Yes, batteries could be the driver behind Australia’s next resources boom, thanks to soaring demand for battery powered devices, from smartphones to motor bikes to cars.
And the primary ingredients in modern day batteries are nickel, cobalt, graphite and vanadium, which a handful of Australian miners have bucket loads of. Demand for aluminium could also soar, thanks to the lightweight metal being increasingly used in the production of modern vehicles.
A typical high power lithium ion battery contains around 40% nickel, 16% graphite and around 18% lithium, as well as smaller amounts of other metals and chemicals, including copper and aluminium.
Tesla, the US maker of electric cars, recently announced that it is building what it calls a ‘gigafactory’, to produce lithium ion batteries for its vehicles.
And it’s not just large car batteries that are causing demand for these metals to soar. The renewable energy industry is also driving up demand.
So which Australian resources companies will benefit from these trends?
BHP Billiton Limited (ASX: BHP) is one – the giant miner has been looking to offload its nickel, aluminium and bauxite assets to focus on its core commodities. Rising demand could see BHP achieve a substantial sale price for those assets.
Western Areas Ltd (ASX: WSA), a nickel miner with some of the highest quality nickel in the world at its two mines, Flying Fox and Spotted Quoll in Western Australia, has already seen its share price rocket up 107% in the past 12 months, on the back of a soaring nickel price.
Independence Group NL (ASX: IGO), another nickel, copper, gold and zinc miner. Independence is up 92% over the past year, but more gains could be ahead from the diversified resources group.
Syrah Resources Ltd (ASX: SYR) – The company’s huge Balama project in Mozambique contains an estimated 117 million tonnes of graphite – more than the rest of the world’s graphite reserves combined, as well as vanadium.
Sirius Resources N.L. (ASX: SIR) – It’s only early days, but Sirius appears to be sitting on some enormous nickel deposits in Western Australia. They have been compared to two giant nickel mines in Canada, which were sold to resource giants for billions.
If demand for those raw materials continues to rise, it could fuel another resources boom – great news for the miners above.