Canada is the world’s sixth-largest nickel producer, with roughly 130,000 million tonnes of nickel produced in Ontario, Quebec, Manitoba and Labrador annually.
There are currently no nickel mines in B.C., but a growing demand for the metal from the electric vehicle market, and a federal strategy that promotes critical mineral self-sufficiency in Canada, could change that.
There are now two very large nickel mines proposed for B.C., representing a potential investment of roughly $8 billion: The FPX Nickel Corp. (TSX-V: FPX, OTCQB: FPOCF) Baptiste project near Fort St. James and the Giga Metals (TSX-V: GIGA) Turnagain project near Dease Lake in northwest B.C.
Both projects are in early development stages, with pre-feasibility studies published in recent weeks.
“FPX Nickel’s Baptiste project and Giga Metals’ Turnagain project are two of the world’s top 10 nickel projects,” said Michael Goehring, president of the Mining Association of BC. “These are two exciting projects that are really what the government of Canada’s critical minerals strategy is all about.
“These are two projects that have received investment from significant and sophisticated global players. That’s strong validation in the strong fundamentals of both of these projects.”
Mickey Fulp, geologist and publisher of the Mercenary Geologist, is less bullish about either project, due to their grades and economics, though he admits the Baptiste project is “interesting” because of its unique mineralization.
“It’s an interesting project, but it’s 15 years in and they still are trying to solve a metallurgical process with a deposit that, even with their economics, looks marginal at best,” Fulp said.
He’s even less impressed with the Turnagain project.
“It’s very, very low grade – 0.2 per cent nickel,” Fulp said. “It’s very remote.”
And yet both projects have drawn big players in the steel and automotive industries as project partners.
The Turnagain deposit is owned by Hard Creek Nickel Corp., a joint venture between Giga Metals and Mitsubishi Corp., which owns 15 per cent.
In May, Finland’s Outokumpu Oyj – Europe’s largest stainless-steel producer – took a 9.95 per cent equity stake in FPX for $16 million.
The FPX project started out as First Point Minerals, founded by Canadian Mining Hall of Fame inductee Peter Bradshaw, who discovered the unique awaruite deposits in what would become the Decar Nickel district, of which Baptiste is one deposit. Bradshaw is now chair of FPX.
At 60,000 tonnes of annual production, the Baptiste mine would produce about half the amount of nickel currently produced in the rest of Canada and would be one of the 10 largest nickel producers in the world, said FPX CEO Martin Turenne.
The Decar nickel district features some unique mineralization: Awaruite and brucite. Whereas Turnagain is a typical nickel-sulphide deposit, the Baptise deposit is free of sulphides. The nickel is contained in awaruite – a mix of nickel and iron. And the brucite is a mineral that is particularly conducive to carbon mineralization – i.e. permanently sequestering carbon.
FPX has spun out a subsidiary, CO2 Lock Corp., which is exploring the potential for the Decar-Baptiste sites to pilot brucite-based carbon sequestration. (Giga Metals is also exploring the potential for carbon sequestration in the Turnagain mine’s tailings.)
Because awaruite is magnetic, magnetic separation can be used in primary processing, as opposed to the chemical metallurgical processing needed for nickel sulphides. This makes the processing simpler and cleaner.
“There’s a cost advantage to that and there’s also an environmental advantage from not having these massive chemical baths that you’re having to separate one mineral from the other,” Turenne said.
“That lower degree of sulphur means it’s a cleaner geology. It also means it’s a cleaner end product, and that absence of sulphur and deleterious elements in that concentrate means that we can bypass the smelting stage.
“This rock is not acid generating, so there’s an advantage in terms of the chemical composition of the tailings from the rock itself, and also the fact that you’re not using that same scale of chemical bath means that there’s less deleterious elements going into the tailings.”
FPX could sell its nickel to the stainless-steel industry. But the company is also exploring a hydro-metallurgical refining process to produce EV battery-grade nickel sulphate – an effort backed by the federal government and Prime Planet Energy and Solutions, a joint venture between Toyota (TYO: 7203) and Panasonic (TYO: 6752).
FPX has received $725,000 in funding from Natural Resources Canada to study the potential for a hydro-metallurgical process to make battery-grade nickel sulphate.
The company estimates the cost of such a processing plant would be $450 million. It would not be located at the mine site, Turenne said, but in a city with industrial infrastructure, such as rail and port access. The plant would employ as many as 400 people.
The Baptiste project faces one potentially significant obstacle: First Nation opposition. The Tl’azt’en Nation had a memorandum of understanding with FPX but cancelled it in June and issued a statement that it would oppose the mine.
“Tl’azt’en Nation and its members do not support or consent to the exploratory work FPX Nickel Corp. is conducting in its territory and are opposed to any sort of mining operation on or near Tselk’un (Mount Sydney Williams),” the First Nation said in a press release.
As for the Turnagain project, the mine would be located 65 kilometres east of Dease Lake. It would have an initial capital cost of $2.6 billion and sustaining capital costs over 30 years of $2.2 billion. It would require a new 78-kilometre access road and a 160-kilometre transmission line to tie into the Northwest Transmission Line.
“We’re looking at average production of a little over 35,000 tonnes per year of nickel and a little over 2,000 tonnes per year of cobalt,” said Giga Metals CEO Mark Jarvis.
The company says the mine would have a relatively low carbon-emissions intensity compared to other nickel mines. For one thing, it would use clean hydro power, by tying into the Northwest Transmission Line. For another, the company is exploring a tailings management approach that would accelerate a natural carbon mineralization process to permanently sequester CO2 in the form of carbonates.
“It is a significant source of low-carbon intensity nickel and cobalt in a form that is very amenable to processing to cathode material,” Jarvis said.
One of the reasons Fulp is skeptical about the Turnagain project is its remoteness and its need for new roads and transmission lines, which add to the project’s capital cost.
Fulp said both B.C. nickel projects have low grades, high capital costs and low internal rates of return. He said Turnagain’s internal rate of return is 11.4 per cent.
“We always look at 20 per cent as being absolute minimum internal rate of return,” Fulp said.
Jarvis said all major undeveloped nickel projects have the same kinds of challenges.
“All of the really large nickel projects in the world are in the same category,” he said. “They have low internal rates of return at low nickel prices. What’s changed, historically, is that now you’ve got this new demand source driving demand for nickel from electric vehicles and batteries in general.”
Nickel prices fell in 2023, from US$14 per pound in January to below US$8 per pound in November, due in part to new supply coming out of Indonesia. But the longer-term forecast is for nickel demand and prices to increase, thanks to the demand from electric vehicles.
The global demand for nickel has already grown by more than 1 million tonnes just in the last four years – from 2.4 million tonnes in 2019 to 3.6 million in 2023 – according to Statista. Rystad Energy predicts there will be a nickel shortage by 2026, and Glencore predicts global demand for nickel could grow to 9.2 million tonnes by 2050, driven largely by the EV battery market.