Demand for battery-grade nickel is projected to triple by 2030, as reported by Benchmark Mineral Intelligence. The surge in demand is primarily attributed to the rise of mid- and high-performance electric vehicles (EVs) in Western markets. Jorge Uzcategui, a senior nickel analyst at Benchmark, highlighted that while China will also experience growth, it is expected to be outpaced by regions outside China. This growth is further supported by the preference for nickel-based chemistries globally due to their superior performance and the limited supply chains of lithium iron phosphate (LFP) batteries outside of China.
Despite the dominance of LFP batteries in the Chinese market, nickel-based chemistries are anticipated to maintain a significant market share worldwide. However, in 2024, battery nickel demand faced challenges due to slower-than-expected EV sales in Western markets. Factors such as inflation and high interest rates have made EVs less competitive compared to internal combustion engine (ICE) vehicles, leading to delays and revisions in EV targets by automakers in Europe and North America. This slowdown also resulted in cancellations of gigafactory projects, impacting North America’s 2030 battery supply forecast by 3% and Europe’s by 10%, according to Benchmark’s data.
On the other hand, China witnessed record EV sales, with nearly 1.2 million units sold in October alone. However, the majority of these vehicles utilize LFP batteries, limiting the impact on nickel demand. Battery producers are increasingly favoring mid-nickel NCM chemistries due to their better thermal stability and reduced risk of overheating, especially amidst low cobalt and manganese prices.
Despite the current challenges, the long-term outlook for battery nickel remains positive. Although weak demand and increased supply have pushed nickel prices to their lowest levels since 2020, the demand for battery-grade nickel is forecasted to grow by 27% year-on-year in 2024. Looking ahead, nickel-based chemistries are expected to dominate, capturing 85% of battery cell production capacity outside China by 2030. High-nickel chemistries are set to play a more significant role as EV technology advances, with over 50% of nickel demand growth by 2030 projected to come from batteries. By the end of the decade, battery nickel demand could reach 1.5 million tonnes annually.
The fluctuation in nickel prices has been a topic of interest, particularly with the projected increase in demand. In the third quarter of 2024, nickel prices began a downward trend, starting at $21,615 per metric ton in May and dropping to $17,357 by July 1. Prices fluctuated between $16,150 and $16,500 in August before climbing to $17,136 on August 27. However, prices fell again in early September, reaching a low of $15,741 on September 10, close to the year’s lowest price of $15,668 recorded in February. Despite this, prices surged in late September, peaking at $17,698 on October 1.
The oversupply of nickel, particularly from Indonesia, has been a significant factor affecting prices. Indonesia increased its mined nickel production by 99,000 metric tons in the third quarter of 2024, with expectations to reach 2.4 million metric tons by the year’s end, constituting 57% of global output. Indonesia’s strategic move to ban nickel ore exports in 2020 has attracted substantial foreign investment for its mining and EV supply chains, solidifying its dominance in the nickel market. Adrian Gardner, principal analyst at Wood Mackenzie, highlighted Indonesia’s projected share of global nickel mine production at 60-65%, emphasizing its pivotal role in the industry.
Indonesia’s nickel ore imports from the Philippines saw a significant surge, rising to 5.3 million metric tons from January to August 2024, a substantial increase from 53,904 metric tons during the same period in 2023. Despite Indonesia’s production dominance, its quota system has posed challenges for Chinese smelters in securing a steady supply, leading to temporary output cuts. Indonesian refiners turned to imports from the Philippines, the world’s second-largest nickel producer, to meet demand. Amid China’s significant investment, Indonesia aims to diversify its partnerships, particularly with Western nations.
In Canada, the government’s commitment of C$46 billion to develop four EV battery plants faces the challenge of raw material availability. Industry experts suggest that Canada may require up to 15 new mines to meet the demand for raw materials. Europe, on the other hand, grapples with the Carbon Border Adjustment Mechanism (CBAM), which taxes carbon-intensive imports. The steel industry in Europe faces difficulties as CBAM only considers direct emissions, leading to increased reliance on nickel pig iron imports from Indonesia and production cuts due to competition with cheaper imports.
The global competition for nickel and critical minerals intensifies as countries strive for energy independence. Alaska Energy Metals Corporation (AEMC), a Canadian mining company, is emerging as a key player in this landscape. AEMC is advancing its Nikolai deposit to enhance domestic nickel supply, aligning with U.S. efforts to develop local sources of critical minerals. President Greg Beischer underscores the importance of a sustainable U.S. supply chain and aims to navigate fluctuating nickel prices while securing funding to advance the Nikolai project. The company’s economic assessment is expected to be completed by 2025, contributing to the development of local critical mineral sources.
In conclusion, the global demand for battery-grade nickel is set to soar, driven by the increasing adoption of EVs and the shift towards high-performance nickel-based chemistries. While challenges such as oversupply and fluctuating prices persist, the long-term outlook remains optimistic, with nickel poised to play a crucial role in the future of electric mobility and sustainable energy solutions.
