Benzinga - by Matt Whittaker, .
Nickel prices are tanking and that’s hurting companies’ exploration efforts, according to Alaska Energy Metals (OTC:AKEMF) CEO Greg Beischer.
"It makes it harder to raise capital because the commodity is out of favor in investors' eyes," Beischer told Benzinga.
With a low stock price, he added, “if we sell shares, that's expensive capital. It dilutes our shareholders."
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The world's nickel mines are divided into two types of deposits—sulfide and laterite. Sulfide deposits offer easier extraction while laterite deposits require more energy and chemicals.
Because of a lack of exploration in recent years, high-grade sulfide deposits are becoming depleted. Low-grade sulfide deposits offer an alternative to the more-polluting laterite deposits in Indonesia.
‘Low Nickel Prices Drive Mines Out Of Business’ Prices for nickel—a key material in stainless steel production and electric vehicle (EV) batteries—are down around 30% over the past year because of oversupply from Indonesian nickel mines. Tempered growth forecasts for electric vehicles (EVs) have also helped pressure prices.
But with the tanking nickel price, these low-grade sulfide deposits are becoming uneconomical, making it harder for developers to bring them into production, Beischer said.
"There's going to be projects like ours that are discovered and advanced that are going to have difficulty getting financed while the nickel price is low," he said. "At a low nickel price, it starts to drive some existing mines out of business."
Alaska Energy Metal is developing its Nikolai nickel sulfide project on the southern flank of the Alaska Range about 124 miles southeast of Fairbanks.
North American and European nickel users should reject nickel produced in a way that creates a net detriment to the environment, even when end uses such as EVs are considered in the equation, he said.
"They can't really look themselves in the face by purchasing metals that are being produced in a manner that's anything but environmentally friendly," he said.
The automobile industry could play a key role in helping develop nickel deposits in North America, which has strong environmental and regulatory frameworks, he said.
"They are going to have a much stronger lobby than the mining industry could ever have," he said.
That will be needed to help burnish the mining industry's image, as the industry is still viewed by the messes it made in the old days instead of the modern methods employed among North American miners nowadays, he said.
Automakers such as General Motors Co. (NYSE:GM) and Tesla Inc (NASDAQ:TSLA) have been investing in mining companies or contracting with them to secure supplies of electric vehicle metals, including nickel. Ford Motor Co. (NYSE:F) last year said it would take a stake in a plant under construction in Indonesia that will supply nickel chemicals for electric vehicle batteries.
Beischer said it is backward when car companies are funding nickel development instead of governments.
The U.S. has ceded metal supply chains to other nations, but at the same time isn't particularly friendly to mining companies even though a lot of minerals will need to be produced to support the nation's electrification ambitions, he said.
"There seems to be a disconnect," he said. "The permitting agencies still move very slowly."
The mining industry doesn't want to see environmental regulations rolled back in the U.S., he said. Rather, it would like to see the timeline for environmental reviews sped up, he added.
"Just make the industry feel welcome encourage mine development," Beischer said. "Have the permitting agencies move at a faster rate. We've got to get this done."
Alaska Energy Metals shares are currently up about 1.36%, trading at 29 cents on last check.
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