Fortescue's Forrest is betting big on nickel. Is it time to buy ASX nickel shares?

Why is Twiggy looking to make his next windfall in nickel?

| More on:
Pilbara Minerals engineer with hard hat looks through binoculars at work site or mine as two workers look on

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The final curtain is nearing on ASX nickel mining share Mincor Resources NL (ASX: MCR) as Fortescue Metals Group Limited (ASX: FMG) founder Andrew 'Twiggy' Forrest moves forward with his takeover.

Last night, Wyloo Metals — a private company owned by Forrest and his wife — announced it had accumulated a 92.71% interest in Mincor. As a result, Wyloo will move forward to compulsory acquisition of the remaining shares in the nickel mining company.

Twiggy eyes a bright future for the critical mineral, pouring $760 million of the Forrest empire into Mincor. Further fortunes will undoubtedly be tipped in over the coming years, with the mining magnate declaring his willingness to invest "whatever it takes" to put the operations on the global nickel stage.

Could EVs deliver a green nickel push?

Lithium has become synonymous with electric vehicles (EVs). You could say this is a no-brainer considering the dominant battery chemistry is lithium-ion. But, as Tesla boss Elon Musk has said before, "Lithium is actually 2% of the cell mass."

You might be surprised that the two most common batteries depend heavily on nickel. According to Greencars, there are roughly 4.5 pounds of nickel for every pound of lithium carbonate in a lithium-ion EV battery cell.

Assuming EV sales follow forecasts over the next decade, demand for nickel could follow, bolstering ASX nickel shares. Estimates from McKinsey & Company suggest global nickel demand will increase to between 3.5 to 4.0 million tonnes by 2030, up from 2.2 million tonnes in 2020.

Furthermore, high-quality battery-grade nickel is forecast to be undersupplied during the second half of this decade. Based on McKinsey's modelling, the shortfall could be as early as 2024 under a high-demand scenario, as shown below.

Source: How clean can the nickel industry become? McKinsey & Company

Before the dust has settled on Mincor, Wyloo is already open to making its nickel deal. In response to the potential of consolidating the Kambalda nickel mining district, Wyloo CEO Luca Giacovazzi said:

Do we have appetite to do more deals? I'm always going to answer the same way: Yes.

No more Mincor. Which ASX nickel shares are left?

The local bourse will soon be one nickel player down for those looking to capitalise on the possibility of enjoying its 'lithium-like' moment. As Wyloo gobbles up the last of Mincor's shares, this company is as good as gone from the ASX.

Nonetheless, a long list of ASX nickel shares is still on offer. In the big end of town, for example, there are established companies, including:

Meanwhile, toward the more speculative side of the market, there are companies such as Centauras Metals Ltd (ASX: CTM), Lunnon Metals Ltd (ASX: LM8), and Poseidon Nickel Ltd (ASX: POS).

However, it is worth noting that alternative battery chemistries are constantly being explored. Last month, lithium iron phosphate was said to be closing the performance gap on the incumbent options. If an alternative to nickel blends is discovered, it could weigh on ASX nickel shares.

Motley Fool contributor Mitchell Lawler has positions in Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. 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 Scott Phillips.

More on Resources Shares

Image from either construction, mining or the oil industry of a friendly worker.
Resources Shares

How these 2 tailwinds could boost the BHP share price into 2026

A leading expert forecasts that BHP shares are set to recover. But why?

Read more »

a miner holds his thumb up as he holds a device in his other hand.
Resources Shares

3 reasons why the BHP share price could still be a buy

There are a few reasons why this mining giant could be appealing.

Read more »

Miner standing in front of trucks and smiling, symbolising a rising share price.
Resources Shares

The pros and cons of buying Fortescue shares in June

Let’s dig into whether it’s a good time to invest in this mining giant.

Read more »

Image from either construction, mining or the oil industry of a friendly worker.
Resources Shares

Why did the Mineral Resources share price rip 15% higher today?

The iron ore and lithium giant was the fastest riser of the ASX 200 on Thursday.

Read more »

A man wearing a hard hat and high visibility vest looks out over a vast plain where heavy mining equipment can be seen in the background.
Resources Shares

2030 forecast: As Australia's iron ore export earnings decline, copper will rise. What does this mean for BHP shares?

BHP is expanding its iron ore and copper production.

Read more »

An engineer takes a break on a staircase and looks out over a huge open pit coal mine as the sun rises in the background.
Resources Shares

4 reasons to buy BHP shares today

A leading expert outlines four key reasons BHP shares are a buy.

Read more »

Businessman walks through exit door signalling resignation
Resources Shares

Pilbara Minerals share price drops as CFO announces resignation

It’s been a challenging few years for outgoing Pilbara Minerals CFO Luke Bortoli.

Read more »

Miner looking at a tablet.
Resources Shares

What happened with the BHP share price in May?

Did you buy BHP shares in May? Here’s how much the ASX 200 miner returned.

Read more »