Nickel, Commodity exploration companies must also deliver

12 April 2022 – Nickel exploration companies also have to sell their products – convince investors with data and press releases, even if there is hardly any nickel. Chinese spot prices for nickel rise significantly in some cases. And the former German energy and economics minister is finally supposed to save Thyssenkrupp Steel Europe – is that even possible?

Nickel: Commodity exploration companies must also deliver

Nickel is on its way to becoming the black gold of the future. So it is no wonder that as soon as commodity prices reach an attractive level, supposedly new nickel deposits are suddenly found.

Caution: Is the news really good?

But as long as no large commodity company is prepared to invest several billion dollars in the supposed find and to write off this investment, one should consider whether this is really such a big deal.

Resource exploration companies also sell products

After all, natural resource exploration companies also have a product: data, press releases and hope. And it has to be sold. In order to raise funds for the next 20 years, during which money can be spent continuously.

Is there really nickel where nickel is written?

So it is good to take a look at the circumstances of an accumulation of good news from e.g. nickel, palladium or copper exploration companies. It is easy to see that investors urgently need to be persuaded to invest in a new project in the context of conferences and trade fairs. Especially when the last good news was nine years ago.

Press releases are for investors

In the end, it’s just press releases. And the word nickel in the headline looks good at the moment, even if the quantities per tonne are only 0.23% or the supposedly big lump is only a few centimetres thick.

Nickel on the Chinese spot market in the plus zone

Spot prices on the Chinese nickel markets jumped today, in some cases significantly. Nickel with a 99.9% share is up by more than 2.4%. However, the increase is particularly strong for nickel ores. Here, drastic price jumps of 12 to almost 24% can be observed. Shortly before the close of trading, nickel traders on the SHFE seem to have realised this and boosted the contract prices there once again today.

Gabriel in a Thyssenkrupp jersey – should ex-minister save the steel division?

The German SPD promised the ailing steel division of Thyssenkrupp more than 8 billion euros in election gifts during the 2021 parliamentary election campaign. This was supposed to push ahead with the green transformation, which for years had been slept through, if not significantly prevented, by the steel manufacturers due to cheap energy from Russia.

Ex-energy and economics minister to save Thyssenkrupp

Sigmar Gabriel, a prominent member of the SPD, is now taking over as chairman of the supervisory board of Germany’s largest steel producer, Thyssenkrupp Steel Europe. The Thyssenkrupp group has been trying unsuccessfully for years to divest itself of its uneconomical steel division. The former energy and economics minister is now expected to make a major breakthrough – which seems to be a distant prospect in view of the sharp rise in energy prices due to the Russian crisis.

Well-connected in politics in times of crisis

Whether this can succeed with Sigmar Gabriel as head of the supervisory board, who not so long ago considered Russian gas to be without alternative, seems questionable. Thyssenkrupp’s manoeuvre, however, is transparent. A still well-connected ex-energy minister, an SPD-led federal government and a green economy minister who now has to produce clean energy with lignite are likely to bring one or two rescue packages in times of crisis.

Thyssenkrupp can’t get rid of steel

But whether this will lead Thyssenkrupp’s steel division into a sustainable future with a profitable sale is something we see rather critically. In any case, green hydrogen cannot be produced with lignite. And the trade unions are already demanding clarity about the future of the rusty steel cooker.

Stainless Espresso: Nickel, Commodity exploration companies must also deliver