A new Singapore-based commodities exchange, Abaxx, is set to launch the world’s first futures contract for nickel sulfate, a key ingredient in electric vehicle (EV) batteries, by the end of this year. The exchange also plans to add contracts for other metals used in EV batteries, such as lithium, in the future.
Nickel sulfate is a form of nickel with higher purity and is more suitable for battery production than the conventional Class refined nickel traded on the London Metal Exchange (LME) and the Shanghai Futures Exchange. Nickel sulfate prices have been rising due to strong demand from the EV sector, which is expected to grow further as countries adopt green policies and consumers switch to cleaner vehicles.
Abaxx executives said they designed the new contract to meet the needs of both producers and consumers of nickel sulfate and investors who want to gain exposure to the emerging battery metals market. The contract will be physically settled, meaning the seller will deliver the product directly to the buyer without using a network of warehouses like the LME. The contract will also have a transparent pricing mechanism based on spot market transactions.
The exchange, which is owned by Canadian-listed Abaxx Technologies, has recruited several former Goldman Sachs executives and analysts, as well as mining investor Robert Friedland, who has discovered some of the world’s largest nickel and copper deposits. The exchange also aims to launch futures contracts for liquefied natural gas (LNG) and carbon, which are also related to the energy transition theme.
The launch of Abaxx and its nickel sulfate contract is part of a broader trend of new exchanges and products emerging in Asia, where most of the EV battery production and consumption is concentrated. For example, China launched a carbon emissions trading scheme in July, while Indonesia plans to launch a nickel ore futures contract next year.
Abaxx said it is still awaiting regulatory approvals from Singapore authorities before it can start operating its exchange and trading its contracts. The exchange said it has already received interest from potential customers, including miners, smelters, battery makers, automakers, and hedge funds.
The exchange hopes to create a liquid and efficient market for nickel sulfate and other battery metals, benefiting the industry and the environment. As Greely, the chief economist of Abaxx, said: “We want to be part of the solution for climate change.”
Source: Mining Weekly
