The world needs more nickel

6th October 2017
Resources Rising Stars

Independence Group boss Peter Bradford predicts the world will need around 40 more Novas just to meet growing nickel demand associated with the electric vehicle revolution, reports MiningNews.

Nova, in Western Australia’s Fraser Range, is the world’s newest nickel mine and is close to full capacity, coming in within 3% of budget.

“If you look at some of the other train smashes around the world, that’s a significant achievement,” Bradford told the Denver Gold Forum last week.

Importantly, says Bradford, the changing market dynamic would favour Nova.

“Nova is aligned to this emerging electric vehicle trend,”

“The move to EVs could occur potentially as quickly as the transition from the horse and cart.”

Bradford pointed to recent UBS research, which highlighted that a Chevy Bolt contained 24kg of nickel, 24kg of cobalt and 91kg of cobalt.

“Nova is a smorgasbord of nickel, copper and cobalt,” he said.

According to Bradford, some research suggests the world will require up to 900,000 tonnes of new nickel production to keep up with growing demand.

“That’s equivalent to 40 new Novas,” he said.

Analysts agree, with Roskill saying last week that demand for nickel was expected to outpace overall trends in automotive electrification.

“Nickel use in batteries currently accounts for no more than 3–4% of total demand,” it said.

“But this is set to change. In its baseline scenario, which Roskill considers to be based on conservative assumptions, demand may increase from below 90,000t in 2016 to as much as 415,000t by 2027.”

UBS analysts just returned from a trip to Asia, visiting 18 Chinese and Korean participants in the lithium-ion battery supply chain.

“The industry is feverishly adding capacity to support a huge lift in lithium-ion battery production by 2020/25.

“EV OEM demand, framed by supportive Chinese (and global) policy, is driving transformational investment across the chain.

“Manufacturers are scaling capacity 4-5x by 2020 and potentially up to 10x by 2025.

“Securing raw material supply is taking precedence over price in supplier negotiations.”

Both Roskill and UBS noted that there was a shift towards batteries with higher nickel chemistry, likely due to the spike in cobalt prices, as well as uncertainty over supply.

UBS said Korean manufacturers favoured nickel-manganese-cobalt batteries and were aiming to move to lower cobalt chemistries in the next few years.

But UBS points out that not all nickel supply is suitable for battery use (around 50% currently), with low-grade products, like nickel pig iron, inadequate.

It said Australian nickel sulphide producers IGO and Western Areas stood to benefit from the rising demand, with their product considered suitable for batteries.

BHP Nickel West is also poised to capitalise, with the company recently approving a US$43.2 million nickel sulphate plant at Kwinana.

The plant will produce 100,000 tonnes per annum of nickel hexahydrate from early to mid-2019.

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