FOCUS: Nickel battery industry set to integrate further

The collaboration and integration among nickel miners and battery makers in the electric vehicle (EV) sector will continue to expand, driven by higher margins, according to panelists at Fastmarkets’ Battery Materials Conference in Shanghai on Thursday April 11.

“I think you do see more and more integration in the industry with chemical companies and battery raw material producers, which has been happening for quite a while now. I think we will see more of that in the future,” Alex Khodov, principal nickel analyst at Norilsk Nickel, said in response to a question on the partnership between BASF and Norilsk Nickel.

“There’ll be less of the market that is just freely available and tradable and more will go into integrated or captive projects,” Khodov added.

Last year, European chemical company BASF and Norisk Nickel established a strategic partnership centred around battery materials for EVs, including a feedstock supply deal and co-located facilities, with their start-up planned for late 2020, enabling the supply of roughly 300,000 full EVs per year with BASF battery materials.

The combined integration of upstream and downstream in the nickel battery sector is attributable to higher margins.

“If you produce intermediate products – MHP (mixed hydroxide precipitate) – historically you’ll be given 80% of the LME price for the products. If you produce nickel sulfate, you’ll get a premium of $2,000-3,000 per tonne over the LME nickel price, so that’s a premium of 20% based on the LME nickel price,” Macquarie Capital senior commodities consultant Jim Lennon said at the panel.

“So if you’re a miner, you’ll get 80% of the price versus 120%, clearly there’s a huge incentive to go all the way through to [producing] nickel sulfate,” Lennon said.

Lennon elaborated the point by using BHP’s plan to start producing nickel sulfate as an example.

BHP received funding approval for phase one of a nickel sulfate project at the company’s Kiwanna refinery in Western Australia with capacity to produce 100,000 tonnes of nickel per year to tap into the growing EV lithium-ion (li-ion) battery market. The first phase is expected to be commission in the second half year in 2019.

The plant capacity is expandable to 200,000 tpy, which at full capacity means the plant would consume 44,000 tpy of nickel powder and would be the world’s largest nickel sulfate facility, according to Haegel.

Nickel hydroxide, also known as intermediate product, is derived from laterite ore via high-pressure acid leaching (HPAL) technology and is one of the key raw materials in nickel sulfate production.

Nickel briquette and nickel powder, attained via sulfuric acid dissolving, are some other nickel sulfate raw materials.

Nickel sulfate is the key ingredient in nickel-cobalt-manganese (NCM) and nickel-cobalt-aluminium precursor materials, which, in turn, are raw materials for li-ion batteries for EVs.

Fastmarkets does not assess the premium for nickel sulfate but does have a nickel sulfate price on a China ex-works basis.

Fastmarkets’ assessment for the China nickel sulfate min 21% max 22.5%, cobalt 10ppm max, price was at 25,000-25,500 yuan ($3,729-3,803) per tonne on April 9, increasing by 200 yuan week on week following some light supply tightness in the market.

Another panelist, Zong Shaoxin, chairman of Metallurgical Corp of China (MCC) Ramu New Energy Technology Corporation, shared his views on cost reduction amid the industry integration.

“Our company’s industrial distribution covers mining to automobile manufacturing. There’ll also be battery recycling in the future. Such full-coverage of the nickel battery industry is likely to be a trend,” he said.

“Our ternary precursor project in Caofeidian, with stakeholders including BYD and Guoxuan High-tech, directly produce ternary precursor from MHP – Ramu’s project’s products – via short-course processing without making nickel and cobalt sulfate, thus lowering overall costs,” Zong added.

MCC’s ternary precursor project in Caofeidian, North China, boasts 40,000 tpy of ternary precursor capacity.

The project is currently on stream and expected to reach nameplate capacity by June this year, Zong said.

MCC holds a 67.02% stake in MCC-JJJ Mining Development, which itself owns 100% of MCC Ramu NiCo. The latter holds an 85% joint venture interest in the Ramu project in Papua New Guinea with a nameplate capacity of 35,000 tpy of nickel.