Sleeping Beauty ASX BSX, page-400

From ********* today about the supply issues for different commodities.
Here's the Ni speel.

Great for Sulphide Deposits like ours as we already know.

Nickel

In September 2019, the average new passenger EV contained 14 kilograms of nickel in its battery, an increase of 20% over October 2018, according to Adamas Intelligence’s latest ‘EV Battery Nickel Monthly’ report. 2018 nickel production was 2.3 million tonnes.

14M EVs x 14kg = 196,000,000kg (196,000t) divided by 2.3M = 8.5% of 2018 production.

37M EVs x 14kg = 518,000,000kg/ (518,000t) divided by 2.3M = 22% of 2018 production.

Nickel deposits come in two forms: sulfide or laterite. About 60% of the world’s known nickel resources are laterites. The remaining 40% are sulfide deposits.

Large-scale sulfide deposits are extremely rare. Historically, most nickel was produced from sulfide ores, including the giant (>10 million tonnes) Sudbury deposits in Ontario, Norilsk in Russia and the Bushveld Complex in South Africa, known for its platinum group elements (PGEs). However, existing sulfide mines are becoming depleted, and nickel miners are having to go to the lower-quality, but more expensive to process, as well as more polluting, nickel laterites such as found in the Philippines, Indonesia and New Caledonia.

Nickel sulfide deposits provide ore for Class 1 nickel users which includes battery manufacturers. These battery companies purchase the nickel product known as nickel sulfate, derived from high-grade nickel sulfide deposits. It’s important to note that less than half of the world’s nickel is suitable for the biggest growth market – EV batteries.

Tesla recently expressed concern over whether there will be enough high-purity “Class 1” nickel needed for electric-vehicle batteries.

According to BloombergNEF, demand for Class 1 nickel is expected to out-run supply within five years, fueled by rising consumption by lithium-ion electric vehicle battery suppliers. It’s clear that nickel is facing some growing pains since the industrial metal was burnished by its new-found use in the transportation mode of the future.

Nickel’s inroads are due mainly to an industry shift towards “NMC 811” batteries which require eight times the other metals in the battery. (first-version NMC 111 batteries have one part each nickel, cobalt and manganese).

But a lot of nickel will still need to be mined for stainless steel and other uses. Will annual world production of around 2.3 million tonnes be enough for everything? It seems unlikely. Consider that less than half of the total nickel output is Class 1 product, suitable for conversion into nickel sulfate used in battery manufacturing.

Class 1 nickel powder for sulfate production enjoys a large premium over LME nickel prices, but for miners to switch from lower-grade to battery-grade material requires huge investments to upgrade refining and processing facilities.

Last year, only around 6% of nickel ended up in EV batteries, as 70% of supply went into making stainless steel.

The nickel industry’s dilemma is therefore how to keep the traditional market intact, by producing enough nickel pig iron (NPI) and ferronickel to satisfy existing stainless steel customers, in particular China, while at the same time mining enough nickel to surf the coming wave of EV battery demand?

One possibility is to keep mining the more plentiful laterites and convert the nickel product into nickel sulfate, as the Chinese are planning to do in Indonesia.

Reuters reported on the $4 billion Chinese-led project to produce battery-grade nickel chemicals, that Indonesia hopes will attract electric-vehicle makers into the country, which is the second-largest car-maker in Southeast Asia.

However there is no simple separation technique for nickel laterites. As a result, laterite projects have high capital costs and therefore require large economies of scale to be viable. The technology for producing battery-grade nickel from nickel laterite ores is – despite being available since the late 1950s – unreliable.

High Pressure Acid Leaching (HPAL) involves processing ore in a sulfuric acid leach at temperatures up to 270ºC and pressures up to 600 psi to extract the nickel and cobalt from the iron-rich ore.

The advantage of HPAL is its ability to process low-grade nickel laterite ores, to recover nickel and cobalt. However, HPAL is unable to process high-magnesium or saprolite ores, it has high maintenance costs due to the sulfuric acid (average 260-400 kg/t at existing operations), and it comes with the cost, environmental impact and hassle of disposing of the magnesium sulfate effluent waste.

Now, considering all the challenges in increasing nickel production, due mostly to the dearth of nickel sulfide deposits and the expense and disposal nightmare of mining laterites for conversion into nickel sulfate, pile on the amount of nickel required for EV batteries.

We’re talking 8.5% of 2018’s total nickel production of 2.3 million tonnes. That works out to 195,500 tonnes – more than the combined production of Canada and the US (179,000t). Go with the high-end EV penetration scenario, 22% of total production, and the amount of nickel demanded, 518,000 tonnes, is nearly as much as Indonesia, the top producer’s output of 560,000 tonnes. One mine takes 10 to 15 years to develop. In that time is it really possible to bring online nearly as much new nickel as the current two largest producers – Vale and Norilsk Nickel – which in 2017 mined a combined 536,000t? The possibility is incredibly unlikely.