In the ongoing push for energy transition and the increasing commitments to achieving net zero emissions, the demand for clean energy technologies has surged, leading to a heightened need for critical minerals. Among these minerals, nickel has emerged as a key player, particularly in the production of batteries for electric vehicles (EVs).
In the first quarter of 2024, primary nickel producers witnessed a significant increase in their output, creating an oversupply in the market, while mined nickel producers scaled back their production. Data from S&P Global Market Intelligence reveals that the top five primary nickel producers collectively generated 130,930 metric tons, marking an 11.7% year-over-year growth. Primary nickel encompasses refined nickel for EV batteries, as well as nickel pig iron and ferronickel for steelmaking. Notably, Indonesia-based companies PT Merdeka Copper Gold and Nickel Industries experienced substantial year-over-year output expansions. Merdeka Copper Gold’s production soared by 123.1% to 20,900 metric tons, while Nickel Industries saw a 22.4% increase to 25,472 metric tons.
The rapid expansion of Indonesia’s nickel industry has contributed to market oversupply, resulting in a significant decline in nickel prices from the peaks of 2022 and 2023. The London Metal Exchange (LME) cash price for nickel stood at $17,790.40 per metric ton on June 7, marking a substantial 42.5% drop from the 2023 high of $30,958 per ton on January 3. This price also represents a 63.1% decrease from the 2022 high of $48,241 per metric ton. Despite initial rises in nickel prices in early 2024 due to sanctions on Russian metal and protests in New Caledonia, prices have since decreased, though they remain 8.6% higher than at the beginning of the year. The surplus of primary nickel, driven by increased supply from Indonesia and China, has constrained price growth, with LME stocks reaching a two-year peak on May 29. Consequently, some producers have announced plans to shutter operations or reduce output.
PJSC MMC Norilsk Nickel, a top primary nickel producer, slashed its production by 9.9% to 41,958 metric tons, while the top five mined nickel producers witnessed an 18.8% year-over-year and 9.4% quarter-over-quarter decrease, generating 17,133 metric tons in the first quarter. Mined nickel refers to metal contained within ore. Sumitomo Corp. experienced a notable decline, producing 2,800 metric tons, down 44.0% year-over-year and 30.0% quarter-over-quarter. IGO Ltd., the leading mined nickel producer, supplied 6,527 metric tons, marking a 21.9% year-over-year drop and an 8.3% quarter-over-quarter decline.
Indonesia, the Philippines, Russia, New Caledonia, and Australia were among the largest nickel-producing countries in 2023, as per GlobalData. Global nickel reserves were estimated at 102.1 million tonnes as of January 2023, with Indonesia and Australia each accounting for 20.6% of the total reserves. Brazil held 15.7% of the reserves, followed by Russia (7.3%), New Caledonia (7%), and collectively the Philippines and Canada (6.9%). In the third quarter of 2023, average global nickel prices stood at $22,942 per metric ton, marking an 11.6% decrease from the same period in 2022. This price decline was attributed to weak demand from China’s battery sector and an increasing nickel supply, particularly from Indonesia.
Forecasts indicate a further 14% decrease in nickel prices in 2023 and an additional 10% decline in 2024, primarily due to the anticipated surge in supply from Indonesia and the Philippines. However, there is optimism surrounding the potential for global nickel prices to rise in 2025, driven by the increasing demand for electric vehicles (EVs).
Nickel, a versatile metal with historical uses in currency and stainless steel, is now playing a crucial role in the global energy transition. The International Energy Agency (IEA) projects a 65% surge in nickel demand by 2030, fueled by the escalating need for resources in clean energy technologies. Reports suggest that clean energy technologies are experiencing the fastest growth in demand for nickel and other critical minerals. However, the nickel industry, often associated with environmental concerns, faces the dual challenge of ramping up production levels while adopting sustainable practices.
Nickel has long been integral to energy storage technologies, facilitating enhanced storage capacity at a low cost, which has been pivotal in miniaturizing batteries for portable electronic devices. Presently, nickel is increasingly utilized in the cathodes of lithium-ion batteries for EVs, enhancing their performance and addressing a key barrier to EV adoption: limited range. The proportion of nickel used in car batteries globally is projected to increase from 4% at the start of the decade to potentially 40% by 2030, as many markets move towards banning internal combustion engine vehicles.
The demand for nickel is not solely driven by the EV market but also by the broader energy transition. Nickel is crucial for high-performance alloys in wind turbines and solar panels, as well as for catalysts in green hydrogen production. According to the International Energy Forum’s analysis, annual nickel demand stemming from the energy transition could surge from less than 1 million metric tons presently to between 2 and 5 million metric tons by 2050. Balancing the increased production of nickel with sustainable practices will be essential as the world transitions towards cleaner energy solutions. The industry’s ability to meet this rising demand while upholding environmental integrity will be pivotal in successfully navigating the shift towards a low-carbon future.
