Battery Grade Nickel For the Electric Vehicle Revolution
Kenbridge property hosts measured and indicated resource of 7.14 million tonnes at 0.62% nickel, 0.33% copper
Message: Invest in EVs now or regret later, Ni mart told
AMSTERDAM — Nickel market participants should invest in production for electric vehicle (EV) batteries soon or they will eventually regret not doing so, EV sector experts said at Fastmarkets' 7th International Nickel Conference in Amsterdam on Wednesday June 5.
Panel experts believed the risk of not investing in nickel production was greater than choosing not to take that option because of their bullish prognosis for nickel demand and the three-month price of nickel on the London Metal Exchange.
EV market penetration will reach 22-30% between 2019 and 2030, according to Ken Hoffman, of management consultant McKinsey, and Thomas Hohne-Sparborth, of specialist consultant Roskill. This will be driven by cleaner, greener European regulations affecting the automotive sector.
But this will not be confined to Europe. EV demand is growing in Asia, with 2.1 million units sold in China alone in 2018 and a projected 3 million units to be sold in 2019. This would constitute a huge increase over 2012, when fewer than 50,000 units were sold, one panelist noted.
Indeed, EV sales in the first quarter of 2019 rose by 118% year on year to 254,000 units in China alone, with 500 factories in the country supporting EV production.
The EV panel experts also believe producers are on the verge of providing batteries with better energy density and vehicles with a 1,000km range, making them more desirable for consumers.
Battery production must increase to meet this demand and panelists indicated that nickel is the EV battery metal of choice. They forecast this will likely remain the case for the next five to seven years at least, leading to an increase in nickel demand, along with the price.
“I am very bullish [on the price of nickel],” Hohne-Sparborth said. “Over the medium term, three to five years, you can get enough nickel units out of some active plants in Indonesia. Tsingshan [Holding’s Indonesian smelter on the island of Sulawesi] can come on-stream very quickly [and] $12,500-13,000 per tonne [for nickel] would be a good price incentive for such projects.”
Tsingshan Group produces around 170,000 tonnes per year of nickel in metal in Indonesia from its three NPI output phases, which have 20 rotary kiln electrical furnace (RKEF) lines. The group’s fourth NPI production phase will come on stream in early 2019, taking its total NPI output to 200,000-210,000 tpy of nickel in metal.
Despite the potential for a short-term oversupply of nickel, pressure on Class 1 refined nickel products will arise following this projected growth in battery demand. As a result, nickel prices are expected to move higher. The LME’s three-month nickel contract closed the official session at $11,800 per tonne on June 5.
“Some of the higher-cost producers might need a slightly higher incentive price. We estimate $17,000 per tonne,” Hohne-Sparborth said.
“In the longer term, from 2025 onward, with all the projects that we are currently aware of the gap in the market [caused by demand outstripping supply] could only be filled with an incentive price in the $20,000-per-tonne range. We think, long term, the price of nickel will be in the mid-$20,000-[per-tonne] range,” he added.
The experts on the panel did not believe that competing battery technologies that do not use nickel, such as hydrogen fuels cells, were a threat.
“Even if technology changes,” Hoffman said, “there will be a shortage of nickel for batteries by 2025 whatever happens.”
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