Deel 2
This was being seen in the changing configuration of lithium nickel manganese cobalt (NMC) oxide batteries, she said, which had moved from a 111 ratio (meaning nickel, manganese and cobalt were used in the same proportion) to 532, and then to the latest 811 (with eight parts nickel to one part of manganese and cobalt each).
Scott-Gray added that StoneX expects Class I nickel, which is used in LIBs, to enter a tight balance over the 2021-22 period, with a marked deficit expected to occur as early as 2023.
"The health of the Class I nickel market will be reliant on new production coming online and we rely, therefore, on the success of HPAL projects coming online in Indonesia and Australia over the next few years," she said.
In Australia, there are a number of nickel HPAL projects in the pipeline, the most advanced being Clean Teq's Sunrise nickel-cobalt-scandium project in New South Wales, where a definitive feasibility study was completed in June 2018.
Other upcoming projects include MetalsX's Wingellina in Northern Territory, GME Resources' NiWest in Western Austraia (WA), Jervois Mining's Nico Young in New South Wales, Australian Mines' Sconi project in Queensland, Ardea Resources' Goongarrie project in WA and Barra Resources' Mt Thirsty in WA.
Chinese investments
China, which has led the EV race until now, is well aware of the likely future battery-grade nickel shortage. Chinese companies have been ahead of the investment in a number of new HPAL facilities that are under construction, especially in Indonesia.
"Unlike Western [investors], Chinese take a long-term view," said Martin Vydra, head of strategy at Canada-based Conic Metals, which has an 8.5% stake in the Ramu HPAL operation in Papua New Guinea. "The Chinese are able to do it because they have a lot of knowledge to transfer; they are China-backed, so financially they are not concerned," he added.
However, "even if you have the conditions, it takes at least three years [to start running an HPAL plant after construction starts]. It depends on complicated computer systems, complicated materials … they have unlimited access to capital and technical staff, so they can be successful, but I think these projects will take their time to be built, and you will see some failures too," added Vydra.
There are several Chinese-backed HPAL projects in Indonesia. Companies now are also looking to process nickel mined in Indonesia domestically after the Energy & Mineral Resources ministry announced in September 2019 that all unprocessed nickel ore exports, including material over 1.7% nickel content, would be banned from the start of 2020 to increase revenue from the processing of ore.
One is PT Halmahera Persada Lygend's 37,000 mt/year of nickel-in-mixed hydroxide product HPAL plant on the Obi Island, which is a JV between China's Lygend Resources & Technology and Indonesia's Harita Group.
The nickel smelter is expected to start up in March 2021 after being delayed six months due to pandemic-related travel restrictions. Lygend started construction again in December 2020 after a temporary suspension due to COVID-19, according to a report released by the company. The project officially started construction in March 2020.
At the end of August 2020, Lygend's subsidy Pt Halamahera Persada Lydend (HPAL) signed a contract with GEM China, a precursor and battery metals producer, to supply between 74,400 mt and 178,560 mt of nickel raw materials and between 9,296 mt and 22,320 mt of cobalt by-products.
Environmental, financial concerns
Although China has already picked HPAL as its choice to develop premier nickel supply from low-grade deposits going forward, there are still concerns about the inherent environmental bottlenecks of the technology.
Most of the existing HPAL facilities are coal-fed, and the process emits up to three times more greenhouse gases than nickel production from high-grade sulfide deposits. This raises concerns that the benefits of increasing nickel supply for "green" purposes such as batteries might not be enough to cover its environmental costs.
"There's no point chasing nickel units if they generate three or four times more carbon footprint [than currently]," Platts was told by Sam Riggall, CEO of Australia-based Clean Teq, which is developing the Sunrise HPAL project in Australia.
The company aims to use solar energy instead of coal, recover steam and heat, and generate 60% of the pressure acid leach from its internal acid plant. These would support a $1.8 billion facility that aims to go further than other plants, producing battery-grade nickel sulfate rather than stopping at intermediates such as MHP and mixed sulfide precipitate, as many HPAL facilities do.
The difficulty is that "there's no investment going to nickel supply, apart from what China is doing in Indonesia," Riggall said.
"The fundamental math of the market is very scary—you need 60,000-80,000 mt/year every year, for the next 20 years; so if EV manufacturers are going to meet their electrification goals, nickel needs to be developed somewhere," Trytten said, adding he believes both automakers and battery manufacturers will need to invest in nickel production to have this capacity added.
In December 2020, German chemical company BASF—which produces cathode active materials for batteries—and French miner Eramet announced an agreement to assess the development of an HPAL plant in Weda Bay, Indonesia. Eramet started mining nickel at Weda Bay in 2019.
Automakers, however, have remained on the sidelines so far. "I had discussions in the past with automakers, they recognize how complicated mining is; but I do see the battery companies getting more involved in the upstream," Vydra said.
Automakers "are understanding there's a problem, they just don't know how to fix it. They are waiting for the mining industry to solve it," added Riggall.