Excitement about nickel sulphides’ role in the batteries boom may be justified but the reality is the stainless steel market still dominates demand for the metal, the 121 Mining Investment conference in London has been told.
Speaking at the two-day event at County Hall, which has been attended by more than 300 investors and executives representing over 100 mining companies on Thursday and Friday, Red Door Research managing director Jim Lennon said he understood the market’s excitement about the role nickel – and nickel sulphides in particular – could play in the electric vehicle-driven batteries boom.
But he pointed out that nickel use in the batteries market remained a small slice – only about 3 per cent – of the metal’s overall demand pie.
The metal demand picture’s transformation was happening but it would take time.
“The driver today continues to be the end use of nickel, which is stainless steel which takes about 73 per cent of nickel supply,” Mr Lennon, the former long-time head of Macquarie Bank’s commodities research team, said.
“Stainless steel growth will continue to prove to be an important part of the growth story going forward (for nickel).”
Not that the EV boom will have no impact on nickel, Mr Lennon added. It will simply take some time to reconfigure the demand pie because EV usage is coming off a low base.
Mr Lennon said nickel demand from the batteries sector was growing at annual rates of between 25 per cent and 30 per cent, and as high as 40 per cent.
“But it is not just the growth in the EV market but the nickel intensity that is going up as well,” Mr Lennon said.
He said a typical EV contained about 20kg of nickel but the projections were that this number could rise to 40kg to 50kg by 2030.
This inevitable raises questions about whether the global nickel supply can keep track of demand.
Mr Lennon said the nickel market remained in a structural deficit position, even though this was not necessarily reflected in the LME nickel price. Most of the additional nickel supplies had come from laterite operations with a noticeable lag in the production of sulphides, regarded as the most suitable nickel for use in battery cathodes.
Analysts report few new nickel sulphide exploration success stories but say that some mothballed laterite operations – such as First Quantum’s Ravensthorpe asset and other assets in Indonesia – may be lined up for an operational restart. While laterite operations typically benefit from their cobalt by-product credits, they are also exposed to acid prices and environmental constraints around tailings.