Why is nickel such a big deal and which ASX shares have exposure?

Like lithium, nickel is a core element in EV and grid storage batteries.

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Key points

  • ASX shares with exposure to nickel should see growing demand for the metal 
  • Nickel is a core element in the lithium-ion batteries that power EVs 
  • BHP’s takeover proposal of Oz Minerals was rejected, for now 

ASX shares with exposure to nickel exploration and production are in the spotlight.

This comes as nickel prices are rebounding and global EV production is booming. China reported an all-time high of 571,000 EV sales in June, helping drive increased demand for the metal.

Like lithium, nickel is a core element in EV and grid storage batteries. Most of the global nickel production goes into making stainless steel. But some 15% is now used in the EV market. And that share is likely to grow, with a single Tesla battery requiring some 50 kilograms of nickel.

According to Hayden Bairstow, resources division director at Macquarie (courtesy of ABC News):

But certainly over time, expectations are that [electric vehicles] will become a much larger piece of the demand pie for nickel. It is about 15% now of the global nickel demand market, if you like, for electric vehicles.

That's certainly grown from basically nothing a few years ago, and the expectations are that it will move into the 20s and 30% of the total, and beyond that over time, as the EV market gets larger and larger.

That strong demand growth should offer some welcome tailwinds for ASX shares with nickel exposure.

Which ASX shares have exposure?

There are a number of ASX shares with a strong focus on nickel exploration and production.

Some leading names include Poseidon Nickel Ltd (ASX: POS), Mincor Resources NL (ASX: MCR), and Nickel Industries Ltd (ASX: NIC).

Some of the biggest ASX mining shares have also been actively seeking to increase their nickel holdings, partly driven by forecasts of continued growth in EV battery demand.

In June IGO Ltd (ASX: IGO) completed its acquisition of nickel miner Western Areas.

At the time, IGO's CEO, Peter Bradford said the move was "a logical consolidation of key nickel assets in Western Australia". Bradford added that the acquisition improved the company's position "as a leading, independent producer of metals critical for a clean energy future".

BHP nickel expansion thwarted… for now

The largest ASX share of them all and one of the world's biggest miners, BHP Group Ltd (ASX: BHP), made headline news earlier this month for its unsolicited, conditional and non-binding indicative proposal to acquire all shares in nickel and copper focused OZ Minerals Limited (ASX: OZL).

The takeover offer of $25 per share in cash was unanimously rejected by Oz Minerals' board. Commenting on that decision, CEO Andrew Cole said, "We have a unique set of copper and nickel assets, all with strong long-term growth potential in quality locations."

Motley Fool contributor Bernd Struben 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 Scott Phillips.

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