Some $100 billion worth of investment in new nickel production is needed to meet projected electric vehicle (EV) demand, says the world’s biggest producer Vale.

But this investment would only be triggered by higher prices — “prices above $US20,000 per tonne (~$28,000/t)”, Vale’s Paul Casbar told S&P Global Battery Metals Conference delegates in New York.

The three-month nickel price on the London Metal Exchange (LME) is now about $17,600 per tonne – down from a peak from about $23,200 per tonne in June.

The market had a “structural global deficit” of 140,000 tonnes this year – meaning far more nickel was being consumed than produced. That deficit would likely be maintained next year, Mr Casbar said.

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Despite these demand projections, many producers are loathe to jump headlong into new investments, he said.

Two bad years for nickel – which saw prices plummet to below $11,300/t in February 2016 – had left the industry “shell-shocked” and still wary about committing to new mines and processing operations.

LME nickel prices have been recovering since 2016.
LME nickel prices ($US) have been recovering since 2016.

Vale believes \nickel prices would have to be sustained at that $28,000/t mark for it to consider developing its vast nickel reserves in Indonesia.

Nickel is already the most significant metal in lithium-ion battery cathodes used in EV.

But the next generation of high-nickel, low-cobalt 811 NCM batteries for EVs could significantly increase projected nickel – and supply could struggle to keep up.

‘811’ stands for eight parts nickel, one-part cobalt, and one-part manganese.