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Editorial Coverage: Growth in demand for batteries is pushing
up nickel production and economic change in Indonesia.
- Nickel is an essential component in batteries, including those
for cars and phones.
- Demand for metals is growing, most importantly in China, a
major battery manufacturer.
- Indonesia is the world’s largest nickel producer.
- The country is working to expand its manufacturing sector,
attracting investment from multinational industry and mining
giants.
To view an infographic of this editorial, click here.
Pacific Rim Cobalt Corporation (OTCQB: PCRCF) (CSE:
BOLT) (PCRCF
Profile) is making the most of
Indonesian nickel through an aggressive exploration and development
program there. VALE S.A. (NYSE: VALE), the world’s
leading nickel producer, is also invested in Indonesia.
Lundin Mining Corporation (TSX: LUN) (OTC: LUNMF),
another leading nickel producer, relies on sources in America and
Europe. Cobalt 27 Capital Corporation (TSX.V: KBLT) (OTCQX:
CBLLF) has recently acquired access to a significant
Pacific nickel resource in Papua New Guinea. One of the major
drivers behind this demand for batteries is car production by
companies such as Honda Motor Company Ltd. (NYSE:
HMC), which is moving more of its work to China.
Building Better Batteries
The past twenty years has seen the demand for battery materials
rise like never before. Mobile phones, laptops and hybrid cars are
spreading around the world, along with a host of other electronic
gadgets. All rely on batteries for their power, causing a spike in
demand for the minerals used in these batteries.
This upward movement has created an opportunity for countries
with rich nickel deposits, such as Indonesia. By reforming laws and
opening up the sector to foreign investors, these countries are
seeing a boost to their economies and growing influence on the
global stage. The growing demand also creates promising potential
for savvy companies who are willing to seize the opportunity to
mine Indonesia’s mineral wealth.
The Need for Nickel
For mineral exploration companies such as Pacific
Rim Cobalt Corporation (OTCQB: PCRCF) (CSE: BOLT),
there’s never been a better time to work on nickel. Two trends are
buoying up demand for battery minerals — green energy and high-tech
gadgetry. Between them, these two trends are ensuring that the
future is busy for nickel companies.
People around the world today live increasingly connected lives,
thanks to the proliferation of electronic gadgets. From smartphones
to laptops to watches that track fitness, first-world consumers and
the rising middle class of the rest of the world are using portable
technology around the clock. The portability of these powerful
devices is made possible because of their rechargeable batteries,
which rely upon elements such as nickel to work.
At the same time, the push for greener living is also giving
batteries a boost. Electric and hybrid cars use powerful batteries
in place of petrol or diesel — batteries that are essential for
self-driving and driver assistance technology. National energy
production networks, which increasingly use renewable energy to
reduce pollution, need power storage solutions to see them through
the ebb and flow of solar and wind power. Mining companies such as
Pacific Rim Cobalt are emerging as vital parts in the creation of a
cleaner environment.
For Pacific Rim Cobalt, this means continued development of the
project with the goal of eventually producing cathode materials
such as nickel to meet growing demand. Though tensions over
President Donald Trump’s trade wars have softened metal prices in
the short term, longer-term needs are essentially immune to
presidential policies. Across Asia in particular, demand for
battery materials keeps rising, and the market’s long-term strength
seems assured.
Indonesia: A Nickel Powerhouse
To make the most of this market, Pacific Rim Cobalt has been
operating in Indonesia, the largest nickel-producing nation in the
world. With cobalt being a byproduct of nickel production,
Indonesia remains in the running to potentially become the largest
source of this critical battery mineral outside of Africa.
The Cyclops Project, located in northern
Indonesia, is the current focus of Pacific Rim Cobalt’s nickel
operations. The project is in its early stages, with 20 step-out
holes already drilled to gather information about the mineral
resources in the region. The company has just announced (June 6)
the commencement of Phase 2 drilling at Cyclops with a goal of
completing up to an additional 50 holes. Combined with historical
estimates, this information will allow the company to establish a
maiden compliant (NI 43-101) resource on the project and determine
how best to go about extracting those resources. Up to this point,
drilling has confirmed elevated nickel and cobalt values,
demonstrating a potentially highly profitable mining site.
The Cyclops site was carefully chosen from among available
options in Indonesia. “The Cyclops Project was acquired following
extensive due diligence on over 40 projects across Indonesia,” said
Pacific Rim CEO Ranjeet Sundher. “We expect the near-surface nature
of cobalt and nickel mineralization at the Cyclops Project will
lend itself well to low-cost, logistically straightforward
drilling. We anticipate the opportunity to undertake a resource
calculation study, as well as ongoing metallurgy and process option
testing, will present itself in the near future."
The abundance of mineral deposits isn't the only thing that
makes Indonesia and, in particular, its north coast an attractive
place for nickel mining. It’s also location. Close to China,
Indonesia is in an ideal position to supply its neighboring
country’s huge battery-production market. Chinese batteries play an
essential part both in their home country’s embrace of modern
technology and in exports to the rest of the world. Chinese
companies are becoming leaders and innovators in telecoms and
electric cars, making this an important market for nickel
producers.
Good transport links are key to making the most of mineral
extraction. Whether it’s the solid road connections around Pacific
Rim Cobalt’s project or the maritime trade connections between
Indonesia and China, these dynamic elements ensure that Indonesia —
and the companies working within the country — can make the most of
its mineral resources.
Opening Up Markets
Indonesia, however, has set its sights on becoming more than
just a resource base. The country’s Industry Minister, Airlangga
Hartarto, has identified a bold agenda. The government’s plan is
to build Indonesia into a regional manufacturing
powerhouse, turning its own raw resources into consumer goods.
This strategic move could create even more opportunities for
companies already in the country, such as Pacific Rim Cobalt.
The government’s goal is not just a grand statement of intent.
Plans are afoot to revise labor laws and open up various parts of
the economy to foreign involvement. These moves are expected to
make the country even more attractive to investors, whose money can
drive the development of the manufacturing base.
The abundance of nickel ore will be one of the
draws for these investors. This rich resource will remain a
unique selling point for Indonesia, as manufacturing within the
country appears certain to reduce transport costs associated with
acquiring the mineral and allow greater efficiencies in the
end-to-end battery production process.
With ongoing demand from China and the development of strong
internal markets, nickel companies working in Indonesia almost
certainly will see demand for their products continue to rise. By
tapping into buried deposits, both Indonesia and the companies
operating in the country appear certain to profit. This promising
future is what companies such as Pacific Rim Cobalt are banking
on.
Pushing Up Nickel Production
Another of the companies heavily invested in Indonesia is
VALE S.A. (NYSE: VALE). The world’s leading nickel
producer, Vale is pumping billions into its Indonesian operations,
with the aim of unleashing the country’s potential for both nickel
and cobalt. The company also has extraction operations in Brazil,
Canada, and New Caledonia as it explores some of the world’s most
valuable mineral sites. With one eye on the ground and one on the
international markets, Vale has been building up its Indonesian
operations as a source of exports to the lucrative Chinese markets.
The company has also been building ties with
Chinese industry.
Like Vale, Lundin Mining Corporation (TSX: LUN) (OTC:
LUNMF) extracts a variety of minerals from sites around
the world. With operations in Chile, the United States, Portugal
and Sweden, the country has access to different markets and mineral
resources, with nickel as one of its leading products. Lundin
recently announced the acquisition of the
Chapada copper mine in Brazil. In addition to copper, the mine
will provide gold, which plays a part in some of the same
electronic devices as nickel and cobalt.
Cobalt 27 Capital Corporation (TSX.V: KBLT) (OTCQX:
CBLLF) provides an investment vehicle for those looking to
put their money into battery metals, including the technologies
behind energy storage and electric vehicles. The company recently
completed the acquisition of
Highlands Pacific Limited, and included with that acquisition
was control of a share in the Ramu mining operation on the north
coast of Papua New Guinea. Like Pacific Rim Cobalt’s investment in
Indonesia, this move puts Cobalt 27 in a strong position to export
to China. The Ramu operation itself was founded by a Chinese
company, alongside which Cobalt 27 will now work.
The hunt for battery metals is made more urgent by the work of
car manufacturers such as Honda Motor Company Ltd. (NYSE:
HMC). Not only is Honda working on more hybrid and
electric cars, but the company is moving part of
its operations to China as a result of the escalating trade
war. This will boost China’s growing battery industry along with
the country’s demand for Indonesian nickel.
As battery demand continues to grow, so will Indonesia’s nickel
industry — and the countries involved in that industry.
For more information on Pacific Rim Cobalt Corp., visit Pacific Rim
Cobalt Corp. (OTCQB: PCRCF) (CSE: BOLT)
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