Ontario’s move towards opening the Ring of Fire Metal deposits to exploring and mining companies could provide the next boost to Canada’s mining stocks.
The state’s Minister of Energy, Northern Development and Mines recently announced plans to work directly with First Nation communities to develop infrastructure that unlocks the mineral-rich region in northern Ontario.
Noront Resources (TSXV: NOT) — which says it holds 85% of all claims staked in the Ring of Fire — and Marten Falls First Nation released a statement in late August applauding the provincial government’s move.
“We are encouraged by the Ontario government’s support and commitment to develop, on an expedited basis, the Ring of Fire mineral deposits and associated infrastructure, which will be shared between community and industry use,” the joint statement said.
This week also saw heightened speculation that the gold surge was at an end, as prices dipped below $1,500 an ounce - although they also moved higher again. Capital Economics said all the drivers for the rally in the gold price – weakening global growth, safe haven demand and low interest rates – were now baked into the price.
On the other hand, Jamie Keech, founder of Ivaldi Venture Capital and Resource Insider, said he believed gold stocks have not been keeping up with the bullion price. This of course suggests that junior gold stocks could yet have further to run, even in a static price environment.
Keech told Kitco News: “We haven’t seen [gold stocks] respond in the way that I would have expected. When we were, back in 2015, we had that small gold run, I think gold went from $1,100 up to $1,300, so about 20%. We were seeing companies triple in value overnight.”
Meanwhile, Junior Stock Review focused on nickel this week and its status as 2019’s best performing metal. It featured an interview with Martin Turenne, CEO of FPX Nickel Corp, who said that disruptions to supply in Indonesia - which accounts for around a quarter of global nickel production - could push prices higher for the next two years.
Turenne added: “In the last year alone, we’ve seen environmental and social issues lead to the closure or the threatened closure of mines in Papua New Guinea, Myanmar, Guatemala and Brazil – and that’s to say nothing of the ongoing environmental inspections in the Philippines, which is one of the largest producers of nickel globally. Well over 60% of nickel mine supply comes from emerging economies with lower environmental and social licence standards than say, Canada or Australia. As environmental and social concerns become more prominent in those emerging countries, that will ultimately lead to either the closure of certain nickel mines, or to increased operating costs for miners having to comply with higher standards. Over time, this will lead to an increase in the nickel cost curve, and therefore in the nickel price.”
The interview came as Moody’s Investor Services reported on the mining implications of the switch to electric vehicles (EVs), whose batteries require significant amounts of high grade nickel. The analysis said “metals consumption for battery electric vehicles (BEVs) will rise sixfold from current levels, as EV penetration reaches 8% of total car sales (our base scenario) by the mid-2020s, and continues to rise rapidly in the second half of the next decade.”
Nevertheless, the report said that the Canadian economy, alongside other nickel majors China and Russia, would not feel a major impact, but added: “Nevertheless, these countries will continue to contribute significantly to the supply of these metals indirectly, through companies investing domestically and overseas.”
Junior nickel stocks, of course, could well feel a very significant effect.