If I had a nickel...

Norilsk lists carbon neutral nickel ETF

Russian nickel mining giant Norilsk has launched another physically-backed nickel ETF, this time claiming to be carbon neutral.

The GPF Physical Carbon Neutral Nickel ETC (NIC0), which will charge a management fee of 0.75%, is being positioned as way to invest in clean energy. The nickel price has risen 18% this year, thanks to surging demand for batteries in electric cars.

The nickel backing this ETF will be mined by Norilsk and will be stored in warehouses in Rotterdam.

NIC0, which will list across European exchanges, is targeting institutional money and comes with a minimum investment of $100K.

The ETF embeds a carbon credit. This credit is generated by Norilsk cleaning up its mining practices. This clean up includes improving its hydro power plant, improving the heat efficiency in its buildings, and other efforts. EY will be responsible for auditing the emissions reductions.

Norilsk now has several physical metal ETFs, including precious metals ETFs like gold and silver.

Bernie’s commentary

I am not an expert on this type of ETF at all. But there are some potential questions that I have.

1. My understanding was that physical metals ETFs that used industrial metals where not popular due to the fact that  regulators  where worried that ETFs could take raw material  out of the supply cycle thus driving up prices. Also storing this quantity of nickel must be a logistics problem compared to gold is it not ?
2. Anyone know how settlement and clearing works for industrial metals like nickel and copper? For gold I know it’s run by the clearing banks that back the LBMA. What’s it for nickel and copper?
3. How does creation redemption work? Do big banks have industrial metals traders that deal in physical like they do for precious metals? Or do they just trade industrial futures? 
4. It seems that the claim to carbon neutrality turns very heavily on EY’s audit. Which begs the question: how reliable is it? I’m presuming they’re not going to go to Russia an inspect the mines?

Still, I like the idea of other kinds of metals ETFs. And I think nickel has a bright future with electric vehicles.