After a dramatic 2022, which saw nickel prices hit record levels and nickel stocks banned from trading on the London Metals Exchange (LME), the base and battery metal is expected to remain relatively stable in 2023.
Most researchers are predicting that demand and pricing will remain strong on the back of booming electric vehicle (EV) sales, with production set to increase to help meet market expectations.
According to Capital.com, nickel has emerged as the clear winner among base metals that have survived a volatile year.
It recently reported that, after rising to multi-year highs in the first quarter of 2022 because of Russia’s invasion of Ukraine, a global economic slowdown caused by central banks’ aggressive monetary tightening and the effects of Covid-19 lockdowns on China’s economy wiped out gains for other industrial metals.
However, it noted that nickel’s price has increased by 29% since the beginning of 2022, despite falling from US$100,000 per tonne during a short squeeze in March that year.
Elsewhere, Trading Economics is forecasting nickel will trade at US$29,301.73/Mt by the end Q1/03 (as of 13 February 2023) and will be trading at US$35,156.01/Mt in 12 months’ time.
Fitch predicts nickel mining growth
In a recent commodity piece, Fitch Solutions forecast that with resilient nickel prices and a strong demand outlook there will be a boost to investment in nickel mining across the world in 2023.
“We forecast global nickel mine production to grow by an annual average rate of 5.1% year on year over the medium term (2022-2026) before easing off to average 1.9% over the remainder of our long-term forecast period (2027-2031). These growth rates are slower than the 6.6% year on year average achieved over 2010-2019, which was boosted by higher nickel prices at the time and strong Indonesian output growth. By 2031, we expect global annual nickel production to reach 3.15Mt, up from 2.24Mt in 2021.
“With battery-grade class 1 nickel to experience a major demand boost from the green transition, the main supply risk and impediment facing battery players is sufficient class 1 supply.
“Meanwhile, the main potential game changer is the successful conversion of class 2 nickel (lower quality, with less than 99.8% nickel content) to class 1 nickel, which remains technically and environmentally challenging at this stage. This suggests tight supply of battery grade nickel over the next two to three years, at a time when EV sales will boom.”
The Fitch report noted that while nickel is the fifth most common element on earth and is currently mined in more than 25 markets, higher-grade sulphide deposits (required for battery-making) located in well-established mining regions have mostly been depleted, necessitating additional exploration in new and riskier jurisdictions.
“Australia and Indonesia will remain the world’s largest suppliers of nickel; however, Australia will outpace Indonesia with its endowment of higher-grade sulphide ores (class 1) whereas Indonesia will catch up trying to convert its class 2 nickel ores to class 1.
“Other areas of opportunities include Canada and Russia, which boast significant resources of higher quality sulphide ore. Canada’s nickel industry also enjoys better sustainability records (lower emissions) than its competitors.”
With resilient nickel prices and a strong demand outlook there will be a boost to investment in nickel mining across the world in 2023
S&P Global identifies resistance to higher pricing
A recent S&P Global commodity review suggested that as the supply of class 2 nickel – containing less than 99.8% nickel – continues to grow at a rapid pace, particularly in the battery sector where intermediates like mixed hydroxide precipitate, or MHP, and nickel matte are gaining dominance, consumers are increasingly resistant toward paying higher prices, especially with a slowdown in the Chinese EV sector on the cards.
“In recent months, demand for nickel sulphate remained tepid ahead of China’s lunar new year, translating to fewer spot trades in the market as many focused on fulfilling existing term contracts,” the report noted.
Battery demand
The Nickel Institute recently highlighted that the major advantage of using nickel in batteries is that it helps deliver higher energy density and greater storage capacity at a lower cost.
“Further advances in nickel-containing battery technology mean it is set for an increasing role in energy storage systems, helping make the cost of each kWh of battery storage more competitive. It is making energy production from intermittent renewable energy sources such as wind and solar replace fossil fuels more viable,” a Nickel Institute report said.
Furthermore, Fastmarkets researchers forecast that demand for nickel for use in EV batteries represents around 280,000tpa of nickel globally, which corresponds to around 10% of worldwide demand for nickel.
“But this figure is set to grow significantly. Demand from the battery industry is expected to increase to close to 314,000t in 2023 and to 668,000t by 2025,” the company noted.
It is clear that the forecast boom in demand for batteries and EVs is leading the world’s biggest mining firms to increase their exposure to nickel.
BHP Xplor
BHP’s innovative BHP Xplor programme recently selected Nordic Nickel (ASX: NNL) to participate in its inaugural event.
The programme will assist the company to advance its exploration plans at its flagship Pulju Nickel Project in northern Finland.
BHP Xplor is a cohort-based accelerator programme designed to support early-stage mineral exploration start-ups to find critical resources, such as nickel, required to drive the global energy transition.
The programme provides candidates with a one-off, non- dilutive grant of US$500,000, together with in-kind services, mentorship, networking opportunities with industry and investors, and connections. The grant is once off and there are no obligations or commitments on Nordic Nickel beyond the conclusion of the Xplor programme.
Nordic intends to use this additional US$500,000 during its recently commenced 2023 drill programme to fund a number of deeper holes to test the known EM targets that appear to be located near the base of the ultramafic cumulate layer at the Hotinvaara nickel prospect, for “Sakatti-style” massive sulphide accumulations.
“We are excited to have been selected to participate in the BHP’s Xplor cohort for 2023. This validates the quality and potential of our flagship Pulju Nickel Project in northern Finland, where we are targeting the potential for tier 1 nickel discoveries in an under-explored greenstone belt with proven geological potential for large-scale critical mineral deposits,” Nordic Nickel managing director, Todd Ross, said.
“The combination of the extensive historical drilling database and drill core from the Outokumpu era that Nordic has been able to secure, together with the company’s modern geophysical exploration, in particular the recent downhole EM survey data from the re-opened drill-holes, has put us in an enviable position from a nickel exploration perspective, with numerous substantial drill targets now being prioritized.
“This, combined with our world-class technical team, means that the company is ideally poised to make one or more meaningful discoveries as we commence our maiden drilling programme this month.
“The non-dilutive funding provided by BHP, together with the ability to access their world-class networks and expertise, will put Nordic Nickel in an exceptional position to unlock the full potential of this asset over the next 12 months and beyond,” said Mr Ross.
