Global demand for high-grade nickel, an essential mineral in the manufacturing of electric vehicle car batteries, may outpace demand by 2024, the latest data from Rystad Energy suggests.
Nickel mining, Indonesia. Credit: KAISARMUDA / Shutterstock
Indonesia (pictured) currently contains the world's largest deposits of nickel, but is still not finding new deposits fast enough to meet the rising global supply. Credit: KAISARMUDA / Shutterstock
The firm estimates demand for the metal will increase to around 3.4 million tonnes by 2024, rising from 2.5 million tonnes in 2021 as the electric vehicle market continues to grow with automakers scrambling to decarbonise their portfolios in the face of stricter emissions targets and heightened consumer awareness over the industry's effects on the climate.
Nickel's year-on-year climb will continue to be steady, it warned, but analysis of existing infrastructure suggests a shortage will occur within two years.
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The gap between global supply and demand will then widen quickly to a deficit of around 0.56 million tonnes by 2026.
"The potential nickel shortage could encourage industry leaders to look to previously unattractive sources of nickel, including deposits in Indonesia", according to James Ley, a global energy metals expert and Senior Vice President with Rystad Energy. "However, the process of extracting nickel from these deposits has inherent risks and challenges, including environmental, social and governance (ESG) concerns".
Supply shortages could cause numerous headaches and pitfalls for automotive manufacturing in the West. It is likely deficits will encourage automakers to seek alternative methods for developing car batteries should these shortages become obstructive, such as recycling existing batteries for parts or researching alternative battery chemistries.
Lay also warned this could lead to automakers assigning extra funds to search for previously untapped nickel deposits.
“The shortage has no other obvious solution in sight that won't tarnish carmakers with several unattractive ESG issues", he added.
Rystad's forecast for nickel demand over the next five years. Credit: Rystad Energy
The two countries with the largest nickel deposits are Indonesia and Cuba and there is currently estimated to be around 94 million tonnes of known nickel reserves globally.
The energy transition and a push towards greater electrification have caused the battery market to explode in recent years.
According to Rystad's forecast, nickel-based batteries are expected to hold the largest share of the battery market by 2030, coming in slightly ahead of iron-based batteries.
However, potential nickel shortages could cause difficulties, as the battery sector still has to compete with other growing industries, such as steelmaking, which currently accounts for 70% of global nickel demand, the group claims, and is expected to grow by 5% per year at the same time the demand for nickel-based batteries is set to explode.
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According to this data, the battery market only accounts for 9% of all global nickel demand, but is expected to bloat to 31% by 2026.
Surging demand for the battery market will place huge pressure on nickel supply inside of a decade, Lay has warned, which is only being exacerbated by mining companies not being able to find new, reliable and sufficient deposits of nickel to keep up with these accelerating production demands.
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