Nickel is an important element in the production of stainless steel, which currently accounts for about 70% of nickel consumption. Recently, however, nickel has gained headlines mainly due to a new application. With the push for electric vehicles (EVs), nickel has also moved into the spotlight, as nickel is an important element in the battery of EVs.
World nickel consumption has made a strong comeback after the global economy largely ground to a halt due to the outbreak of the COVID-19 pandemic in 2020. Nickel consumption in 2021 increased by almost 20% compared to the previous year. In particular, demand for stainless steel and batteries increased strongly.
Global Nickel Consumption
Approximately 70% of the world’s nickel consumption goes into the production of stainless steel. Only 5% so far in the production of EV batteries. Demand is expected to increase with the push for EVs in the coming years. Alloys and surface coatings still account for the second most applications.
Global Nickel Production
Elon Musk once said in a tweet that he was most concerned about nickel supply. As more EVs are built, Tesla is dependent on nickel. The concern about the nickel supply probably comes mainly from the mining regions, which are mainly Indonesia, the Philippines and Russia. Presumably, this can also serve as a wake-up call to the U.S. government that something needs to be done here to meet infrastructure goals in the coming years. For example, according to USGS, Australia has one of the largest nickel reserves in the world.
According to a report by the Australian government, expected nickel production in 2021 will be around 2.6 million tons of nickel, representing a growth rate of 6.3%. In 2020, global nickel production had decreased by about 4% due to the COVID-19 measures.
According to analysts at GlobalData, the main growth areas are Indonesia, the Philippines and Brazil. Brazil is the country with the strongest growth of around 24%.
However, the main suppliers of nickel are still Indonesia, the Philippines and Russia.
Global Nickel Outlook
The production of Li-ion batteries is expected to significantly increase demand for nickel by 2030. According to the Minerals Counsil of Australia, demand in the battery industry will increase to 26% by 2030, which would be a world nickel consumption of 3.9 million tons.
In addition to battery applications, the focus is naturally also on the steel industry in order to realize infrastructure expansion and refurbishment.
What does this mean for investors?
The outlook for rising demand in the nickel sector remains optimistic. The major nickel producers are all among the biggest fish in the mining industry. They include Vale SA, BHP Group, Glencore and Russian agent Norilsk Nickel Co.
One of the most promising projects is in Brazil with the Araguaia Nickel Project, owned by Horizonte Minerals (LON: HZM). The project is expected to come online in the next few years. According to Horizonte Minerals, the project is a Tier 1 project.
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