Nickel in batteries to take ‘significant’ market share from 2023
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The rapidly growing demand for more nickel in electric vehicle (EV) batteries is expected to see the base metal take a much bigger market share in just three years.
“In terms of when the shift towards nickel intense cathodes starts to take effect, we expect batteries using high nickel cathodes (namely NCM 811) start to really develop significant market share from 2023 onwards,” Benchmark Mineral Intelligence analyst Gregory Miller told Stockhead.
NCM 811 has a chemistry make-up of 80 per cent nickel, 10 per cent cobalt and 10 per cent manganese.
For some time now, car and battery makers have been working to reduce the amount of cobalt that goes into their batteries because it is one of the most expensive parts and there is a shortage of the commodity.
“Some of this technology is just starting to filter into the industry now following many years of development yet it still faces technical challenges in being able to deploy into the EV market,” Miller explained.
“By increasing nickel in the cathode, you decrease the life of the battery (i.e. how many cycles you can put it through) and increase safety issues linked to thermal stability.
“This transition will be significant for the industry as demand grows, by 2035 demand could be roughly as big as the industry was in 2019.”
Major players like South Korean battery materials maker Posco are now producing cathodes with greater nickel content to meet demand for greater energy density and longer driving range in the next generation of EVs.
A recently completed 25,000-tonne-per-year plant expansion will mass produce cathodes with 65 per cent nickel content, Posco says.
Fellow South Korean battery maker Samsung says that nickel will make up more than 80 per cent of the cathode materials in its fifth-generation EV batteries when commercial production begins in early 2021.
While Wood Mackenzie is predicting demand for nickel sulphate from the EV market to reach around 800,000 tonnes a year by 2035, Benchmark Minerals Intelligence is expecting it to far exceed that.
“We see total nickel demand from the battery market (all end-uses) much higher than that with the ongoing trend towards higher nickel cathode technology in EVs,” Miller said.
“In Benchmark Minerals most recent quarterly nickel forecast we see nickel demand from lithium-ion batteries reaching 2,250,000 tonnes by 2035.”
Miller says it has been suggested that the rise of EV demand could result in a “bifurcation” of the nickel market, with a split between higher-grade nickel for the EV industry and lower-grade (mainly ferronickel and nickel pig iron) nickel to supply stainless steel mills.
But this all depends on the success of high-pressure acid leach (HPAL) operations being built in South East Asia.
“The history of HPAL operations is littered with technical and operational challenges, and if these projects fail to bring sufficient nickel units to market, a wider spectrum of nickel feedstocks may become economically viable in the production of nickel sulphate due to a higher price environment,” Miller explained.
However, the nickel sulphate market is expected to remain in oversupply for a few years yet.
“Benchmark Minerals forecasts the nickel sulphate market to remain in surplus until 2024, where we expect a deficit to emerge thereafter where rapid demand growth will set in as EV penetration rates rise quickly,” Miller said.
“This is likely to be exacerbated by increasing use of high nickel cathodes (NCM 811).”
Although the nickel price is on an upward trend, it is still off the five-and-a-half-year high of $US18,620 ($27,097) per tonne it reached in September last year.
It currently sits at $US12,930 per tonne, only about 17 per cent higher than its recent bottom in March.
However, longer term Benchmark sees prices rising to between $US15,000 and $US20,000 per tonne as supply struggles to match the significant ramp up in demand from EV’s over the coming decade.
“Indeed, with the next generation of supply suitable for use in batteries set to come from capital intensive HPAL projects in South East Asia, a higher pricing environment will be necessary to incentivise both the development and operation of these projects.”