Critical Metals: Developing a Clean Nickel business

Tom Heintzman: Welcome to The Sustainability Agenda, a podcast series focusing on the evolving complexities of the sustainability landscape. I’m your host, Tom Heintzman. Please join me as we explore today’s most pressing issues with special guests that will give you some new perspectives and help you make sense of what really matters. 

Sean Samson: We have a huge amount of R&D going on, which I think differentiates us from other companies. We trademarked the term Clean Nickel. That’s the umbrella that we tuck in our R&D efforts on. And as you mentioned, what we’re really focused on is trying to have the lowest possible carbon cost attached to the nickel units we will produce in future 

Tom Heintzman: On today’s episode, we’ll discuss the development of a clean nickel business. This is an interesting topic because it stands at the intersection of two important trends electrification, which will mean increased demand for critical minerals like nickel, and decarbonization, which is where the clean in clean nickel comes in. We’ll explore the investment case for clean nickel production, how prices can be differentiated by carbon and what is needed to scale its production. I’m excited to welcome my guest, Sean Samson, who I’ve known for many decades, in fact. He is president and CEO of EV Nickel. Sean is a mining executive with more than 20 years of management and financial experience. Prior to founding EV Nickel in 2021, Sean held senior positions at FNI Mining and at Kinross Gold Corporation. He was previously a management consultant at Bain and Company, and traded for investment banks in New York and in Europe. He is also a past elected PDAC board member and a Cleantech advisor at Mars. Good afternoon, Sean, and welcome to the show.

Sean Samson: Thanks, Tom. Great to see you and thanks for having me.

Tom Heintzman: Oh, my pleasure. To give our audience context, can you elaborate on the importance of nickel for the clean energy transition?

Sean Samson: Yeah, so nickel is one of the global base metals, which as it turns out, is integral to the winning battery chemistry in the electric vehicles that are driving around and are planned for the decades to come. So as we think overall about the transition and we think about electrification of ground transportation and electric vehicles, the big difference with an electric vehicle from an internal combustion engine is that it needs a big slug of metal to be able to carry the energy with the vehicle as it rolls. And as it turns out, nickel right now is an integral part of each battery, to the point that about 150 pounds of nickel are required in every Tesla rolling down the street. And when you forecast out the amount of EVs, you know, the percentage of EVs for vehicles that are sold, it adds up to an enormous amount of nickel required with that electric vehicle growth. Now it’s a global base metal to begin with, because right now nickel is produced and almost all of it is used in stainless steel. So stainless steel itself is going to continue to grow at a few percent. And then you bolt on top of that, an enormous new demand category with the electric vehicles. And it makes it a really interesting metal to look at because it falls in, as we say, to the critical metals. But it’s not one that’s going from zero. It’s not like lithium and cobalt, which are currently don’t have a global demand for. Nickel does and it’s all already allocated for stainless steel growth. So a big part of the energy transition because of its energy density and how it’s needed in the batteries of the future electric vehicles.

Tom Heintzman: Sean, you mentioned both EVs driving the need for nickel as well as the traditional stainless steel markets. However, nickel futures have fallen to call it $15,500 per ton late in November 2023, the lowest in several years, in part due to a global economic slowdown and inflated supply concerns. Does this alter the investment case for clean nickel production? Why or why not?

Sean Samson: Yeah, I don’t think it alters it because so much of the future nickel market we anticipate is going to become from the demand required for the electric vehicles. The short term metal price, and this is always a challenge in the metal space where sort of short term pricing drives finance access and finance access either limits or helps along development of projects, which leads to future supply. The issue here is that the future demand for nickel comes from something that’s sort of regulatory intensive. So a big reason why we’re going to have these EVs rolled out is because of the incentives, the Inflation Reduction Act in the US, for example, that is moving the ball forward on the energy transition and with it the future growth in electric vehicles. The short term nickel price is really driven off of the supply demand to fill the Chinese production of stainless steel. So that’s sort of today’s nickel market. And it’s a tricky one because if you look forward sort of five years, nickel needs to double in size the global nickel market. And to get there we’re likely going to need, you know, higher price signals to incent new supply to come on to the market. It’s not a great answer because you’d anticipate that today’s price should be higher to be incenting along that future supply to come on to the market. But really, what it all adds up to Tom is it’s just a bigger and bigger imperative that even without the nickel price signaling, we need this new supply coming on. Or for example, all these new EV battery plants aren’t going to have the inputs that they require.

Tom Heintzman: Let’s turn to your operations. Now, I understand that EV Nickel’s focused on the development of the lowest possible carbon emitting nickel production, and therefore attracting the lowest carbon cost and a carbon pricing regime. Can you describe your business model and how you’re rethinking each step of the nickel production process to create clean nickel?

Sean Samson: Sure my company is your typical explorer-developer who has hugely promising package of land. So in my case, EV Nickel has 30,000 hectares. Just outside Timmins. We have discovered an enormous amount of nickel on our property. So we have both a low grade, which is one of the largest undeveloped nickel sulfide projects in the world. On our high grade, we have what we think is very promising mineralization, and we have a resource which allows us to talk about having a whole lot of the equivalent of EV batteries in the ground. And we think from a basic mining perspective that we can put together a business case on our mineralization. But alongside that, we have a huge amount of R&D going on, which I think differentiates us from other companies. We trademarked the terms Clean Nickel. That’s the umbrella that we tuck in our R&D efforts on. And as you mentioned, what we’re really focused on is trying to have the lowest possible carbon cost attached to the nickel units we will produce in future. And what that is, and it’s very simple, is that we anticipate that the nickel market, especially in the trades that occur when people are buying nickel to make these batteries in their plants, we think the nickel market is pretty soon going to have an extra edge to it, which is going to be nickel contracts will include the carbon cost attached to the nickel units. And the reason I say that is because January in Europe, all vehicles sold in the EU are going to be stamped with their kilometre zero carbon cost. And what that means is you’re going to walk into a Volkswagen dealership and you’re going to have an internal combustion engine beside an electric vehicle engine. And actually the EV is going to have a higher carbon cost, because the big difference is the big whack of metal in the battery for the EV. So the car companies are hugely focused on getting the lowest possible carbon cost on their inputs and what that means in the industry, us, the suppliers, us, the mining companies. For really the first time ever, we’re not just selling a commodity, we’re selling a commodity plus, it’s got to be that we can provide the nickel units. And I talked about how there’s this sort of short in future of nickel between the supply and the forecast demand growth. But it’s even more complicated than that because we need low carbon nickel production. So that’s really what we’re getting at with the clean nickel thing is that we’re doing a bunch of R&D to have the lowest possible carbon cost attached to the nickel we produce, because we think that’s where the market is headed.

Tom Heintzman: So Sean, tell me a little bit about this R&D because I find it interesting. It’s where mining meets climate tech. What kind of projects are you currently undertaking and what are you learning in the process?

Sean Samson: Yeah. So tucked in under the umbrella of our clean nickel. And again, we’re trying to just question each of the steps of our process of like what’s the typical way for us to get the nickel out of the ground, out of the rock and off to customers? So our first big area is around looking at a technology that has existed in our industry for the processing. And when you work through the processing, you are going through and trying to concentrate the metal as much as you can. So we would take the ore out, crush, grind, float it and then create a concentrate. So as is typical in our business, you take that concentrate and then the next step which is smelting and refining. Often that’s done somewhere else. . So that smelting and refining, we have been able to test that if we have a concentrate, we can run what’s called Bioleaching. And this is a technology that’s used elsewhere in base metals. It’s used very actively in copper. And we’ve had tremendous laboratory results of being able to use bacteria that we’ve bred from very local water sources in our area and use them in these tanks and take the concentrate, which would come from a typical mining processing mill. So take that concentrate and instead of sending it to Europe or to Asia for the final stage, we do bioleaching at our site and we’ve proven that we’re able to produce the final product, MHP, for example, which is a form of nickel, which is exactly what the battery plants need in southern Ontario. So Tom our first really interesting area of our R&D has been this tank bio leach, which for a company like ours, where everything is basically greenfield, we can think about it as being a much different way, where we would add on a tank bio leach to a processing plant, and then we’d have an end product leaving our site so that bioleaching is really neat and it saves commercially all of the treatment and refining costs that you pay for that downstream stage. From a carbon perspective, I don’t need to ship the stuff around the world, which is really what blows the mind of the car companies as they wade into this space and try to put their hands on nickel, they begin to realize how short supply it is and how it’s not in the places they want it to be, for example, North America. And then they realize that even if they are talking to nickel producers, oftentimes the final product isn’t even coming out of the same place because these crazy global supply chains have evolved and they’re not used to the complexity that comes with it. So Bioleaching is our approach to really simplify that and to have an end product from our site. The other really interesting area we’ve done a bunch of analysis on is around carbon capture. So on my low grade deposit, which is one of the biggest undeveloped nickel sulfide projects in the world on that one, it’s got this really interesting chemistry in the rock where it has brucite, and the brucite in our rock means that it naturally draws in carbon dioxide from the air. So we have outcrop across our project, which means basically the rock extends up above surface, and you see it on the rock that comes above surface because it’s been exposed to the air, it has this crust on it. The crust is almost pure carbon. So the rock, naturally, because of its brucite content, draws in carbon. So we’ve been studying this in the lab. We’ve calculated what that means for if that rock is then uncovered from underground, which is what we plan to do with a big open pit after we’ve taken the nickel out of it and we send it to what miners call the tailings. So that’s our waste pile. We can calculate what the waste pile naturally does when it draws in carbon from the atmosphere. So it’s really neat because it’s a waste stream. Basically, one of the things that miners have to do is to deal with the rock after you’ve drawn the metal out of it, and sometimes after you’ve applied some chemicals to that rock and tailings or something, you always have to manage when you’re talking about a mining business. In this case, the chemistry of our tails is such that it actually draws in carbon. So we’ve calculated and it’s quite material, both passive. So if the rock just sits there, it draws in carbon to a certain amount. Plus we’ve had tremendous results. If we can find ourselves a high CO2 gas that we can pump into the tails, it has incredible results in terms of how much carbon it’s able to absorb. So carbon mineralization or carbon capture is the second big area that we’re working on under the clean nickel. But then also we’re working on other things, like for example, in the mining world, you’ve got to move a lot of materials. So material movement typically is done, as everyone knows, with these enormous diesel powered trucks, we anticipate we will never operate diesel powered vehicles. But even better than even having the vehicles, because where we’re located in northern Ontario, we draw hydro power. So everything that we can electrify means we’ll have a very low carbon cost attached to that step of the mining process. So we anticipate we would electrify all of our material movement. And what it allows us to do, Tom, is stack up sort of what the typical emissions would be per nickel unit of us doing it the traditional way. And if we stack all those up and have a theoretical carbon cost attached to the nickel units, and then we’re able to do these things much differently, we’re able, we anticipate, to go out and find people who will pay us the credits. The difference between what it could have been and what we plan to build, because it again, it’ll be a very low carbon cost per nickel unit. So that’s a quick drive by of our areas of R&D.

Tom Heintzman: Sean, I love this story because it brings together so many of the themes that we talk about on this show. You’re creating or sourcing critical minerals that’ll enable electrification. You’re electrifying your own operations, your processing your materials in novel ways to lower carbon emissions. And you’ve got a carbon sequestration at the back end. It brings it together. So much of the themes that we talk about, just to pursue the carbon capture and storage process a little bit more. So as I understand it, these rocks absorb the carbon, and you can accelerate and increase the amount that they would normally absorb. How much are we talking about and how big a difference would that make on the emissions at your company, and give us some sense of how many carbon credits might be generated in the economic impact of that.

Sean Samson: I say we’ve had very promising results. We’ve news released those. I don’t want to get out over my skis in terms of saying what the potential is of the project, but I’m glad, Tom, you asked me from the context of how it would go towards our own emissions. So we believe with the results that we’ve come back with so far in our R&D is we will go beyond just covering the emissions that our operation would have and actually making us a net benefit. So this may seem quite strange for a miner to be saying this, but here’s the other thing. What we’re doing is I say that we have this outcrop which is already now naturally sequestering carbon, capturing the carbon. We are going to be unlocking the rock that is currently underground. Right? So within a couple of hundred metres of surface and exposing all of that, we’ve released what our results have been. I encourage folks, if they want to go a little deeper on this, they can go to our company’s website. But it does become very material because it’s a function of volume. And I mentioned that this interesting chemistry is on my low grade deposit, which means that’s where it’s, you know, less nickel per ton, which means for us to commercially make sense of it, we’ve got to move a lot of tons. And the volume really adds up, which at its simplest is us taking the ore out of a hole, recovering the nickel out of it, and putting the waste back in the hole, but changing how long we allow the rock to be exposed before we cover it with more rock in our tailings. So it’s a subtle change with how we would normally stack tailings, but very doable. And the numbers really begin to add up because we’re moving a huge amount of volume. 

Tom Heintzman: I have one last question, and it’s about policy. The Government of Canada recently launched the Critical Minerals Infrastructure Fund. The fund is to provide up to 1.5 billion over seven years for clean energy or transportation projects that enable the sustainable development and expansion of critical minerals in Canada. I’d love your opinion on this new measure, whether it’s sufficient, how it helps, how it could be built on or improved. And then maybe a more blanket policy question is what do you still need in order to scale your clean nickel business?

Sean Samson: We’re still a few years away from production, so the infrastructure fund is announced by the feds seems very interesting. We’ve been through everything that it’s been presented. And actually we’re getting into more detail with the bureaucrats taking a step back from policy perspective. Right now in Canada, we have a federal government and a provincial government in Ontario who are completely aligned with trying to support along these critical metals projects for many reasons, one of them being that we’ve supported battery plants being built that don’t have the supply, the inputs that are required. So both levels of government, for the first time in my mining career, which has been more than a couple of decades, I’m hearing from government, in a way, they’re pulling me along in terms of trying to propose projects, which is wonderful. And that’s not just the political staff, it’s also the bureaucratic staff, which are very important when you’re talking about a permitting process on support direct, you know, dollars in the pocket from government. I’m excited about the infrastructure fund. I certainly don’t want the infrastructure fund to be sort of a roads to nowhere slush fund that comes down from government, because what we really need to do in our industry is find projects which are near other projects which we can use existing infrastructure for, and that’s mine. I’m 30km outside of one of the world’s largest gold producing cities. I’m very appreciative, both federal and provincial money that we have received. There’s another federal program other than the infrastructure fund. Their R&D fund that we have applied to, which is really exciting because all the innovative stuff I’ve talked about so far, the majority of it has been sponsored by the provincial government and the federal government has mimicked that. And really, Tom, that’s how Canadians that’s how the mining business is really going to be able to reach these challenges that are put in front of us is with innovation. It’s not just, you know, help support my business plan to make it economic for me to develop up some deposit out in the middle of nowhere, like we need to rethink the way we do things. I have clearly a bias towards innovation and a new approach, but I think that’s really how our supply is going to meet the challenges. Just of this rising demand. So government’s been very supportive. Of course, everybody talks about permitting. We know that, as I mentioned, they’re pulling us along in terms of trying to move these projects because we’re all pushing to the same thing, which is trying to meet this enormous challenge for which right now, the critical minerals are not identified and need to be moved along. It’s like all the projects are required.

Tom Heintzman: Sean. That’s fascinating. And it’s also it’s a very optimistic note on which to leave the conversation. It seems like everybody’s rowing in the same direction, which is not that often you get that coordination. Thanks for taking the time to join the show today. Always fascinating to talk to you and thanks to our listeners for tuning in.

Sean Samson: Super. Thanks, Tom.

Tom Heintzman: Please join us next time as we tackle some of sustainability’s biggest questions, providing you different perspectives to help you move forward. I’m your host, Tom Heintzman, and this is The Sustainability Agenda.

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