FPX puts auto companies on notice

While automakers seemingly prevaricate over whether to invest in the minerals supply chain, the game may be changing as other consumers of minerals that could end up in lithium-ion batteries, come to the table seeking to secure low carbon supplies of raw materials, to reduce their own carbon footprints.

Canadian nickel junior FPX Nickel struck a deal with leading stainless-steel producer Outokumpu, underlining that markets are competitive and battery markets are not the only game in town. FPX Chief Executive Martin Turenne has met with many automotive, battery and chemical companies over the last two years, which he says have struggled to climb the steep learning curve to learn mining from scratch.

“Outokumpu has been buying nickel for decades. They know what they're doing. They're not newbies the way the car companies are. If the car companies want to learn how to procure critical minerals, they're going to have to play by this type of playbook, and that playbook has now been set as regards our asset by Outukumpu. This is a way of putting car and battery companies on notice that they cannot assume that North American nickel production will magically appear into their supply chain. If the car and battery companies want to get their mitts on nickel to be produced from this project they are going to have to play ball and they are going to have to pay up for that privilege,” FPX president & CEO Martin Turenne told Skarn Bulletin. Outokumpu bought a 9.9% stake in FPX at a 40% premium to market, including a right of first offer for offtake.

Net zero

In addition to being one of the largest stainless steel producers, Outokumpu’s stainless steel production also has one of the lowest carbon footprints in the industry, enabling it to differentiate itself and potentially obtain higher pricing. Nickel from FPX could help it further reduce its footprint as FPX’s nickel will be produced using hydropower, and have very low emissions, particularly as it will not need to be smelted. Baptiste is also hosted in ultramafic rocks which naturally sequester atmospheric CO2. “This is a novel style of nickel deposit. It's not a sulphide. It's not a laterite. It will produce a ferronickel product which has significant advantages in that it can bypass the smelting stage and be sold directly to stainless customers, yielding significantly higher payables or revenue per unit of nickel compared to products sold to smelters,” said Turenne.

The potential of the awaruite nickel mineral at Baptise has seen Japan’s JOGMEC agency reach out to FPX to help it find more of it around the world. FPX was also the first nickel focussed recipient of funding under the Canadian government’s critical minerals initiative, with an award of C$725,000, which will help it scale prodduction of nickel sulphate from its pilot facility.