Canada Nickel (TSX-V: CNC) – Tesla Wants Clean Nickel – NetZero Nickel (Transcript)

Canada Nickel Co Inc.
  • TSX-V: CNC
  • Shares Outstanding: 57M
  • Share price C$0.92 (02.07.2020)
  • Market Cap: C$52M

Interview with Mark Selby, CEO of Canada Nickel (TSX-V: CNC)


Now, here’s something that some nickel commentators know about, but very few of them seem to talk about.

Let’s talk about ‘Clean Nickel & Dirty Nickel’. Elon Musk wants nickel. he wants it efficient and clean. large funds are bound to follow this lead. As will other automotive manufacturers.

Not all nickel is equal. We’ve discussed at length the advantages of disadvantages of nickel sulphide and nickel laterite, with both possessing different costs: high-cost mining (sulphide), low-cost mining (laterite), high-cost processing (laterite – +US$1Bn HPAL projects) and low-cost processing (sulphide – simple smelting).

However, the element that many are forgetting to this story regards the environmental footprint of nickel sulphide and nickel laterite; are laterite projects dirty? Is this a complete game-changer in the wake of Elon Musk’s quarterly conference call requesting that nickel miners produce as much green, efficient and sustainable nickel as possible?

We Discuss:

  1. 2:20 – NetZero Metals Inc: An Overview
  2. 5:30 – Environmental and Sustainable: Problems of Mining
  3. 7:10 – Sulphide vs Laterite: Which Gets Funded First?
  4. 9:29 – NetZero Mission and Plan
  5. 11:13 – Supporters of NetZero: Benefits to the Market
  6. 12:17 – A Distraction from Canada Nickel’s Goals?
  7. 15:37 – Difficulties to Come: Might Big Companies Retaliate?

CLICK HERE to watch the full interview.

Matthew Gordon: Mark Selby. How are you, sir?

Mark Selby: Good. Thanks, Mr. Gordon. How are you?

Matthew Gordon: It feels like only yesterday we spoke, but that was I suspect that was our Nickel insight weekly session.

Mark Selby: There you go. The weeks do merge together these days when you’re at home with COVID.

Matthew Gordon: They do roll on. But today we are talking to you with your Canada Nickel Corporation hat on, because I saw your press release, you are talking about NetZero Metals. What is it? Is it some gimmick?

Mark Selby: No, we have had this in the works for the last few months. What we realised is, we’re in a pretty unique position where we have the rocks that make up 90% of a deposit actually, naturally absorb CO2 when exposed to air. We are in a region where all the electricity is hydroelectric power. Any electricity that you use in the mining process is zero carbon. And we are in an area that actually has a long history of doing downstream processing in the region, so we can actually build a downstream processing plant, which is often where a lot of these emissions are generated. We are going to take advantage of the fact that our waste rock and tailings should be able to soak up that CO2. When you step back and look at it, you go, ‘Oh, okay. What?’ We can actually deliver zero-carbon materials, zero-carbon Nickel, zero-carbon Cobalt and zero-carbon Iron. And, Mr. Musk’s tweet last night, not last night, last week, really drove that home in terms of they need environmentally sensitive Nickel, and it’s not a 2050 issue. It’s a today issue.

Matthew Gordon: I need to dig deeper than that because those factors have always been there in your project – why now? What attention are you trying to draw? Is it just trying to draw attention to Canada Nickel Corp? Or is there something bigger to it than this?

Mark Selby: I think, at the end of the day… in a past life, we realised that Dumont could be that, so now that I’m running my own show, realising that, yes, this is possible and to step back, and really, this is the thing the mining industry should be doing. I think what the industry needs to realise is there’s an ever larger number of people who are your consumers who look at Co2 emissions in the same way that we did looking back in the 1970s and 1980s when a lot of mining companies and industrial companies in general used to think, ‘Oh, just dump the gas in the air, dump the liquid waste down the stream. That’s great, we’ve got a stream, that’ll just carry it away for us. We don’t have to worry about it.’ And we look back and we think all that was so horrible, but there’s a whole new group of consumers who are looking at the Co2 emissions that our industry is involved with, not just generating ourselves, but the products that we make, and we really need to find solutions to generate the zero-carbon products that these consumers and the market wants and needs.

Matthew Gordon: Elon Musk came up that statement last week, and that’s had a massive effect on the price of Nickel, your share price, and it has got people’s attention, looking towards Nickel. But you have got a Nickel Sulphide project. We have talked in some of our weekly insights sessions around laterites, and we have done one show on dirty Nickel. So he’s helped people understand that he will invest in Nickel projects if they are sustainable, if they are done in an environmentally friendly way. Aren’t they all environmentally friendly,  as far as mining goes?

Mark Selby: No, that’s the big thing, we alluded to it in different things. Nickel has a dirty Nickel issue in that the bulk of the growth over the last five years and where the bulk of the growth going is going forward, has come from Nickel pig iron projects in Indonesia, and to make Ferro-Nickel, to make Nickel pig iron, you use a huge amount of electricity and all those projects are using coal-fired electricity that degenerate it all. Each one of those projects is using somewhere in the order of 25t to 30t of coal to make 1t of Nickel. That in turn is 90t of Co2 emissions per ton of Nickel. So all of a sudden you take 50kg of that  Nickel that’s related to that and all of a sudden, you’re strapping 4t of steel to a Tesla that’s got 50kg of Nickel under the bottom, I’m not sure that’s what Elon Musk had in mind when he was,  wanting to build Tesla to  change our impact on the environment. And, consumers don’t want to buy a car and end up having a whole pile of CO2 that comes along with it. The fact that that’s where he went to immediately after saying we need as much as we can, as soon as we can, is really, that is a fundamental issue for them, that they just can’t get enough clean Nickel to meet their objectives.

Matthew Gordon: Basically, Indonesians, Chinese, they don’t care. They can get funding wherever. What about laterite projects outside of those jurisdictions? Do you think that they are going to find it just that little bit harder to get funding, or do the big institutions and funds not mind? And they are really just concerned about the bottom line?

Mark Selby: Well, the coal-based Ferro-Nickel projects in general are going to really struggle here because, not only on an economics perspective, you’re now competing with these massive facilities that are being built in Indonesia. Your project itself is at a disadvantage scale-wise to these businesses. You now, if you’re using coal in the rest of the world to generate your Nickel, if the Indonesians are going to dominate the Chinese market, and you’re left supplying your product to the rest of the world, are you going to have a market there when you either have to start paying for the carbon that you’re generating? Or whether people will say, ‘no, as long as I have an alternative that’s zero or lower carbon, I’m not interested’.

There are Ferro-Nickel projects that do have access to hydroelectric power or access to natural gas so those, obviously, have a much lower environmental footprint than the coal-based powers. But, those are the design choices people are going to have to make in terms of the projects that they choose to fund going forward.

Matthew Gordon: Who gets financed first – Sulphide projects or Laterite projects?

Mark Selby: Sulphide projects, particularly the ones that have the benefits that we do at Crawford, where you have these rocks that do absorb CO2. And, I encourage people… there’s a whole pile of research on carbon sequestration using serpentine rock-based systems. They are actually looking at injecting CO2 into solid rock, as opposed to just using the tailings and the waste rock that are leftover. It’s a real solution. I think increasingly as we move forward here there’s going to be much more capital available to those projects that are able to deliver a zero carbon or low carbon versus those projects that generate 90t of carbon for every ton of Nickel that gets produced.

Matthew Gordon: But what are you trying to do here? Because not only have you announced a wholly-owned subsidiary – NetZero Metals, but you have also applied for trademarks. Are you trying to get investors more aware of specific issues, or is this just for your own benefit?

Mark Selby: We’ve been talking now about carbon for several decades, and several decades in, industry still hasn’t managed to do it. If you look at most of the larger resource companies they have got, ‘By 2050, we’re going to be net carbon neutral,’ That’s 30-years from now, and that’s a lot of carbon between now and then. And this year we changed all the light bulbs in the office to be LED lights, but fundamentally they are making iron ore and coal that go to make steel that are going to generate several tons of carbon for every ton of product that they are shipping out. It’s time for those large companies to look themselves in the face and say, ‘okay, how do we, as an industry, find end-solutions to be able to deliver zero carbon production?’

We’re talking, we are going to build downstream, look to build downstream facilities in the area next to this mine, because, the off gas from these processing plants is the issue and we’ll have an ability to take that off gas and route it through the tailings and waste rock and make that carbon issue disappear. Other companies should be thinking about that and should be able to do, should be looking for those opportunities to do it as opposed to, we’re going to get to it in 20 or 30-years.

Matthew Gordon: Have you got any other supporters here? Because I suspect that the BlackRock and Fidelities of this world who are changing their investment criteria, would be interested, if they understood this. Are you going to take this forward? Are you going to be the champion for this?

Mark Selby: Yes, one of the things we talk about in the release is leadership changes, so we really want to target mining. It’s about getting the right people. It’s about finding the right deposits. And it’s about competing for capital in a way that allows you to have ‘the best capital and the lowest cost capital, the most patient capital’ and so forth. So if this initiative allows us to tap into a much broader range of networks to be able to get those type of investors, and you’re going to see changes at our board level where we are going to start to bring in people who have those types of relationships and who have that  experience. So that, we really are going to take this as a new concept to a much broader audience, and, hopefully win versus the other competing mining projects in this space.

Matthew Gordon: Why do you say that’s a positive? Isn’t this going to be distracting for your main task, which is to get your project up and running?

Mark Selby: No, from a mining perspective, it’s about A) – getting the right people. B) getting the right asset, and C) getting the right capital. You need to focus on all 3. Too many mining companies just get caught up in the technical and not really focused enough on the people and on the capital part of it. I would encourage people to listen to Tesla’s last conference call because every topic they came to was around talent; we need more of these types of people. We need more of these types of people. If you’re an entrepreneurial actuary we want you to come help us build an insurance business. So that’s the mindset that we need to have, and this is a stake in the ground in terms of, this is going to be a major thrust of where we’re headed.  We have trademarked these terms because we are first. They don’t exist today. And then in terms of creating a separate entity, because , I’ve been talking to the people in the EV chain now for the last three or four years, and it’s clear on 2 fronts: 1) – they are not as interested in deploying capital to the mining side of the business, but oh boy, do they want as much Nickel and Cobalt as you can produce and preferably double and quadruple your production as quickly as possible, please. And we will help you build a processing plant and we will promise to buy everything you produce. By creating a separate subsidiary right out of the gate, it makes it a much easier conversation, a simpler conversation to get those companies into that specific entity.

The other fundamental piece of this, and, so many companies to date have got this so, so wrong, 2) is the auto industry wants to make the lowest-cost product possible, Elon Musk makes it very clear. That’s how they are going to win. And so you need to look from an end to end perspective of what’s the lowest cost way to get a chunk of Nickel out of the ground and into a battery that isn’t a Tesla and the other 18 large automakers who are going to be betting the farm now on the electrification of cars. And so when you look at that, the key is, as you take a Nickel intermediate that’s as high-grade, as clean as possible, and you dissolve it once and then you basically keep it in one set of processes until it’s like in a can that’s ready to ship to a plant. These people who have built standalone sulphate plants are crazy because to take the sulphate, the Nickel that’s in solution, you spend a huge amount of energy to crystallise it, to put it in a bag or a drum, and then that bag or drum goes to a plant that starts to make batteries. And the first thing they do is dissolve it all. I can spend 15-minutes on why that’s not a good idea. All of these companies that we have been talking to are very keen at basically putting as much of the one process under one roof. They do everything once and only once until they get to a product that’s the right thing to ship at that point in time.

Matthew Gordon: That’s hard to put together. What’s even harder is getting the old boys in the industry to back something like this, because what you’re proposing is potentially going to cost them billions and billions of dollars on infrastructure to get clean.

Mark Selby: Oh, no. If you’re making iron ore it’s like, well, okay, well we just ship iron ore. That’s our business. If it all ends up in China, and China pumps out billions of tons of CO2 in the process of making that, we’re not going to build a steel plant next to a hydroelectric facility or in a place where there is some solar or wind, so you have a chance of having cheap hydro available or using natural gas involved in the reduction of it. Or look at complete hydrogen reduction of that process, so that there’s no carbon involved, and/or strapping on some carbon capture at the end of that process. So that if there is carbon that’s produced, you’re able to capture it so it’s not released into the environment.

Matthew Gordon: Well it’s exciting times, and the whole NetZero initiative. Exciting for you. Keep us up to date with how things are moving along.

Mark Selby: Yes. Most definitely.

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