Here's why the Poseidon (ASX:POS) share price is up 5% on Wednesday

The nickel company's shares are gaining on the back of positive news…

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The Poseidon Nickel Ltd (ASX: POS) share price is charging higher today following news its products will be studied for their ability to create battery cathode material.

The company has signed a memorandum of understanding with Pure Battery Technologies (PBT). Under the understanding, the companies will test if Poseidon's nickel can be used as a base feed for PBT's proposed precursor Cathode Active Material (pCAM) refining hub.

At the time of writing, the Poseidon share price is 10.5 cents, 5% higher than its previous closing price.

Let's take a closer look at today's news from the nickel exploration and development company.

The Poseidon share price is surging after the company announced it could soon supply nickel for battery cathodes.

Poseidon and PBT will be working together to see if Poseidon can supply PBT's proposed Kalgoorlie refinery.

Initially, the companies will be looking into the feasibility of producing up to 50,000 tonnes of pCAM each year.

PBT has commercialised a selective acid leaching process that can produce high-quality, affordable nickel and cobalt materials for lithium-ion batteries. PBT's process also has a lower environmental footprint than other methods.

PBT will be bringing its technology and expertise to the table. Whereas, Poseidon will provide typical specifications and anticipated production volumes from its projects.

The understanding may lead to a definitive agreement. Such an agreement would outline how the companies would fund and develop a supply chain for battery manufacturing markets.

Poseidon's managing director and CEO Peter Harold commented on the news:

We look forward to working with PBT to determine if our potential concentrate production could be feed for PBT's proposed refinery, should we decide to proceed with development of our projects. This could be a great way for us to improve the payability of the nickel in our concentrates and improve the margins of our projects.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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