$1+ is around the corner, page-2

Nickel price catches battery, export ban fever. Again

Frik Els | July 18, 2019

Nickel is addingshine to the otherwise lacklustre 2019 industrial metals complex, asexpectations of booming demand from electric vehicles and renewed supply worriesrev prices to a one-year high.

Nickel is now up37% since the start of the year, reaching $14,665 per tonne on Thursday inLondon and jumping 4% in Shanghai to the equivalent of $16,690.

Open interest inChinese nickel futures is up by half in a fortnight and trading volumes havesurged – indicating that the price spike is likely the result of speculationmore than fundamentals.

Miners of the devil’s copper are used to wild swings in price. From the lows mid-2017 below $9,000 a tonne to around this time last year, the metal gained 79%, only to slump by nearly a third to its opening levels of 2019. And who can forget that in March 2007, nickel peaked at $51,780 per tonne.

The right chemistry

The electricvehicle (EV) narrative is an exciting one for the metal, but it is still earlydays. Very early days. Last year, only around 6% of nickel ended up in EVbatteries. 70% of supply goes into making stainless steel.

That said theoutlook is certainly rosy. Battery metals tracker Adamas Intelligence says electric vehicle manufacturers deployed 57% more nickel in passenger EV batteries in May this year, compared to 2018.

The deployment ofnickel also outpaced the growth of the EV market overall. In May this year,total passenger EV battery capacity deployed globally was 48% higheryear-on-year, according to Adamas data.

Nickel’s inroads ismainly due to shifting chemistries of nickel-cobalt-manganese (NCM) batterycathodes. First generation NCM111 batteries had a chemical composition of 1part nickel, 1 part cobalt and 1 part manganese, but the industry is shifting towards an 811 mix. Roughly speaking NCM 811 batteries for light passenger EVs require more than 50 kilograms of nickel.

Andrew Cosgrove,senior mining and metals analyst for Bloomberg Intelligence at a recentconference predicted that nickel demand in batteries could outpace that ofstainless steel in absolute terms, adding as much as 900,000 additional tonnesper year by 2030. That compares to current annual nickel production of less than2.5m tonnes.

Jakarta jolts supply

China’s nickel pigiron production fed from Indonesian and Philippine mines dominate the globalindustry, and despite the economic slowdown in China, which imports some 50% ofthe world’s nickel, stainless steel production is growing rapidly.

Nickel also jumpedthis week due the mooted reinstatement of a ban on ore exports from Indonesia from 2022 onwards.

When Jakartaenforced the ban to encourage the building of domestic smelters from 2014 to2016 the price gained initially, but Chinese NPI producers were able to switchto Philippine miners in a relatively short time, so it’s unclear the impact ofexport restrictions would be this time around.

NPI contains only8–12% nickel and less than half of the total nickel output is so-calledClass 1 product, which is suitable for conversion into nickel sulphate used inbattery manufacture.

Class 1 nickelpowder for sulphate production enjoys a large premium over LME prices, but forminers to switch to battery grade material requires huge investments to upgraderefining and processing facilities.

But confidence infuture demand is such that BHP decided last year to hold onto Nickel West aftermany attempts to offload it, and is now spending hundreds of millions ofdollars switching its Australian operations to battery-grade production.

www.mining.com/nickel-price-catches-battery-export-ban-fever-again/