Canada Nickel Deep Dive Part 1: The Global Outlook for Nickel

Nickel is the Key Building Block for a Successful Energy Transition

Governments are pushing hard to electrify transportation and energy generation in a race to decrease global greenhouse gas emissions.

The rapid buildout of windmills, solar panels and the rise of Tesla have made certain battery metals like lithium, cobalt and copper household names.

But there is one battery metal no one is talking about that is more important than them all. Nickel.

If we look at which metal has been gaining the most battery market share in the last five years, nickel is far and away the winner.

Leading edge batteries, with the best energy density on the market, are using up to 80% nickel in the anode, up from less than 33% in older chemistries.

Nickel % in Leading Edge Battery Chemistries

Kilos of Nickel in New Battery Chemistries up 40%

Nickel has become the most important mineral in an EV battery as it now makes up a majority of a battery’s cathode, the most expensive component and arguably the most important determinant of performance.

Highest Energy Dense Batteries All Use Nickel

With the cathode making up more than 50% of a batteries total cost, nickel’s ability to increase range and power output has been critical in helping bring down the price of batteries overall.

Battery Cell Broken Down by Cost

Nickel is such an irreplaceable part of a battery because of its ability to increase the energy density and output of a battery. Add more nickel to a battery you increase performance.

The latest science has found that increasing the nickel content increases the energy density, a key differentiator, especially in electric vehicles where range is a key selling point for customers. More nickel, more energy, it’s that simple.

Nickel Batteries Offer the Highest Energy Density on the Market

Nickel is on track to own an increasing share of lithium ion battery chemistries based on industry forecasts. Couple rapidly growing battery demand with the move towards higher nickel content across all battery chemistries and we have a situation where nickel demand will likely grow faster than the world has seen in modern history.

NMC811 is the Most Nickel Dense Battery on the Market and Gaining Share

Nickel Demand Set to Grow 80% by 2030

Based on industry forecasts and from Canada Nickel’s internal analysis, nickel demand is on track to hit 5.1 million metric tons per year, an 82% increase, or 7% annual growth over 9 years.

To put this in perspective, the global supply of nickel which is already at a record, will need to almost double by the end of the decade just to meet current renewable and EV demand forecasts.

However, demand forecasts could end up being too low based on recent history. In the first three years of this decade nickel demand has already exceeded all earlier estimates growing 9%-10% a year. The 5.1 million tons number is likely to come in closer to 6 million tons or better according to Canada Nickel.

Global Nickel Demand Outlook

Western government incentives and plans to phase out internal combustion cars by 2035 are driving rapid adoption of electric vehicles. Even though we’ve seen a slowing in battery only sales in the west this year, Chinese consumers are still transitioning to full battery cars at a rapid rate.

EV Share of Total Car Sales

A Turnaround for Nickel Prices is Imminent

Even though rising supply from Indonesia has led to a market surplus and weak prices recently, forecasts from many leading commodity houses and consultants including Benchmark Mineral Intelligence call for near term bottoming in Nickel prices and a gradual recovery.

With prices as of late May close to Benchmark’s forecast after bottoming out 20% below Benchmark’s forecast for year end, the downside looks extremely limited as demand for energy storage continues to exceed estimates.

We expect 2023 to mark the peak in nickel inventories and with supply deficits starting in 2028, nickel prices have likely found a bottom in our view.

In part 2 we discuss the rise of a potential nickel cartel in Asia, what the west is doing to fight it and why North American nickel producers will likely be the main beneficiaries of coming legislation.