Talon Metals (TSX:TLO) Expands Exploration on Nickel Supply Concerns From Tesla (NASDAQ:TSLA)

The nickel shortage and growing demand is pushing miners to expand exploration and production. This also comes on the heels of companies like Tesla (NASDAQ:TSLA), that have announced plans to source more nickel for their electric vehicle batteries from environmentally sound projects.

Talon Metals (TSX:TLO) is one of the latest miners to announce expansion plans at their Minnesota-based nickel project. Tesla is a client of Talon’s and the Tamarack nickel-copper-cobalt project is one of the company’s major projects, of which is holds a 51% interest. Rio Tinto (ASX:RIO) holds the remaining 49%.

The Tamarack North and South projects are located in an 18-kilometer stretch of strike length with a significant land position (18 kilometers of strike length) and numerous high-grade intercepts outside the current resource area. The new rigs will be utilized outside of the main resource zone. If Talon chooses, it has an earn-in option to increase its interest to 60%.

The goal is for the firm to make staggered payments worth $22.5 million in cash and shares to partner Rio Tinto, invest $10 million in exploration and development, and complete a feasibility study in order to reach it.

The Supply Race is On

Rising demand from EV companies is driving automakers to secure steady supply of battery metals which include nickel, cobalt, and lithium. While most of the world’s nickel is used in stainless steel production, an increasing amount is being gobbled up by the battery sector as the production of EVs ramps up.

The market for electric vehicles is expected to grow rapidly in coming years, alongside the demand for these metals.

Nickel is beneficial to the development of lithium-ion batteries, which are increasingly being used in automobiles. It allows EVs to charge faster and farther between plug-ins by increasing the energy density of battery packs.

The price of nickel has increased to previously unseen heights in recent months, not surprisingly. In March, the price rose by an unprecedented 250 percent in a day, forcing the London Metal Exchange (LME) to halt trading in the metal.

EV Giants Scramble

Tesla CEO Elon Musk has noted that nickel supply is one of the company’s top concerns because of the amount used in each battery pack. The company is also eying a move into more direct control of raw materials, which would give it more control over its supply chain.

For now, however, miners are benefiting from the electric vehicle boom as they race to increase exploration and production. Talon Metals is just one of the many firms looking to take advantage of the perfect climate for them.

The sanctions against Russia resulting from the invasion of Ukraine have further heightened the need for nickel, which it holds about 17% of global capacity for refined Class 1 nickel, the type used for EVs.

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.

By Matthew Evanoff

I cover the mining industry and the best mining stocks around the world. I write about industry news, individual companies, projects, management, and profiles on industry leaders.

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