EVs give charge to nickel
Shortage predicted by 2025
The predicted and probably inevitable increase in the number of electric vehicles on the road over the next 10 to 20 years has spawned a lot of hype about lithium, cobalt and graphite, but often lost in the discussion is the important role played by nickel in battery chemistries.
Based on the S&P Global report, Nickel supply energized by electric vehicles, published in March, the Sudbury Basin and other sources of nickel sulphide deposits will be important beneficiaries of the transition to electric vehicles.
“Lithium-ion batteries used by many of the major electric vehicle manufacturers use a cathode that is primarily composed of nickel,” notes the report. “However, not all nickel supply is suitable for manufacturing battery cathodes.
Only 49 per cent of 2017 nickel supply from sulphide and limonite deposits is suitable for this purpose and extracting nickel from the latter deposits is less attractive as costs are generally higher than from sulphide deposits.”
According to the report, the cathode used in Tesla’s lithium-ion batteries is 85 per cent nickel, 10 per cent cobalt and five per cent aluminum.
Another widely used battery used by General Motors and Nissan is 60 per cent nickel, 20 per cent manganese and 20 per cent cobalt. “However, many manufacturers of this battery are looking to increase the nickel content in their cathodes to 80 per cent “because higher nickel content…increases energy density and extends vehicle range.”
Adam Webb, the author of the report, cautions that there are other battery technologies already available or under development that use less or no nickel, but says he believes “nickel will continue to be an important commodity in the manufacture of lithium-ion batteries.”
The concern though is whether nickel supplies will be adequate to meet the demand.
Global production of cars powered solely by batteries amounted to less than 50,000 units in 2012. In 2017, three million electric vehicles came off the assembly line and by 2030, 30 per cent of new cars sold in the U.S., Europe and China will be battery powered, according to CRU, a consulting company specializing in mining and metal analysis.
A McKinsey & Company report, The Future of nickel: A class act, predicts 31 million electric vehicles will be on the road by 2025.
“This bodes well for nickel demand – and in particular class 1 nickel – because only class 1 with its high purity and dissolvability, is suitable for battery manufacturing.”
Class 2 nickel accounted for 25 per cent of total nickel production in 2009, but driven by increased demand from Chinese stainless steel producers, less expensive nickel pig iron (NPI) now accounts for 50 per cent of global supply. It’s that surge in nickel production from deposits in countries such as Indonesia and the Philippines that has contributed to the slide in nickel prices from a high of US$29,000 per metric ton in 2011 to just above US$10,000 per metric ton in 2017, prompting nickel miners to conserve cash and close uneconomic mines.
By mid-April, nickel prices edged up to US$13,585 ($6.16/pound), perhaps as a result of the buzz surrounding electric vehicles.
According to S&P Global, nickel sulphide deposits mined by Vale and Glencore in the Sudbury Basin are among the sources of suitable supply to benefit most from the transition to electric vehicles.
“These deposits benefit from the presence of valuable byproduct metals such as copper, cobalt, gold, silver and platinum group metals,” states the S&P Global report. “On average, these operations are lower-cost on a co-product basis than nickel-mining operations exploiting limonite or saprolite deposits due to production costs being spread out over the multiple commodities as well as the processing techniques being relatively simple and well established.”
Nickel ore from limonite deposits such as those at Vale’s Goro operation in New Caledonia is processed using high pressure acid leach (HPAL) technology, which “presents inherent challenges because of its use of high pressures and temperatures combined with corrosive substances.
“This has led to several well-documented problems at major HPAL projects, including Murrin Murin (a Glencore operation in Western Australia), where significant delays were encountered in the design, construction and commissioning of the processing plant, and at (Vale’s) Goro (operation), which was originally designed to produce 60,000 tonnes per year of nickel, but has yet to reach near this level, despite first production being achieved in 2011,” again due to technical difficulties.
In December, Vale CEO Fabio Schvartsman threatened to mothball Goro by June if the company is unable to find a strategic partner to acquire between 20 and 40 per cent of the asset. “We cannot continue to invest money and lose money in New Caledonia forever,” he told the Financial Times.
McKinsey & Company predicts nickel demand for EV batteries will grow from 33Kt in 2016 to 570 Kt by 2025, increasing total class 1 nickel demand from 0.9 Mt to 1.5 Mt while demand for class 2 nickel is expected to remain flat at 1.1 Mt.
“At the same time, based on the current project pipeline, class 1 mine capacity is expected to grow only slightly, from 1.1 Mt to 1.2 Mt, as historically low nickel prices have led to mine closures and the deferral of over 250Kt of class 1 capacity.”
This will result in a 0.3 Mt shortfall of class 1 nickel in seven years and a premium price for nickel sulphate, which should incentivize miners to increase spending on exploration and new mine development.
Vale and Glencore showed confidence in their Sudbury Basin holdings earlier this year when their respective boards approved C$1.8 billion in mine development spending for their Copper Cliff Deep and Onaping Depth projects, respectively.
Increasing demand for class 1 nickel could stimulate further mine development activity in Sudbury if KGHM International decides to reactivate its stalled Victoria project and Sudbury Platinum is able to raise money for its Aer-Kidd project, both of which are located on the Worthington Offset Dyke west of Sudbury and adjacent to Vale’s Totten Mine.
There is reason to be optimistic about increasing demand for class 1 nickel, but if the price goes too high, there’s still the risk that electric vehicle manufacturers will resort to other chemistries, including the lithium cobalt oxide and lithium iron phosphate chemistries, which contain no nickel at all.
“Battery technologies continue to rapidly evolve” and “the chemistries that emerge dominant will be heavily influenced by potential raw material constraints,” concludes the McKinsey & Company report. .