Supply of battery-grade nickel sulfate shifts, but is it sustainable?
Many producers have sought alternative solutions to supply nickel sulfate.
China's Tsingshan Holding Group Co., the world's largest nickel producer, said it would be supplying nickel matte derived from converted NPI from its operations at Indonesia Morowali Industrial Park, which would later be further processed to generate battery-grade nickel sulfate. It would supply 100,000 mt of nickel matte to Chinese companies Huayou and CNGR Advanced Materials over a one-year period, with the first batch of nickel matte produced Dec. 8.
While Tsingshan's plans to convert NPI to an intermediate nickel matte diverges from the traditional production process , it is not an entirely new technology. Brazil's Vale employs laterite nickel ore to produce nickel matte, while France's Eramet also previously converted a portion of its ferronickel output to produce nickel matte at its Donaimbo operation in New Caledonia.
Similarly, in April, Chinese new energy materials manufacturer CNGR announced that it would partner with Singapore-based Rigqueza International to establish a joint venture plant in Sulawesi, Indonesia, to produce nickel matte.
Changsha-based CNGR plans to produce 30,000 mt of nickel matte per annum, in a $243 million smelting project in Tsingshan's IMIP site. The first $81 million phase is expected to produce 10,000 mt of matte on a nickel contained basis, as per a filing with the Shenzhen Stock Exchange.
These developments have unsurprisingly caused a stir in both the physical and papers markets, sparking conversations around whether an old technology of producing nickel matte might serve as a fresh solution in easing supply tightness in the nickel market in the long run. Tsingshan's March 2021 announcement saw nickel prices plunging, turning the bulls to bears as the market anticipated more supply coming into the market to ease the tightness in nickel sulfate.
An old technology to solve a future problem?
Other alternatives have also been explored in recent years to address the possible shortage in nickel sulfide deposits, such as processing lower-grade laterite material into intermediates before reaching battery quality and the use of high-pressure acid leach (HPAL) technology.
But according to MI, development of new HPAL projects in Indonesia have been conventionally quoted as requiring primary nickel prices to reach as high as $22,000/mt to be profitable. Besides the need to ensure that falling nickel prices do not overly impede producer margins, HPAL operations also generate environmental concerns, especially regarding waste disposal.
Tsingshan's bold move in attempting to resolve the industry's supply shortage conundrum to keep up with the bullish EV demand had been labelled as "a game changer" for the nickel market, not only for addressing supply concerns outlined earlier, but also in the higher margin that NPI provides as it is substantially cheaper.
However, there are doubts that OEMs outside of China will be willing to accept batteries that contain nickel sulfate produced from matte, also due to the environmental impact involved in its production process.
With clear pledges to make their supply chains carbon neutral over the next decade or so, there is concern that automobile producers outside of China will not use batteries containing materials that involved energy-intensive production, which translates to higher carbon emissions.
Citing data from the Nickel Institute, Sappor said the global warming potential of nickel in ferronickel production – ferronickel being a higher-grade version of NPI – is over three-times higher than that LME-grade class 1 nickel production.
According to independent nickel consultant Trytten Consulting Services, which conducted a preliminary analysis of generic NPI and sulfide facilities, producing nickel matte from NPI is a very greenhouse gas-intensive route that does not lend support to the ultimate goals of decarbonization. Based on the experimental model to test the GHG intensity of NPI production and the nickel matte conversion process by comparison with existing global nickel facilities, NPI produces much higher carbon emissions (Scope 1+2) than other nickel laterite or sulfide processes.
A "conventional" 1% nickel in sulfide ore would be expected to emit less than 15 t CO2e/t Ni, and potentially under 5 t/t Ni depending on the electrical power sources at the mill and smelter, compared to NPI whose emissions are expected to be over 60 t/t Ni, and potentially close to 100 t/t Ni for lower-grade ores.
From the model, it is evident that nickel sulfate originated from sulfide ores provide a much lower carbon footprint than nickel sulfate produced from NPI, no matter the sulfide ore grade.
While western OEMs are certainly seeking cost-effective solutions to improve battery raw material supply, they are unlikely to compromise on their green credentials. Even with Tesla declaring publicly their biggest concern is nickel supply in the future, it will almost certainly insist on more sustainable options, given their track record of championing environmentally friendly initiatives.
In a company statement, Tsingshan has said that it aims to "uphold and promote energy conservation, emission reduction, and a low-carbon-footprint environment." With the EV industry playing a key and leading role in the energy transition movement, the Chinese nickel giant will inevitably face continued pressure to uphold the current green standards.
The upsides and downsides
All things considered, the NPI-matte conversion route certainly offers the industry more options in easing raw material tightness at least in the short term, and in lowering prices overall and alleviated costs to Asian cathode producers. Battery makers could redirect these cost-savings to invest in potentially more cost-effective and sustainable operations.
However, if producers of nickel matte do not make the adjustments and investments needed to address carbon intensity concerns, this will almost certainly be problematic in deploying this in EVs produced outside of China. Furthermore, competing battery chemistries, which are cheaper and do not utilize nickel, will continue to benefit from growing research and development in improving ranges and charge times.
With supply-shortages looming over the horizon, more actions are needed to mitigate future challenges in the nickel sphere.
