Thursday, April 22, 2021

ICYMI: "The king of nickel is betting big on a green future in batteries"

 No, not Kyle Bass, though as far as I know he still has his nickels.*

From Bloomberg, March 14:

Tsingshan Holding Group Co. made numerous bold moves on its path to becoming the world’s largest nickel producer, but its new plan to supply carmakers with cheap, clean metal could be its biggest breakthrough yet.

The Chinese company shocked the nickel market twice this month by targeting two significant challenges for makers of electric vehicles and their batteries: first, getting enough nickel, and second, ensuring it’s delivered in a climate-friendly way.

Tesla Inc.’s Elon Musk has said nickel is the metal that concerns him most as he looks to scale up battery-cell production, and last year he promised a “giant contract” for miners to encourage production. Without new sources of supply, the robust EV industry could face a critical shortage within a few years.

“You have, essentially, a market that will grow exponentially in size, but you don’t want to inhibit growth by running short of feed,” said Michael Widmer, head of metals research at Bank of America Merrill Lynch. “What we’re seeing in nickel is Tsingshan trying to resolve those issues.”

Teaming up with Tsingshan would appear to be an obvious choice for Tesla and rivals, but they aren’t just looking for cheap, abundant nickel — they want it to be green, too. Nickel is a dirty industry, and Tsingshan’s rise was driven largely by its development of a low-cost production process that’s also extremely carbon-intensive.

Its vow to be greener dramatically demonstrates how the fight against climate change is forcing producers with poor environmental records to find new solutions for more discerning customers. Tsingshan’s financial might and history of innovation suggest that, within a few years, it may emerge as a top supplier of green nickel.

“Tsingshan vigorously upholds and promotes energy conservation, emission reduction, and a low-carbon-footprint environment,” the company said in a statement. “Clean energy produced will be used mainly to power the production of raw materials required for the batteries used in electric vehicles.”

Tsingshan also benefits from solid government support in Indonesia after helping transform the archipelago into a heartland of nickel and stainless-steel production. Now, officials there are courting investments from Tesla and other key players in the battery industry to make sure it plays a similarly critical role in the EV revolution.

The question is whether Tsingshan’s pivot will be sufficiently green to both unlock the investment and solve Tesla’s looming supply shortage. Tesla didn’t immediately respond to requests for comment.

Tsingshan’s announcements this month lengthen a list of commercial and technological breakthroughs that upended metals markets. The closely held company is owned by a husband-and-wife team, Xiang Guangda and He Xiuqin, and got its big break in the late 1980s with a business making frames for car doors and windows in China’s eastern city of Wenzhou.

Tsingshan is credited with pioneering the large-scale use of nickel pig iron, a semi-refined product and low-cost alternative to the pure metal, to make stainless steel.

Its also benefited from a decision to invest in Indonesia during the 2000s. At the time, the nation’s nickel reserves were unproven, making it a risky move. Now, Indonesia is the largest producer, and Tsingshan runs nickel pig-iron plants and a stainless-steel complex in Sulawesi.

In recent years, it’s been building plants that use acid to make nickel chemicals for batteries, but progress on that path has been slower than planned.

Tsingshan jolted the market earlier this month by saying it planned to make the battery-grade metal using an alternative process, refining it up from materials previously reserved only for stainless steel. Prices subsequently suffered their biggest two-day slump in a decade as investors factored in the additional supply, but there also were immediate concerns about the environmental impact of the process, which relies on vast amounts of coal-fired power....


Have I mentioned the Chinese are not just the largest battery producers but have tied up the EV battery materials supply chain? Why yes, yes I have.

And many, many more.

*2013: "Is Hayman Capital Management's Kyle Bass About to Get Crushed in Physical Commodities?":
However, his plan for world domination may be delayed a bit. Here's the story.

Back in October 2011 the news hit the wires (well, the Daily Mail) that, according to Michael Lewis' then-latest book, Boomerang, Mr. Bass had taken delivery on 20 million nickels, $1 million dollars worth....

2013: "Another Look at the Kyle Bass Nickel Trade"

2019: "Hedge-fund manager Kyle Bass on decade-worthy investments, trade talks and that nickel collection"