Can you dig it? Samsung buys chunk of a Canadian nickel mining company

Korean giant wants a local source of the stuff needed to build batteries

Samsung’s battery unit may have found part of a solution to sourcing the raw materials needed for the products it packs into gadgets and cars: buy a nickel mine. Or part of a nickel mine, at least.

Samsung SDI, one of the chaebol’s many business units, purchased US$18.5 million worth of shares from Canada Nickel making it an 8.7 percent shareholder, according to an announcement [PDF ] from the Toronto-based miner last Friday.

The deal is expected to close around the end of January, pending approval by the Toronto Stock Exchange.

As part of the agreement, Samsung has an option to purchase up to 10 percent equity interest in a planned new mine for US$100.5 million. That stake comes with the right to a tenth of the nickel-cobalt produced over the life of the mine. An additional 20 percent of the production can be purchased for 15 years if mutually agreed.

The mine is currently known as the “Crawford Project” and is expected to tap into the world’s second largest nickel reserve located in Timmins, Ontario, Canada.

The conventional open pit mine/mill operation is expected to operate for 25 years, with first production by the end of 2027. It’s investors already include British mining giant Anglo American and Canadian gold miner Agnico Eagle Mines Ltd.

“We are very pleased to welcome Samsung SDI as an investor and project partner with Canada Nickel," commented Canada Nickel CEO Mark Selby. "As we advance the Crawford Nickel Sulphide Project, it is critical to form long-term partnerships with companies that truly understand how crucial this production is for electric vehicle supply chains across North America and Europe.”

Samsung SDI manufactures and distributes rechargeable batteries used in electric vehicles, IT, Energy Storage Systems (ESS), and for semiconductors and displays. It’s latest quarterly report detailed a 10.8 percent year-to-year revenue growth “propelled by strong sales of automotive batteries.”

The battery unit has committed to building multiple plants in North America, making a Canadian source of raw materials rather convenient.

“Most of the existing nickel sulphide deposits that have been around for 10 years or more have all been bought up by a major in one way, shape or form,” Selby told media outlet The Globe and Mail, indicating that Samsung might not have much choice than to pull the resource out of the ground.

Even so, according to ING Research, nickel is currently underperforming thanks to Indonesia’s enthusiasm for its production. The Asian nation holds the world’s largest reserve of the metal, although most of it is a lower grade material. The supply side surplus drove down prices in 2023 by 45 percent.

“We believe this underperformance is likely to continue, at least in the near term, amid a weak macro picture and a sustained market surplus,” stated ING.

Indonesia has sought to control the nickel market much in the same way OPEC joins forces to control crude oil movement. It also it banned exports of nickel ore in 2020 to boost local processing and other adjacent industries.

While Samsung and other companies are now putting their money into North American resources, Chinese companies, including metals giant Tsingshan have heavily invested in plants in Indonesia for years. Indonesia now largely relies on China-owned nickel processors. ®

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