Concerns over the availability of nickel for the battery sector increase from 2022, when electric vehicle (EV) growth picks up again after a period of weak consumer confidence caused by Covid-19, according to a poll conducted during a Fastmarkets webinar.
“Given the growth we see in EVs and the change in battery chemistries, it’s going to be very hard for nickel producers to keep up with strong forecast CAGR [compound annual growth rate] in the EV market,” Will Adams, Fastmarkets’ head of battery raw materials research, said during the webinar.
Battery chemistries are shifting in favor of high-nickel chemistries, which, subject to the required technological developments, provide greater driving ranges and reduce the need for cobalt per cell.
“The transition to nickel-rich batteries is going be a significant factor for nickel demand growth on top of going into a period of EVs becoming more mainstream, and on top of that, driving ranges increasing, which is going to require larger battery packs. So on three counts, nickel is a winner,” Adams said.
But in the near-term, the requirement for the class 1 nickel that is suitable for battery applications will be felt less acutely, and existing nickel stocks can provide a buffer.
Covid-19 and the economic downturn and uncertainty it has triggered is expected to cause weaker consumer confidence, which will negatively hit EV order books in the short term.
About 79% of respondents to Fastmarkets’ poll said Covid-19 would cause EV adoption to pick up at a slower pace than anticipated, or that there would be a short delay to growth before picking up again and following its previous growth trajectory.
“There will be a slower uptake in EVs, so that does mean demand for nickel in the short term might not be so great, and there might not be such a drawdown on stocks. But the other side of the equation and the longer-term issue is that these low prices are not providing the incentive to invest in the new production of class 1 nickel,” Adams said.
The three-month nickel price on the London Metal Exchange closed at $12,192 per tonne on Friday May 29, down from highs of $18,475 per tonne last September.
Investment has already started in some high-pressure acid leaching (HPAL) projects - which produce class 1 nickel from laterite ore - such as the Tsingshan Group’s joint venture in Indonesia. But more such investments will be required even while nickel prices are low in order to avoid a class 1 nickel shortage when EV usage picks up, Adams said during the webinar.
HPAL projects have a “checkered history,” in terms of their realized capacity and budgetary overruns, Adams added.
“We wait to see if these new HPAL ops come onstream in a timely manner, because that is what the nickel and EV market is going to need - these new HPAL operations, and more of them,” he said.
The next webinar in Fastmarkets' battery raw materials series, “How Covid-19 has impacted the lithium market,” will take place on June 23. Click here to sign up. To listen to the first webinar in the series, “Covid-19 and the battery raw materials supply chain,” click here.