Elon Musk Set Off a Nickel Rally For Investors
Billionaire entrepreneur Elon Musk set off a market rally in nickel and nickel miner stocks during his company’s analyst call. Early investors in the commodity’s futures contracts and nickel miner shares are now sitting on immense gains.
During Tesla’s second quarter conference call with Wall Street analysts, Musk pleaded with nickel miners to produce more. “Wherever you are in the world, please mine more nickel…Tesla will give you a giant contract for a long period of time, if you mine nickel efficiently and in an environmentally-sensitive way,” he said.
Nickel-based cells for electric batteries are more energy-efficient, which means they can extend the range of Tesla’s electric vehicles without compromising weight and efficiency. However, the process of producing the mineral comes with severe environmental and health costs due to the release of sulphur dioxide.
Making the production more eco-friendly could allow Tesla to adopt nickel-based batteries, especially for its larger vehicles such as the Semi or Cybertruck. In response to Musk’s plea, Toronto-based Canada Nickel Co. claimed it could deploy a zero-carbon nickel production facility in Canada soon. The company’s stock surged 163% over the past week.
Meanwhile, the spot price for an ounce of Nickel climbed 4.5% and the stock price of Russian miner Norilsk Nickel surged 6.7% over the same period. Russian billionaire Potanin holds a 30.3% stake in Norilsk Nickel through his investment vehicle Interros.
Investors are now bracing for a production breakthrough that could make the material a key component of future batteries. Higher energy density batteries could also be used in energy storage at solar farms and backup storage in residential properties, opening up several billion in potential demand for the silvery-white metal.
Investors could add exposure to this phenomenon by betting on Nickel futures (which spiked 3.5% after Musk’s comments) or adding a nickel miner’s stock to their portfolio (Canada Nickel stock was up 145% while Vale stock was up 8.27% over the past week)