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The Nickel Market

An introduction to nickel

Nickel demand and end-uses

Nickel forms an essential component in the cathodes of Li-ion batteries, delivering high energy density and greater storage capacity at a lower cost, thereby delivering a longer range for battery electric vehicles (BEVs) and making them more competitive with internal combustion engine (ICE) vehicles.

Nickel has long been widely used in batteries, most commonly in nickel cadmium (NiCd) and in the longer-lasting nickel metal hydride (NiMH) rechargeable batteries, which came to the fore in the 1980s. Nickel usage in batteries is set to increase as it forms an essential component in the cathodes of lithium-ion (Li-ion) batteries utilised in BEVs.

Nickel has outstanding physical and chemical properties. It has a melting point of 1,453°C, relatively low thermal and electrical conductivities, high resistance to corrosion and oxidation, excellent strength and toughness at elevated temperatures, and is capable of being magnetised. It is attractive and durable as a pure metal, and alloys readily with many other metals.

These qualities make it essential in hundreds of thousands of products. Its main use is in alloying, particularly with chromium and other metals to produce stainless and heat-resisting steels. The six main uses are stainless steel, batteries, Cu-Ni alloys, nickel alloys, plating and nickel compounds.

Usage of nickel has increased over time and is correlated with economic development. Nickel is contained in nearly two-thirds of stainless steel produced. Strong world economic growth until 2007 supported the rising production of primary nickel metal. Over the past 10 years, global nickel output has increased by more than 65%, while that of China has surged by a factor of 13.

Nickel supply and resources

Nickel is a lustrous, silvery-white metal discovered in 1751 and the fifth most common element found on Earth. It occurs in nature principally as oxides, sulphides and silicates. Nickel ores are found in two types of orebody – sulphidic and lateritic. However, polymetallic manganese-rich nodules containing nickel found on the seabed are potentially a resource many times larger than those located on land, with a grade varying from 1.25-1.5% Ni.

Ores of nickel are mined in approximately 20 countries on all continents and are smelted or refined in around 25 countries. Global mined nickel production is derived from ~30% sulphide ores, with the remainder coming from a mix of limonite and saprolite ores.

Globally, the bulk of historical production has been derived from sulphide ores as these are easier to process through conventional mining, smelting and refining, compared to laterite ores. Sulphide ores are typically derived from volcanic or hydrothermal processes and usually include copper and/or cobalt, and sometimes other precious metals such as gold, platinum or palladium (generally grouped as PGMs).

Laterite ores mined from surface targeting limonite (oxide ore) and saprolite minerals (silicate ore) are mined along the Asia-Pacific Rim. Saprolite-type ore, characterised by high magnesia and silica content, is treated by a pyrometallurgy process, while limonite-type ore is subjected to a hydrometallurgical process. Laterites contain 70% of global nickel resources but produce only around 40% of world production.

Primary nickel is produced and used as ferronickel, and in nickel oxides and other chemicals, and as almost pure nickel metal. Globally, over 2 mt of new or primary nickel is produced and used annually. Nickel is also readily recycled in many of its applications, and large tonnages of secondary or ‘scrap’ nickel are used to supplement newly mined metal.

The output of primary nickel production is generally divided into two main product categories: class 1 and class 2. Nickel class 1 is a group of nickel products comprising electrolytic nickel, powders and briquettes, as well as carbonyl nickel. Approximately 40% of primary nickel production was class 1 in 2019.

Nickel class 2 comprises nickel pig iron (NPI) and ferronickel. These nickel products commonly have a lower nickel content and are used in stainless steel production, where producers take advantage of the iron content. China began producing NPI in 2005 in different forms and grades, and this has replaced traditional products such as nickel metal and stainless-steel scrap in the manufacture of stainless steel in China and Indonesia.

Nickel supply-demand balance

 tonnes     2015 2016 2017 2018 2019 2020 2021f
Primary supply                  
 Indonesia     260,500 309,200 430,600 623,100 729,300 720,565 1,068,000
 Philippines     406,390 348,560 333,685 337,300 323,225 333,810 360,000
 Russia     296,405 265,750 247,110 248,770 272,000 273,000 235,000
 New Caledonia   289,150 318,125 308,445 192,500 180,000 204,500 183,100
 Canada     193,015 213,515 206,315 176,000 176,900 153,455 150,800
 Australia     192,065 186,825 181,290 172,400 163,940 188,200 204,000
 RoW     502,745 488,555 563,240 520,850 585,390 566,860 628,655
 Total     2,140,275 2,130530 2,270,685 2,270,960 2,430,760 2,440,390 2,829,855
Refined supply                  
 Indonesia NPI             353,500 607,000 958,000
 China NPI             584,000 513,000 400,000
 Ferronickel             399,500 379,480 397,700
 Class I (briquettes, cathodes, powder)          861,080 836,000 822,855
 Other (primary NiSO4, utility nickel etc.)         117,100 108,000 127,200
 Total refined             2,315,180 2,443480 2,705,755
Demand and recycling
 Battery demand                
  Battery electric vehicles (BEV) 5,510 8,455 12,655 31,525 49,940 71,060 123,430
  Plug-in hybrid electric vehicles (PHEV) 55 50 55 315 965 1,720 3,885
  Full hybrid electric vehicles (FHEV) 240 325 455 560 905 1,120 1,900
  Mild hybrid electric vehicles (MHEV) 55 50 55 315 965 1,720 3,885
  Full cell electric vehicles (FCEV) 0 0 0 5 5 5 25
  Heavy-duty electric vehicles (HDEV) 0 0 0 15 155 310 570
  E-bikes     0 0 0 70 665 1,060 1,405
  Other battery     46,720 50,045 49,400 47,295 109,590 111,765 113,980
  Total battery demand 52,575 58,930 62,630 80,095 163,195 188,765 249,075
 Other demand                
  Stainless steel   2,076,330 2,267,615 2,414,495 2,459,540 2,609,010 2,570,930 3,063,770
  Alloy steels   70,105 78,575 83,505 86,100 93,255 70,790 84,700
  Non-ferrous alloys   175,255 196,440 208,760 214,100 233,135 212,365 254,095
  Other demand*   210,310 235,725 250,510 253,350 186,505 141,575 169,150
  Total other demand   2,532,000 2,778,355 2,957,270 3,013,095 3,121,905 2,995,660 3,571,715
Gross demand                  
      2,584,575 2,837,285 3,019,895 3,093,190 3,285,095 3,184,430 3,820,790
      832,000 872,900 932,300 948,380 977,070 848,405 980,405
Net demand                  
Market balance (with mined supply) 387,710 166,145 183,090 126,155 122,730 104,370 -10,530
Market balance (with refined supply) 0 0 0 0 7,155 107,460 -134,635

Source: SFA (Oxford). Updated July 2021. Note: *Other demand includes plating and casting.

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