Nickel tops Zim’s 2020 exports

NICKEL mattes surpassed gold and tobacco (conventionally the largest foreign currency contributors for Zimbabwe), clinching the top spot in the country’s 2020 forex earnings. The metal raked in US$985 million, a 22.4% input to Zimbabwe’s 2020 forex receipts, according to the most recent figures released by the Zimbabwe National Statistics Agency.

eben mabunda

The 2020 nickel matte figure was a 100% surge from the US$489 million recorded in 2019, wherein it was the fourth biggest earner of foreign currency behind gold, tobacco, and nickel ores and concentrates respectively. In a sharp reversal of the matrix, gold’s contribution dipped 7.6% to US$982 million, while tobacco’s figure came off 7.6% to US$714 million in 2020.

Comparatively, nickel ores and concentrates which were the country’s third-biggest export in 2019 also collapsed by 17% from earnings of US$737 million in 2020 to US$611,8 million in 2020. Bolstering nickel matte’s sterling outturn is a firming of nickel prices over the past couple of years. The rapidly rising demand for nickel in the batteries that power EVs over the coming years translates to spiraling nickel prices on the back of an anticipated boom in the global Electric Vehicles (EVS) industry.

Nickel’s three-month price on the London Metals Exchange (LME) inched  1.3% higher on Tuesday to $18,405 per tonne from Monday’s closing price, close to its year-to-date high of $18,515. Although the price of nickel continuously fluctuates, it has increased considerably in recent years.

The demand for nickel is expected to soar as governments and companies aim to cut the noxious fumes emitted by fossil-fuelled vehicles. Currently, the use of nickel is dominated by the production of ferronickel for stainless steel (66%). However, it is also used in the production of non-ferrous alloys (12%), alloy steels (5%), plating (7%), foundry (3%) and batteries (2%). China is presently the largest consumer of nickel, accounting for approximately 55% of the global demand.

The boom in demand for EV’s is poised to see a surge in nickel demand which has now been dubbed “the new gold” by experts. While it is believed that lithium is the key input in “lithium-ion batteries which power EVs, nothing could be further from the truth.  In 2016, Elon Musk highlighted: “Although [they’re] called lithium-ion, the actual percentage of lithium in a lithium-ion cell is approximately 2%,” Musk explained at Tesla’s 2016 shareholder meeting. “Technically, our cells should be called nickel-graphite, because the primary constituent in the cell as a whole is nickel.”

The “Secondary Battery Market Forecast to 2027 —  COVID-19 Impact and Global Analysis by Technology; Application” report valued the global EV’s market at US$ 52,884.4 million in 2019 with projections of reaching US$ 85,395.25 million by 2027; growing at a CAGR of 8.50% from 2020 to 2027.

This spells enormous opportunities for Zimbabwe for both Nickel and Lithium mining. The most recent figures  released by statista.com reveal; Zimbabwe is among the top 5 nickel producing countries in Africa having produced an estimated 19 000 metric tonnes of the now vital mineral, a third of Madagascar, Africa’s largest nickel producer in 2019.

According to the Ministry of Mines, there are more than 30 known nickel deposits known in Zimbabwe but major production is only being done at  Bindura Nickel Corporation’s (BNC) Trojan Mine in Bindura. In addition, the nation is endowed with several serpentine areas in greenstone belts with enormous potential in komatiite and laterite. BNC is Zimbabwe’s largest nickel producer having sold Nickel concentrate amounting to 5 685 tonnes in 2020 versus a 2019 figure of 6 410 tonnes.

Notably, Bindura has a nickel smelter which is 83% complete. As prices firm, the entity has plans to complete the smelter which would boost their revenues with beneficiation.

Policy consistency is key, power supply imperative and an investor friendly business environment mandatory. If well harnessed nickel could be a game-changer for Zimbabwe’s economy.

Mabunda is an analyst and TV anchor at Equity Axis, a leading financial research firm in Zimbabwe. — ebenm@equityaxis.