and/or Facebook pull out of the Australian market.

"In Australia, Prime Minister Scott Morrison has pushed forward with legislation two years in the making to redress the competitive imbalance between the tech sector and an independent press. The ideas are straightforward. Dominant tech properties like Facebook and Google will need to invest in transparency, including by explaining how they display news content," he said in a blog post.

"The United States should not object to a creative Australian proposal that strengthens democracy by requiring tech companies to support a free press. It should copy it instead."

Global reach and tech investor impact

Six months down the road from Australia's landmark legislation, it's tough to say what the long-term impact may be.

That said, market watchers do believe the country is part of a new precedent of forcing Big Tech into paying for journalism — something giants Facebook and Google are not used to.

Countries looking to pursue similar legislation include Canada, where Facebook agreed in May to pay 14 publishers to link to their articles on its COVID-19 and climate science pages, as well as other unspecified use cases. Canada is pursuing other avenues too. Meanwhile, in France, Google said it will pay publishers for news content after the country took up new EU copyright laws that make digital platforms liable for infringements.

For investors, the takeaway is perhaps that while companies like Facebook and Google may seem too big too fail, they too can fall subject to new regulations that can change how they do business. As nations around the world look to take back control from these mega companies, it's important to be aware of possible effects on their bottom lines.

Don't forget to follow @INN_Australia for real-time updates!

Securities Disclosure: I, Ronelle Richards, hold no direct investment interest in any company mentioned in this article.

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