Interesting read17 Oct 2020 12:23
Nickel US$ 15,545/t vs US$15,385/t yesterday - Nickel is all class but not enough supply
Elon Musk’s call to arms to the nickel mining industry is just the most high profile example of the EV battery market yearning for greater and more secure supply of the metal which is an important component in the EV revolution.
Today stainless steel makes up the majority of demand for nickel, constituting 74% of the market while batteries only make up 5-8% of demand. Batteries however can only be produced using higher purity Class 1 which accounts for only around 46% of the nickel supply market.
As the demand for EVs rises with government policy support and improved battery economics Class 1 demand is set to outstrip supply by 2029 and likely even earlier, perhaps 2024 according to McKinsey. McKinsey forecast EV battery demand for nickel will increase from 33Kt to 570Kt by 2025.
This could lead to a divergence in pricing for the different classes of nickel with class 2 trading at a significant discount to class 1. This bifurcation and the associated environmental problems associated with mining nickel provides an opportunity for certain producers differentiate themselves reports Metal Miner.
Nickel has become a popular component in EV batteries with the proportion of the metal ever increasing, most recent iterations including the NCM 811 with 80% nickel content. Nickel helps deliver high energy density and greater storage capacity at lower cost, often filling in for cobalt which battery producers are seeking to move away from.
Russia, Canada and Australia are the primary sources of nickel with Canadian miners marketing themselves as a green source of nickel to acquire supply contracts with automakers.
With lead times on projects up to 10yrs which coincides with the moment at which demand will outstrip supply, investment is required now and so might be some blue skies for nickel.
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