The big splash agreement that Elon Musk and his Tesla car company made last week with Brazilian miner Vale should have a ripple effect in the nickel-rich Sudbury basin and across Northern Ontario, according to a Toronto-based mining columnist.
“This is a tremendous opportunity to highlight the enormous potential of the Sudbury basin for clean, low-carbon nickel,” said Stan Sudol, owner of the Republic of Mining website, who heaped praise on the Tesla CEO.
“Elon is someone who thinks out of the box and by solidifying a secure supply of clean nickel he’s ensuring that Tesla continues to be one of the most innovative electric vehicle manufacturers in the world.”
On May 6, Tesla and Vale finally confirmed a rumoured deal floating around for months that Canadian-mined and processed nickel from Sudbury and Labrador will be used in the manufacture of Tesla electric vehicle batteries.
Neither company revealed the dollar value or length of the agreement other than it being a multi-year deal.
Two years ago, Musk was urging mining companies to produce more nickel to expedite the transition of the world to electric vehicle transport and clean energy, and to address the coming supply squeeze.
But the global business magnate likely didn’t foresee the outbreak of war in Eastern Europe and the skyrocketing price of many mineral commodities in the critical minerals and battery metals sphere.
Sudol said the Ukraine war and trade sanctions against Russia effectively removes 20 per cent of Class 1 nickel — also known as nickel sulphide — off the global market, a key ingredient used to make electric vehicle (EV) batteries.
“Musk and any North American manufacturer don’t want to be associated with what can now be termed blood or genocidal nickel,” said Sudol.
With nickel-producing countries like Indonesia and the Philippines increasingly coming under Chinese influence, the emphasis by North American automakers is on securing shorter, domestic supply chains to feed their plants, “that leaves Northern Ontario and Canada.”
“It bodes well for the Sudbury basin and also bodes well for the potential of other nickel discoveries throughout Northern Ontario,” said Sudol.
Between the Sudbury basin, the Ring of Fire in the James Bay region, and other mineralized greenstone belts in the northwestern half of this region, Sudol thinks the future of Northern Ontario is “extraordinary, because the world is almost depending on this region to help find the nickel, copper and other battery metals to decarbonize.
Nickel, copper, platinum group metals, lithium and graphite are all categorized as critical minerals, as are some of the more obscure elements such as cesium, molybdenum and tungsten. All are key ingredients used in digital devices such as cell phones, batteries for electric vehicles, battery storage, renewable energy and applications in health care, aerospace and the defence industry.
Sudol said a high-profile deal like the Tesla-Vale agreement provides an added sweetener for the Ontario government to lure more EV manufacturers to this province.
South of the border, Ontario and Canada are being viewed as major competition to Michigan’s auto-driven economy due to the federal and provincial governments' critical minerals strategic road map and a willingness to invest in battery plants, retool assembly lines for EV production, and establish related research centres, he said.
But the so-called “secret sauce” working in Ontario’s favour is having the raw mineral material in place to feed the EV sector.
“The ace in Ontario’s pocket,” Sudol said, is the Ring of Fire. The untapped Far North mineral district contains an enormous abundance of many of the critical metals needed to produce batteries for the car makers.
Sudol said that should put more of Northern Ontario’s advanced nickel and critical minerals project in play, suggesting there could be more mega-deals deals in the making.
One was already finalized this spring.
Australian billionaire Andrew Forrest used his metals investment arm, Wyloo Metals, to acquire Noront Resources and its major nickel asset in the Ring of Fire.
That’s been the capper, so far, on a slew of Australian investment to stake and acquire mineral properties and mining companies across a broad spectrum of commodities in this region.
And after losing out on Noront, Australia’s BHP remains on the hunt for Canadian assets after moving its copper and nickel exploration office to Toronto from Chile last year.
“When you have the biggest mining company in the world realizing that the future potential for battery metals is Northern Ontario and Canada, then that bodes well for country,” Sudol said.
Despite President Joe Biden’s call to create a carbon neutral economy, it’s become increasingly difficult in the U.S. to permit and bring new mines into production, even in traditional mining states, he said.
For example, in January, the U.S. Department of the Interior cancelled two mineral leases for the proposed Twin Metals copper-nickel in northern Minnesota over concerns about its proximity to Boundary Waters Canoe Area Wilderness, a victory for Indigenous opponents and environmental groups.
Even in a mining district like Nevada, lithium miners are facing an uphill regulatory struggle.
Sudol said that should shift the investment focus to more opportunities in the Ring of Fire, into established nickel mining camps like Voisey’s Bay, NL, Thompson, MB, and older nickel operations, once shuttered due to plunging commodity prices.
The Sudbury basin is blessed with a polymetallic endowment of copper, cobalt, PGMs, gold and silver as byproduct material from nickel mining, he said.
It’s also a “promising” time for those in the junior mining space, he said, mentioning privately held Juno Corp.’s Ring of Fire assets and Sudbury-based Frontier Lithium’s world-class, 40-million-tonne PAK deposit in northwestern Ontario.
Sudol likens today’s situation to Northern Ontario’s surging resource economy in the post-Second World War era of the 1950s when a thriving U.S. manufacturing base leaned heavily on natural resources excavated and harvested from this region. Many mines and lumber operations were developed and this region’s population surged to its highest levels ever.
“We’re entering a new phase where the decarbonization and electrification of the transport sector is requiring similar huge increases in mining development, and because of the geology of northwestern Ontario, being as rich as it is, there is enormous potential for many, many new mines, not only in Ring of Fire, but toward the Manitoba border," Sudol said.
“We’ve got a chance to do it over again.”