Why Nickel

Nickel: The Secret Driver of the Battery Revolution?

Nickel is a strong, silvery-white metal that is a staple of our daily lives and can be found in everything from the batteries that power our television remotes to stainless steel that is used to construct buildings and cars. Although the majority of nickel is used in stainless steel, it has increased in popularity in the electric vehicle (EV) industry which is about to reach the tipping point in the penetration curve over the next few years.

Here is why – Click To View Infographic Below

Nickel’s Vital Role
Nickel is the most important metal by mass in the lithium-ion battery cathodes used by EV manufacturers. Currently nickel makes up one-third of Nickel Manganese Cobalt (NMC) cathodes and 80% of a Nickel Cobalt Aluminum (NCA) cathodes. As battery formulations evolve, it’s anticipated that we will use more nickel because increased nickel provides higher energy density.

Higher energy: Higher energy density means the increase of nickel in the battery cathode the longer distances electric vehicles can travel. EV manufacturers require batteries that can provide higher energy density, greater power and longer lifetime, safely and at a lower cost.

Reduce costs: The increased costs of lithium and cobalt has battery and electric car manufacturers wanting to shift their current mix of materials by reducing the amount of cobalt and adding more nickel to maximize performance and minimize costs. For example, the battery in the Chevrolet Bolt accounts for 26% of the total cost. Auto makers realize a drop in manufacturing costs would mean an increase in the acceptance of EVs and a move towards profitability.

Impact on the Nickel Market

Nickel, which is primarily used for the production of stainless steel, is already one of the world’s most important metal markets at over $20 billion in size. The additional future impact on the nickel market depends on battery demand and EV market penetration.

Air pollution is the world's largest environmental health risk, according to the World Health Organization and the transportation sector is one of the largest polluters of CO2 emissions. Governments have begun responding by banning the sale of gasoline and diesel vehicles in UK, France, Norway, India and China in the long term.

EVs currently constitute about 1% of auto demand – this translates to 70,000 tonnes of nickel demand, about 3% of the total market. As EV penetration goes up, nickel demand increases rapidly as well.

Future Supply

Even though much more nickel will be needed for lithium-ion batteries, most nickel in the global supply chain is not actually suited for battery production. Battery demand requires high grade nickel products to produce nickel sulphate.

Today’s nickel supply comes from two different types of deposits:

  • Class I (Nickel Sulphides): Higher grade, but rarer deposits that make up 37.5% of current production.
  • Class II (Nickel Laterites): Low grade, bulk-tonnage deposits that make up 62.4% of current production.

Many class II nickel deposits are used to produce nickel pig iron and ferronickel and are generally not suitable for use in batteries. However, state-of-the-art technology is now available which was designed to profitably process laterite with low grade nickel. Ultimately these mines will struggle with costs related to increased energy and shipping for efficient processing. Meanwhile, class I nickel sulphide deposits are used to make nickel metal as well as nickel sulphate. Nickel sulphate, a salt, is used primarily for electroplating and lithium-ion cathode material. Less than 10% of nickel supply is in sulphate form.

Not surprisingly, major mining companies see this as an opportunity. Norilsk, the world's largest nickel miner, announced a tie-up with the German battery maker BASF in June, 2017. In August 2017, mining giant BHP Billiton announced it would invest $43.2 million to build the world’s biggest nickel sulphate plant in Australia.

But even investments like this may not be enough to capture rising demand for nickel sulphate.

Sources: UBS Investment Bank, Daily Commodity Note – 21 July 2017; Wood Mackenzie, Global nickel short-term outlook August 2017
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