Terrafame to bolster battery chemical output; quarterly nickel, zinc production at record-high

The investment, said to be worth €240 million ($273 million), has received principle funding of €100 million from parent company Finnish Minerals Group, with additional benefactors Galena Asset Management and Trafigura Group set to invest €60 million and €43 million respectively.

“Our goal is to complete the plant by the end of 2020, with commercial production commencing at the start of 2021,” Terrafame’s chief executive officer Joni Lukkaroinen said in the release. “Our production technology enables a low carbon footprint of nickel and cobalt sulphate [production] needed for electric-vehicle batteries.”

The projected investment comes amid a recent strategic partnership between BASF and Nornickel centered around battery materials for use in electric vehicles (EVs), reportedly worth around €400 million.

Nickel demand from lithium-ion battery producers is set to rise rapidly from the current 100,000 tonnes per year to 500,000 tonnes per year by 2025, while the market shifts toward more nickel-weighted batteries.

Terrafame’s third-quarter interim report indicates broad strength in production, with 7,326 tonnes of nickel produced over the quarter and 16,530 tonnes of zinc, in addition to net sales totalling €86 million the highest production rate for a third quarter on record.

“Our own battery-chemicals plant takes us further in the value chain and closer to the end users. It allows us to provide a large customer base with high-quality nickel and cobalt sulphates, which are produced in a process optimized for Terrafame’s ore,” Terrafame’s chief commercial officer Janne Palosaari said.

Global physical nickel spot markets have been quiet over the past week while participants focus on negotiating long-term supply deals. Fastmarkets MB assessed the full-plate nickel premium at $200-210 per tonne, cif Shanghai, on Tuesday October 23, unchanged from a week ago.

In addition, the resumption of Indonesian laterite ore shipments after a 2014 ban has prompted higher growth expectations for nickel pig iron, which could potentially free up a share of class-1 refined nickel, which is used in high-valued applications such as EV battery production.

“At the end of the day, whether you’re a battery producer or an electric vehicle producer, [people] have got to start locking in the right class-1 units,” a nickel trader told Fastmarkets.