Brian Leni: EV Demand is the Icing on Nickel’s Stainless Steel Cake

I’m Scott Tibballs with the Investing News
Network. I’m here today at the Vancouver Resource Investment Conference and
joining me now is Brian Leni of Junior Stock Review. Thanks for joining me Brian.
– Thank you for having me. Looking back on 2018, it was not a great
year for base metals. Can you just run me through your thoughts on why. It was definitely not a good year for base metals. I think interest rates and of course the US-China trade were had a major impact
on the base metals in particular and we’re definitely looking to 2019 to make
that a little bit better. So now that we’re a little bit into 2019, what are some early signs for how the year’s going to trend. You know it’s — I’m not really sure, but I think leading up to the March interest rate decision and some of the
things going on in the States are things we definitely have to watch and I’m
encouraged especially from precious metals point of view that it could be a
good year. The base metals, I think, that will need to see a resolution between
the US and China before that can – that market can get rid of the uncertainty
but I’m positively optimistic. Speaking of base metals you’re here
this week to talk about nickel. Can you just tell me a little bit about what you
will be talking about today? Sure. So there’s a few overlying points
that I’m going to be covering. Nickel is driven by stainless steel. If you’re
bullish on nickel you’re bullish on stainless steel so that’s one of
the factors I’ll be covering and then of course I’ll touch on the US-China trade
war and then probably the biggest overlying aspect impact in the nickel
market is the Chinese announcement of an HPAL plant in Indonesia and why this is affecting the nickel market and what the implications will be if they’re
successful. You’ve mentioned stainless steel which obviously is where
most of the demands for nickel comes from but just watching what companies
are saying it seems like the narrative is driven by electric vehicles. Can you
just run me through why everybody’s so focused on that? Personally I still look to
stainless steel for my outlook on nickel but EVs is sort of an icing on the cake
in my opinion, but the reason why people use it in the narrative is because of
how disruptive it could possibly be and just to put it in perspective,
Glencore last year came out with an estimate based on a 30 percent adoption rate of
EVs in our lives. In as far as how this impacts nickel this
is around 1.1 million tons of demand and the fact is, it’s a 2 million ton market
so you’re looking at roughly 55 percent of extra demand over the course of the
next 10 years. This will have an impact if it comes to fruition so time will
tell but you kind of wonder where’s this supply going to come from. Could electric vehicles ever overtake stainless steel or was it always
gonna be stainless steel? It’s tough to say. I would say probably maybe not in our
lifetime, but like I said you know stainless steel represents 1.5 million tons of demand yeah considering a 30 percent adoption
rate, it is around 1.1 million tons. I would say for sure but it’s a
little bit further in the future before that happens. Long term? Yeah So staying with electric vehicles, when it comes to realizing that demand
and how it pushes the nickel price, what would an investor be looking at
that would make them bullish on nickel? Should they be looking at car maker data, what
the miners are saying, stockpiles, legislation or even battery technology? I think it’s threefold like I said you start with stainless steel
and how you feel stainless steel is gonna to be in the future. Second, I think probably the biggest point that I was nervous about was global inventories. If
you rewind back to 2016 when I first started kind of looking at the market, the inventory levels were almost half a million tons. I really thought to myself: “oh this is a big hurdle that it’s gonna have to be
overcome for us to get into a bull market and you know lo and behold, 2018
was an amazing year for draw down on LME supplies and this drawdown was by that
class when nickel market was consumed by stainless steel and these are great signs
moving forward so I think continued draw downs on nickel inventory and
considering that our supply numbers are dwindling, these are great
signs and stuff that we need to watch moving forward. Fantastic. So just wrapping up: Obviously, there’s a lot of companies here. Do you
think that you could just give me your top, top, stock picks for 2019? Sure! From a nickel perspective, I like From a Nickel perspective, I like FPX Nickel – I am an investor and have been for a while. It all centers around Martin Turenne, the CEO, Next to that, outside of nickel , l I like Adventus sink I think they’re – you know again – great
management and they’ve got a great deposit and some exploration upside so,
yeah those are two that I like. We will wrap it up there. Again, my name is Scott Tibballsfor the Investing News Network and joining me has been Brian Leni. Thank you for joining us.

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