Nickel is the fifth-most common element on earth and is currently mined in more than 25 countries. Nickel-containing ore bodies require a variety of techniques to extract the nickel depending on the ore-type - laterites or sulphides being the predominant ores that nickel is extracted from. Over two million tonnes of new or primary nickel is produced and consumed each year, evenly divided between Class 1 (containing a minimum of 99.8 percent nickel) and Class 2 (containing less than 99.8 percent nickel) units (Nickel Institute).
Nickel has outstanding physical and chemical properties, which make it essential in thousands of products. Its biggest use is in alloying - with other metals, to produce corrosion resistant (commonly referred to as stainless) and heat-resisting steels. Primary nickel is produced and used as ferro-nickel, nickel oxides and other chemicals, and as pure nickel metal. ‘First use' of nickel is defined as the conversion of nickel products into intermediate products, which form the basis for nickel-containing end-use products. In almost all cases, these first-use products undergo further processing before they are ready for use.
EVs Disrupting the Nickel Market
Today approximately 70% of nickel is used as an alloying input to steel production and only 3% is devoted to battery production (Nickel Institute). However, this is expected to change dramatically over the next decade. According to CRU Group, global primary nickel demand was approximately 2.2 million tonnes per annum in 2018, and is expected to reach 2.8 million tonnes by 2023. Nickel usage in batteries is expected to grow from approximately 70,000 tonnes in 2017, to 240,000 tonnes by 2023, representing a CAGR of 20% during that period. Recently, Bank of America projected that 13.6 million EVs are projected to be sold in 2025, which would result in the need for 690,000 tonnes of new nickel supply by 2025.
Nickel-rich Battery Chemistries
With the accelerated mass adoption of electric vehicles and roll-out of energy storage systems, nickel like cobalt, is expected to materially benefit from the new energy paradigm. Two chemistries of lithium-ion batteries dominate electric vehicle batteries – Nickel-Manganese-Cobalt or ‘NMC’, and Nickel-Cobalt-Aluminum or ‘NCA’. The NMC battery chemistry is used by nearly every automobile manufacturer in the world with the exception of Tesla, which uses NCA chemistry. However, research indicates that, for at least the next decade, the evolution of the lithium-ion battery and its NMC chemistry is towards a more nickel-rich cathode.
“If you increase the nickel proportion, you reduce the stability of the battery and so it has an impact on cycle life, the ability to charge it fast, cobalt is the element that makes up for the lack of stability of nickel. There isn’t a better element than nickel to increase energy density, and there isn’t a better element than cobalt to make the stuff stable. So (while) you hear about designing out cobalt, this is not going to happen in the next three decades. It simply doesn’t work.”Source: Marc Grynberg, Chief Executive Officer, Umicore
The original NMC battery chemistry started off at a 1-1-1 ratio of nickel-manganese-cobalt, moving on to 5-3-2 chemistry ratio, and in the future, as technology advances, it is expected that a nickel-rich battery chemistry will evolve to a 6-2-2 ratio, and then on to 8-1-1 and beyond, with the first number representing nickel percentage of the cathode. Unlike other battery metals, nickel stands to benefit twice as much from the adoption of the EV and the roll out of energy storage systems: 1) nickel will benefit from increased nickel-rich battery chemistry; and 2) it will benefit from increased EV and energy storage systems sales.
“Unlike other battery metals, nickel stands to benefit twice as much from the adoption of the EV and the roll out of energy storage systems: 1) nickel will benefit from increased nickel-rich battery chemistry; and 2) it will benefit from increased EV and energy storage systems sales.”Source: Marc Grynberg, Chief Executive Officer, Umicore
Class 1 Nickel
Lithium-ion batteries utilizing nickel-rich cathodes require high purity nickel, typically in the form of nickel sulphate. As the main feed for EVs battery cathodes, nickel sulphate is currently manufactured by dissolving Class 1 nickel (i.e. greater than 99.8% purity nickel metals) in sulphuric acid. Future cathode production is gravitating towards bypassing the metallic stage of Class 1 nickel and utilizing purified nickel sulphate in solution generated during the nickel refining process. Currently approximately 29% of total nickel production and approximately 60% of Class 1 nickel production comes from high-grade sulphide deposits (Bernstein, 2018). The second way to produce Class 1 nickel, or intermediate nickel products to be used as a feedstock for the production of batteries, is through the processing of limonitic laterite (i.e. oxide) ore bodies utilizing processes such as high pressure acid leaching (HPAL).
Nickel Sulphide Deposits – One of the primary issues facing the nickel industry is the need to develop new high-grade sulphide nickel deposits, which tend to be the most economic form of nickel to process. Until recently, nickel sulphide deposits have historically provided the majority of Class 1 nickel production. Cobalt 27 believes that new nickel production required to fuel the EV revolution will need to come from nickel sulphide deposits such as the Turnagain Project in British Columbia, and the construction-ready Dumont Project in Québec. Cobalt 27 holds royalties on both of these nickel sulphide projects which have the potential to provide new nickel production to meet future projected demand for Class 1 nickel as a feedstock for nickel sulphate required for the nickel-rich cathodes within lithium-ion batteries.
Nickel Laterite Deposits – Over the past decade, lateritic nickel deposits have emerged as a major source of Class 1 nickel due to the shortage of discoveries, exploration and development of new nickel sulphide deposits. Nickel laterites may be divided into two groups: limonites and saprolites, with the difference being that magnesia and silica levels are much higher and iron is much lower in saprolites. Limonites can be processed with a variety of processes, such as high-pressure acid leaching (HPAL) to produce Class 1 nickel or an intermediate nickel product. Cobalt 27 is currently undertaking the acquisition Highlands Pacific which would result in Cobalt 27 owning an 8.56% joint venture interest in the integrated Ramu operation. Cobalt 27 believes the Ramu operation, a nickel-cobalt laterite deposit, is one of the best ways to gain exposure to this important source of feedstock to produce Class 1 nickel given that it is ranked as a top ten asset globally for the production of nickel and cobalt from lateritic sources.