Lithium and cobalt? Pfft, nickel is where the battery metals action is
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The words “dire” and “critical levels” were used to sum up the increasing shortage of nickel at this week’s Lithium & Battery Metals Conference in Perth.
This is great news for producers and emerging producers because that means prices will take off.
And electric vehicles and power storage are going to come to the rescue when Chinese stainless steel demand starts to flatten out.
Wood Mackenzie, although more conservative than others with its estimates, reckons the nickel market is going to need the equivalent of 12 “Ambatovy” mines by 2030.
Ambatovy in Madagascar is one of the world’s largest lateritic nickel mines. At full production its output will be 60,000 tonnes a year, but right now it is producing at 40,000 tonnes a year.
That amounts to 480,000 tonnes of much-needed nickel supply by 2030.
“For the battery sector, the demand for nickel is currently less than 5 per cent but growing up to 35 per cent by 2040,” said Angela Durrant, principal analyst metals research at Wood Mackenzie.
“Our projection at this stage is that by 2040, we are looking at about a 1.7-million-tonne requirement to meet our demand projections.
“So that’s stainless, that’s into batteries, that is basically into everything and that is really the shortfall we are looking at because there really is nothing of huge significance in the development pipeline.”
Global inventories have dropped to about 13 weeks supply, while London Metal Exchange (LME) inventories sit at about nine weeks supply, according to Jerome Baudelet, sales and marketing director for major French nickel producer Eramet.
“So somehow we are getting into critical levels of inventory, so that could have an impact on prices,” he said.
Since the start of this year, the LME nickel price has jumped over 25 per cent and is trading at around $US13,090 ($18,459) a tonne.
However, the price still has some way to go to get back up to the peak of $US15,745 reached mid-last year.
“We’ve noted the change in cobalt and nickel prices coming off their peaks, but we also note that prices will always go up and down at a particular time and we’re not too worried about that, we’re more worried about the opportunities in these materials,” said Western Australian mines minister Bill Johnston.
“Our high-grade nickel is clearly superior to some of the other nickel produced in the Philippines and Indonesia.”
Mr Johnston reiterated how happy he was that BHP in particular had decided to keep sinking millions into its Nickel West refinery — which in the tough times faced closure or potential sale.
“In 2018 the government of Western Australia welcomed the decision by BHP Nickel West to invest $60m into their nickel refinery in Kwinana, south of the city of Perth, to produce nickel sulphate, with an option to expand that even further to include cobalt sulphate,” Mr Johnston said.
Federal shadow minister assisting for resources Madeleine King said the transformation of the Nickel West plant had been “remarkable”.
“It’s a nickel refinery seemingly under constant threat of closure for decades and now its reborn and supplying this essential power storage element,” she said.
Wood Mackenzie predicts prices will head back up to over $US15,400 before rising even further to potentially as much as nearly $US21,000 a tonne by 2025.
“At this stage we are in sustained undersupply, stocks are falling, and prices are rising,” Ms Durrant said.
“So we are looking at a relatively good price outlook for the next couple of years.”