2019 PREVIEW: NPI to extend its dominant role in nickel supply

Nickel pig iron (NPI) is set to extend its dominant role in nickel supply in 2019, with output in both China and Indonesia rising further as a number of key projects come online.

Increased NPI output in Indonesia is expected to squeeze global nickel supply to 22,000 tonnes in 2019 from 143,000 tonnes in 2018, Xu Aidong, chief analyst at Chinese research organization Antaike, said at the Antaike Annual Nickel & Cobalt conference in Xiamen, China, on November 7.

Indonesian NPI output will rise to 390,000 tonnes of nickel in metal next year, compared with 140,000 tonnes in 2018. Production in China is expected to rise by 40,000 tonnes year-on-year to 480,000 tonnes in 2019, according to Chinese information provider SMM.

The nickel supply structure has been going through a major change since 2015, with NPI expected to replace refined nickel as the main contributor to supply by 2020. In 2015, refined nickel contributed 57% to supply, while NPI is expected to contribute 55% of the supply by 2020. In 2018, 51% of global nickel supply originated from NPI, Liqing Zhang, senior analyst from Tsingwoods Holdings, said in a presentation on November 30.

New NPI projects
Tsingshan Group currently produces around 170,000 tonnes per year (tpy) of nickel in metal in Indonesia, from its three NPI output phases which have 20 Rotary Kiln Electrical Furnaces (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.

In addition, Tsingshan’s Weda Bay project – with 117,000 tpy of nickel-in-metal capacity – is expected to come into operation in 2020, according to Zhang.

Weda Bay has eight 33,000 KVA RKEF lines jointly owned by Tsingshan and Zhenshi Eastern Special Steel Co, and another four 33,000 KVA RKEF lines co-owned by Eramet and Tsingshan.

Indonesia’s PT Virtue Dragon Nickel Industry’s (VDNI) NPI output is also expected to climb to 100,000-110,000 tonnes of nickel in metal in 2019 from 40,000 tonnes, according to SMM.

Seven out of VDNI’s 15 RKEF lines in the first phase are in production, and the remainder will come into operation in 2019. VDNI also plans to build a further 30 RKEF lines in the future.

China’s Jinchuan Group and Indonesian mining company WP & RKA built an NPI smelter with four RKEF lines in Indonesia in May this year. The smelter is expected to produce 30,000 tpy of nickel in metal when it comes into operation next year.

In China, Shandong Xinhai Technology, the country’s largest NPI producer, has added eight RKEF lines with a design capacity of 120,000 tpy of nickel in metal.

One of those lines is in operation so far, according to market participants, and the rest are expected to come into operation gradually in 2019.

Fastmarkets assessed the Chinese yuan NPI spot price, on-delivery, at 980-1,000 yuan ($141-144) per tonne on December 4, down from 990-1,010 yuan per tonne the previous week, due to abundant downstream supply and the decline in the London Metal Exchange nickel price.

EV bodes well for nickel outlook, more refined nickel to be used in sulfate-making
By 2021, 8% of global nickel supply will be consumed by the electric vehicle (EV) sector, compared with less than 4% in 2018. The stainless steel sector will still be the largest consumer, accounting for 77% of global nickel usage, according to Antaike’s Xu.

Vale predicts that EV production will increase to 14 million units by 2025 from 1.8 million units in 2018, requiring more than 500,000 tonnes of additional high-quality nickel in the market until 2025, Vale’s chief executive officer, Fabio Schvartsman, said on Tuesday December 4.

“By the end of this year, total sales of Chinese EV vehicles could reach 1.18 million units, and the sales target of 2 million new electric vehicles by 2020 can be achieved,” Jianhua Shi, deputy secretary of the China Association of Automobile Manufacturers, said at APEC New Energy Annual Conference on December 6.

Surging demand from the EV sector has driven lithium-ion battery development in recent years.

Lithium-ion nickel-cobalt-manganese (NCM) and nickel-cobalt-aluminium (NCA) are the two dominant batteries in the EV market. More recently, a shift towards batteries being increasingly nickel-weighted has been evident.

Nickel sulfate – a key material for NCM and NCA batteries – is largely produced and consumed in China. For 2018, nickel sulfate output is estimated at 450,000-500,000 tonnes in China, and around 700,000 tonnes globally, according to Xu.

Chinese nickel sulfate production is expected to ramp up in response to the growth in EV production next year and will reach 520,000 tonnes in 2019, according to SMM.

In 2018, 28% of feedstocks for nickel sulfate produced in China came from refined nickel, including nickel briquettes and nickel powder, compared with just 4% in 2017, according to SMM.

Moreover, the proportion of refined nickel used in sulfate making is expected to increase in China as an immediate expansion in output of another key feedstock – nickel intermediate products – is unlikely despite several new high pressure acid leaching (HPAL) projects being announced this year. HPAL is used in the production of nickel intermediates.

In October, Huayou Cobalt announced plans for a laterite ore hydrometallurgy project producing nickel intermediate products in Morowali, Indonesia. The project will have capacity to produce 60,000 tpy of nickel in metal.

In late September, a joint venture comprising Tsingshan Group, GEM, Brunp Recycling, PT Indonesia Morowali Industrial Park (IMIP) and Hanwa Co, announced it would invest in a nickel-cobalt project, also in Morowali, Indonesia.

The project has target production of 50,000 tpy of nickel and 4,000 tpy of cobalt. It will be able to produce 50,000 tpy of nickel hydroxide intermediates, 150,000 tpy of battery-grade nickel sulfate, and 20,000 tpy of battery-grade cobalt sulfate, according to GEM.

But the projected production timeframes for many of these new HPAL projects are likely to be pushed back and their development costs are liable to increase, Fastmarkets has learned.

Fastmarkets assessed the price for nickel sulfate, China ex-works, at 24,200-24,700 yuan ($3,535-3,608) per tonne on Tuesday December 4, unchanged from November 27.