Mining Mirror May 2018 - Page 42

Insight Battery demand resuscitates nickel The global interest in lithium-ion batteries and electric vehicles has interesting implications for traditional commodities like nickel, writes Adam Webb, senior analyst at metals and mining research company S&P Global Market Intelligence. [40] MINING MIRROR MAY 2018 T he recent buzz in the commodities sector around lithium-ion batteries and their use in the growing electric vehicle market has centred around relatively minor commodities such as lithium, cobalt, vanadium, and graphite. However, it also holds implications for major commodities and, based on current technology, it seems likely that nickel will play an important part in this story. Lithium-ion batteries, used by many of the major electric vehicle manufacturers, use a cathode that is primarily composed of nickel. Not all nickel supply, however, is suitable for manufacturing battery cathodes. Only 49% of the 2017 nickel supply from sulphide and limonite deposits is suitable for this purpose, and extracting nickel from the latter deposits is less attractive as costs are generally higher than from sulphide deposits. Discoveries of new nickel deposits, particularly sulphides, are rare. Reports suggest Tesla uses a lithium-ion battery with a cathode primarily composed of nickel, cobalt, and aluminium. These batteries typically have a cathode composition of 85% nickel, 10% cobalt, and 5% aluminium. Another widely used lithium-ion battery in current electric vehicles is the nickel, manganese, and cobalt battery, which is used in electric vehicles produced by Chevrolet and Nissan. This battery has a cathode that is typically made up of 60% nickel, 20% manganese, and 20% cobalt. Many manufacturers of this battery are now working towards producing batteries with cathodes containing 80% nickel, because higher nickel content in these batteries increases energy density and extends vehicle range. Other battery technologies are either already available or under development that use less or no nickel. However, given that the major electric vehicle producers are favouring batteries with significant nickel content, we believe it likely that nickel will continue to be an important commodity in the manufacture of lithium-ion batteries for use in electric vehicles. There are complications, though. Not all forms of nickel-containing products from mining operations are suitable for use in batteries. Nickel sulphate can only be produced economically from class one nickel products, which are defined as products with a nickel content of 99% or more. Some 51% of production in 2017 could not be used towards production of lithium-ion batteries. We estimate that mined nickel supply will grow 12% from 2017 to 2020. However, we forecast that mined supply suitable for battery manufacture will only grow 2% over this period. Although there is a lack of new discoveries of nickel, S&P Global Market Intelligence has identified nine projects with nickel reserves suitable for lithium-ion battery sector. Whether existing nickel supply and these potential additions will be sufficient to supply the long-term demand for nickel in the production of lithium-ion batteries remains to be seen. A lot will depend on how quickly electric vehicles displace internal combustion engine vehicles. If there is a shortfall, then it may lead to increases in the nickel price that could allow previously uneconomic projects to become viable and incentivise greater exploration spending on battery nickel. b