The focus is already shifting to nickel supplies, with the expected EV boom fuelling a spike in global prices

When we think of the transition to green energy, cobalt and lithium tend to dominate discussions surrounding the minerals required for this shift to take place. Partly, because base metals like nickel are not produced solely for the purpose of green technologies. Rather, as sated by the Nickel Institute, it is used in more than 300,000 products worldwide, ranging from consumer to aerospace applications.

Of the 2.1 million metric tonnes of nickel content produced in 2017, approximately 65 per cent was used to manufacture stainless steel, while only 6 per cent was devoted to the production of coins, electronics and rechargeable batteries.

While nickel production has slowed in recent years due to an abundance of supply and price fluctuations, the transition to EVs is expected to revitalise global interest in the commodity. According to the International Nickel Study Group, China is a significant source of this growing demand, accounting for 52 per cent of world nickel demand and more than 40 per cent of the world’s EV car stock.

Due to efficiency, price and ease of manufacturing, there are currently two types of lithium-ion batteries making up the majority of the EV market: nickel manganese cobalt and nickel cobalt aluminium, which require a rate of 30 and 80 per cent of nickel respectively.

According to the World Bank, the transition to solar technologies could also increase the demand for nickel by 300 per cent through 2050.


Nickel prices appear to be dropping from their surge in May and early June, when they were driven by higher stainless steel productions.

According to the Australian Government’s Resources and Energy Quarterly, nickel prices have been “subject to high volatility in recent months, buffeted by trade tensions, production pauses among Asian refineries, and various other minor disruptions and industrial disputes, which have led to swings in nickel supply”. The Office of the Chief Economist predicts that “prices are expected to smooth out somewhat as markets settle in coming months, averaging around just over US$13,600 for 2018 as a whole”, with prices stabilising over the next two years, reaching around US$13,250 by 2020 as new production enters the market.



Nickel LME spot prices and stocks. Source: Bloomberg (2018) London Metal Exchange; International Nickel Study Group (2018); Department of Industry, Innovation and Science (2018). Licensed from the Commonwealth of Australia under a Creative Commons Attribution 3.0 Australia Licence.

Nickel consumption is expected to rise from 2.3 million tonnes in 2018 to 2.5 million tonnes by 2020. With stainless steel accounting for a majority of nickel use, the Australian Government believes that it will account for most of its growth.

The Brazilian mining company Vale SA stated in its Q2 report that “global stainless-steel production increased 8.6 per cent in 2Q18 relative to 2Q17, while EV sales worldwide grew 69 per cent in 2Q18 relative to 2Q17. Demand for nickel in other applications continues to be positive, particularly in the super-alloy and plating sectors”, where supply increased by approximately 6 per cent in 2Q18 relative to 2Q17.

The Office of the Chief Economist, however, notes that the situation with stainless steel is rather complex. Although it predicts that the demand growth for stainless steel will ease from the current yearly 5 per cent due to inventory build, it accepts that changes in stainless steel composition may in fact buck this trend. “Chinese state-owned Tsingshan, which recently opened a new stainless steel production facility in Indonesia, is now producing a stainless steel alloy with more than 8 per cent nickel: well above the typical ratio of less than 2.5 per cent”, it stated in the quarterly update.


Australian production is expected to rebound from a low point following several facilities and mine closures in 2016 and 2017.

According to the Australian Government figures, mine production is expected to rise from an estimated 163,000 tonnes in 2017-18 to 166,000 tonnes in 2018-19, and to 178,000 tonnes in 2019-20, with exploration for nickel and cobalt increasing from AU$46 million to AU$65.4 million. This compares to a quarterly spend of around AU$10 million dollars early in 2016.

Production growth will be driven primarily by the new Mincor mine at Kambalda in Western Australia, as well as Poseidon Nickel’s new mine at Mount Windarra, also in Western Australia. Several older mines are also expected to contribute through modest ramp-ups in production.


According to a report released by Wood Mackenzie, Indonesia will play a central role in the nickel market, from “ore production and export to stainless hot-rolled coil sales”.

Nickel supply from Indonesia grew rapidly over the year to June 2018, with the country now accounting for almost one quarter of global mine production, with a large proportion than ever being processed locally to nickel pig iron.

The rise in Indonesian output was driven in part by significant Chinese capital investment. Indonesian nickel ore is being largely directed to Chinese nickel pig iron producers.

GEM, Brunp JV to develop Indonesian nickel-cobalt project

A joint venture comprising Tsingshan Group, GEM, Brunp Recycling, PT Indonesia Morowali Industrial Park (IMIP) and Hanwa Co Ltd will invest $700 million to develop a nickel-cobalt project in Indonesia.

The project, located in Morowali County, Central Sulawesi in Indonesia, has a target production capacity of 50,000 tonnes per year of nickel and 4,000 tpy of cobalt. It will be able to produce 50,000 tpy of nickel hydroxide intermediates, 150,000 tpy battery-grade nickel sulfate, and 20,000 tpy battery-grade cobalt sulfate, battery recycler GEM said late last week.

GEM, steel mill Tsingshan, and battery-maker CATL’s recycling arm Brunp will hold 36 per cent, 21 per cent and 25 per cent of the shares of the joint venture respectively. The remaining 10 per cent and 8 per cent shares will be owned by Indonesian joint venture IMIP and trading company Hanwa.

Xu Kaihua, Chairman of GEM believes that the energy source for electric vehicles has entered into an era of nickel-rich batteries, with the new energy industry undergoing a drastic reshuffle.



Key nickel consumer markets (in tonnes)

In a new environment protection drive, the world’s second largest nickel producer – Philippines – has announced that it will limit the land that miners can develop at any given time.

As reported in local media and Reuters, the new rules – set to protect the environment and backed by President Rodrigo Duterte – target 29 of 48 mines operating in Philippines, that are nickel producers supplying ores to the world’s leading market, China.

Nickel ore output fell 10 per cent in the first half of 2018 from a year earlier to 9.43 million dry metric tons, government data showed.

Eleven of the nickel mines had zero output during the period because their operations were suspended or they were under maintenance status.

According to reports, the new rules stipulate that a 20-metre buffer zone is established inward from the mining tenement boundary near rivers and streams, where metals extraction will be banned.

Nickel miners will be limited to a production area ranging from 50 to 100 hectares at any one time, depending on the size of production and whether they have a processing plant.

The government order will allow mines producing up to 1 million tonnes of nickel ore a year to work on 50 hectares at any one time.

Those producing more can work on 60 hectares up to 100 hectares, while projects with a processing plant will be allowed up to 162 hectares.

Mining companies are required to progressively rehabilitate the same amount of land that was disturbed by mining operations.



World mined nickel production, monthly. Source: International Nickel Study Group (2018); Department of Industry, Innovation and Science (2018). Licensed from the Commonwealth of Australia under a Creative Commons Attribution 3.0 Australia Licence

Germany's BASF and Russian miner Norilsk Nickel (Nornickel) have struck a nickel and cobalt supply deal to meet growing demand for EV batteries.

Underpinned by a new BASF cathode plant in Finland, the agreement could provide fresh impetus to European efforts to create battery cell manufacturing capacity in a market dominated by Chinese and Korean producers.

Chemicals giant BASF will build a plant to produce cathode materials for batteries in Harjavalta, Finland, adjacent to a nickel and cobalt refinery owned by Nornickel, the world's second-largest nickel miner and a major cobalt producer.

This investment is part of BASF’s €400 million multi-step investment plan announced last year and builds upon initial battery materials production started in Harjavalta in 2018. Start-up is planned for late 2020, enabling the supply of approximately 300,000 full electric vehicles per year with BASF battery materials.

“With the investment in Harjavalta, BASF will be present in all major regions with local production and increased customer proximity further supporting the rapidly growing electric vehicle market,” said Kenneth Lane, President, BASF’s Catalysts division. “Combined with our Nornickel cooperation, we are creating a strong platform that connects the efforts between industry leaders in raw material supply and battery materials technology and production.”

Sergey Batekhin, Senior Vice President, Sales, Procurement and Innovation at Nornickel said, “We believe that electric vehicles have significant potential to transform the global nickel industry.”