The nickel boom - could exponential nickel growth be aided by blockchain technology?
If nickel was a party, you might say that it is just about to get started. Roskill commodity researchers estimated that nickel sulphide production in 2018 rose by nearly 21% to 160,000 tonnes per annum, up by 110,000 tonnes from 2010. Roskill don’t anticipate the market growth to slow in the near future with demand set to grow to more than 900,000 tonnes by 2029. In 2019, Horizon Metals Plc, named nickel as the best performing base metal of the year.
In such a fast-growing market, volatility is a given. New projects are expected to come online, and current producers are expected to ramp up production in order to get their hold on the market with scale ups in the next few years already planned.
BHP’s Nickel West came online in early 2020 and have added 22,000tpa of nickel sulphate to the market. There is the likelihood of a second stage ramp-up, with expansion set to reach 45,000tpa which would put Nickel West at triple the capacity of the next largest producer – Sumitomo Metal Mining.
Why is the nickel market exploding?
Two thirds of nickel is used in the stainless-steel sector. Nickel allows stainless steel to withstand high temperatures and avoid corrosion. In more recent times, nickel has become extensively used in lithium-ion batteries. Nickel has been favoured for cathode chemistry as it eliminates the use of cobalt which has been associated with human rights abuses. This is why we are seeing an exponential growth in the market.
Nickel makes up 80% of lithium batteries that have a chemistry NCM 811. Wood Mackenzie, a research and consultancy group, has predicted that nickel demand from Electric Vehicle (EV) batteries will rise from 128,000 tonnes to 265,000 tonnes by 2025, and 1.23 Mt projected for 2040.
Future bottlenecks and solutions in the nickel supply chain
Concerns surround the volumes of nickel that can be produced to meet the current and forecast demands. At the 2019 International Nickel Conference in Amsterdam, Ken Hoffman, Co-Head of the Battery Materials Research Group, suggested battery manufactures are “petrified about supply”. OEM’s are increasingly concerned about securing supply because greenfield nickel sites take around 8-10 years to come online, which leaves uncertainty as to how the interim shortfall will be satisfied. Currently filling the void are nickel briquettes, however stocks are running low and are only likely to be able to support supply for the next 1-2 years, meaning nickel sulphate production will become critical.
Indonesia was expected to be able to make up the volume deficit, however the Indonesian authorities placed a ban on the export of nickel ore 2 years earlier than expected, causing an immediate price hike and further concerns for the future of nickel supply. Indonesian authorities have kept funding nickel projects in the country, estimated to be worth in the region of $11 billion, but in recent weeks, in light of the outbreak of the COVID-19 virus, projects are expected to slow because of the reliance on Chinese workers.
Roskill has suggested that sourcing nickel from recycled products could slow the demand for primary nickel material. In 2018, as much as 80% of the production of nickel sulphate remained in the hands of processors dependent on third-party intermediates. Big automotive players such as Audi, which purchases large quantities of finished and recycled materials, have been reported to be working with Umicore to recover more than 90% of nickel from EV batteries in order to go on and produce new batteries forming a closed loop supply chain.
Circulor can add value to the closed-loop systems by monitoring and recording the material that enters and exits the recycling process. By using mass balance calculations to monitor processing we can assure customers that output material can reliably be linked with input material of known provenance, whilst also assigning integrity to the material itself, forming a robust and trusted closed loop system, feeding into a circular economy.
Circulor’s platform can also be used for the traceability of raw material entering the supply chain. With the exponential growth in nickel that is predicted, now more than ever, the market has a duty to invest in understanding where such material is coming from. As with recycled material, Circulor assigns a digital identity to the material and processes along the supply chain to create an immutable record of the material’s journey, allowing manufacturers to be confident that the material they are using is from a responsible source. Circulor also has the ability to dynamically track the carbon footprint of the material as it travels through the supply chain.
Demand for nickel will shortly outstrip available materials meaning there is a need to act urgently. Using blockchain technology, Circulor’s platform allows faster transactions and broad adoptability of values. The system can cascade code of conduct and due diligence procedures through the entire supply chain, ensuring the compliance of all parties.
The nickel boom has already started and OEM’s and consumers have a responsibility to ensure that the material being used in everyday products does not follow in the same footsteps as other maligned minerals such as cobalt.