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By 2040, demand for nickel will grow 19 times bigger than it is today as electric vehicles (EVs) claim an increasingly greater share of the world’s car market, the International Energy Agency said.
In addition to being a key ingredient in stainless steel, nickel also is essential in making the more powerful batteries demanded by electric trucks and other large EVs.
British minerals giant Rio Tinto has bought into a U.S. nickel project of Talon Metals, Australian mining company IGO is negotiating to take over competitor Western Areas, and BHP and Wyloo Metals are wrestling over Noront Resources’ millions of tons of nickel in northwest Ontario.
BHP entered the fray after deciding last month to sell its oil assets and turn to more “future-facing” minerals, CEO Michael Henry told The Wall Street Journal.
“We can see an increase in M&A in nickel, which is driven by the need for sustainable nickel that’s outside the Chinese supply chain,” metals consultant Steven Brown told the WSJ.
Tesla has contracted for Australian nickel from BHP and also has signed deals for supplies from Canada and New Caledonia; Korea’s LG Chem battery company has inked a six-year nickel contract with Australian Mines.
The only nickel now mined in the U.S. is sent to China to be used in batteries made there, the WSJ reported, although the Biden administration is eager to develop American supply chains for nickel and other key minerals, Henri van Rooyen, Talon, CEO, said to the WSJ.
“People are looking to de-risk the supply chain by reducing dependence on one country,” Brown said.
People also are looking for “clean” nickel as countries seek to abide by their pledges under the Paris Climate Agreement, the WSJ noted.
For example, the European Union has proposed that, beginning in 2024, only batteries with a “carbon footprint declaration” can be sold in the Eurozone.
That would ban car makers from using batteries containing nickel from Indonesia, which ranks 12th in the world for coal consumption.
In contrast, Ontario already has shuttered its coal-fired electric plants, meaning that nickel mined there would have a smaller carbon tail than Indonesia’s.
“Car companies are willing to pay a price premium for nickel sustainably produced,” the WSJ noted.
Still, Indonesia’s dominance of the nickel market is likely to grow from 40 percent today to 60 percent by 2027, James Lennon, a director at Red Door Research, predicted to the WSJ.
“Virtually none of these [mining] projects outside China are under construction,” he said. “The bulk of supply will come from Indonesia. There’s no alternative.”
Chinese companies involved in Indonesian nickel mining ventures also will have to clean their supply chains, forcing Indonesia to take similar steps, Brown noted, and then “the green premium will disappear.”