The Western Areas Ltd (ASX: WSA) share price has continued its strong run on Tuesday and is up 7% to $2.99 in late morning trade.
This brings the nickel miner's three-month return to approximately 25%.
What happened?
As well as receiving a boost from a solid gain by the market today, Western Areas was given an additional lift from a rising nickel price.
Overnight the nickel price rose sharply as investors became bullish on the metal due to its use in the batteries of electric vehicles.
Up until recently nickel miners such as Western Areas have been overlooked in favour of lithium miners such as Galaxy Resources Limited (ASX: GXY) and Pilbara Minerals Ltd (ASX: PLS). But arguably both sets of companies have a lot to gain from the expected electric vehicle boom.
Western Areas and rival Independence Group NL (ASX: IGO), which is also up almost 7% today, are busy building plants that will convert nickel into a powder-like sulfate that can be used in electric vehicle batteries.
Not only is there expected to be strong demand for the sulphate, but it currently trades at a premium to regularly LME-traded nickel according to Reuters. This has the potential to lead to bumper profit growth over the next few years in my opinion.
Should you invest?
While Western Areas is no longer the bargain buy it was a few months ago when I first took a shining to the company, I believe there is still a long-term opportunity for investors here.
As long as improvements in battery technology does not do away with the need for nickel and lithium carbonate, I believe miners of these two metals will be in a great position to profit from the rise of electric vehicles.
This could make Western Areas a compelling, but high risk, long-term investment option.
