Roskill: The booming market for nickel sulphate

Much can change in the span of a year – as is apparent from the recent release of the annual analysis of the nickel sulphate industry, published by Roskill.Up until a few years ago, nickel sulphate represented a relatively niche product, with production of the material having amounted to less than 50ktpy of contained nickel up until 2010, or 3% of the total nickel market. Since then, nickel sulphate has been thrust into the limelight, with awareness of its key role in the chemistry of cathode active materials for use in batteries of electric vehicles now well-established in the minds of investors and hopeful juniors alike.

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London, UK, May 30, 2019 (GLOBE NEWSWIRE) --

In 2018, Roskill estimates that the production of nickel sulphate increased by as much as 21%, reaching nearly 160kt Ni. Rather than representing an outlier, demand for nickel sulphate is forecast to continue to grow and expected to exceed 900kt Ni by 2029 in Roskill’s baseline outlook. Buoyed not merely by rising adoption rates of electric vehicles but also by increased vehicle range (and battery size), and the increased intensity of use of nickel among various competing battery chemistries, growth in nickel sulphate demand is set to outpace that of most other battery raw materials.

In such a fast-growing market volatility is inevitable, with major new additions likely to trigger a shake-up of the market.  In 2020, first production of nickel sulphate is expected from BHP’s Nickel West operation, adding 22ktpy Ni capacity in its first stage. With ample access to feedstock from internal production of nickel powders, a potential second-stage expansion to 45ktpy would see output grow to triple the capacity of the next largest producer - Sumitomo Metal Mining. The addition is significant both in scale and in symbolic significance. Whereas Nickel West had previously been earmarked for sale by BHP, in April the company’s chief executive Andrew Mackenzie confirmed that following the operation’s strategic pivot to align itself with the electric vehicle industry the asset would be retained in BHP’s portfolio.

While Nickel West is likely to be the next major entry into the market, others are not far behind. In Finland, the Finnish Mineral Group’s Terrafame is seeking to convert its operation at Sotkamo from producing intermediates to nickel sulphate. In Indonesia, a joint venture including Tsingshan – the world’s largest producer of nickel – has broken ground on a new hydrometallurgical operation that will produce an intermediate product for processing onsite and in China into nickel and cobalt sulphate.

These various producers enjoy the advantage of access to a captive source of feedstock, from their own or contracted mines, ensuring a stable source of supply to ensure stable levels of output. On the other hand, as of 2018 as much as 80% of production of nickel sulphate remained in the hands of processors dependent on third-party intermediates, finished metal and recycled material. Competition for such feedstock materials is increasing, with new producers such as Alpha Fine Chemicals in Thailand and Pure Battery Technologies in Australia looking to join the fray, alongside steady capacity expansions by Chinese producers.

Roskill’s report outlines that the availability of feedstock, rather than access to capital, is likely to prove the primary bottleneck facing the production of nickel sulphate. Production of suitable intermediates remains limited to a handful of producers whose products are in high-demand. Abundant stocks of nickel briquettes have helped sustain production, but stocks in LME warehouses have been rapidly dwindling, and are not expected to sustain production beyond the next year or two. As such, future production of nickel sulphate will critically depend on increased supply of feedstocks suitable for processing into the battery-grade material.

 

Some such new production may come from additional operations in Indonesia, with several having commenced feasibility studies in 2018. These operations may contribute several hundreds of kilotonnes of annual supply over the next decade, benefitting from pre-existing mining operations and low costs, thanks to Chinese investment capital and plant construction. Back in Australia, a potential restart of Ravensthorpe, producing a hydrometallurgical intermediate ideal for processing into nickel sulphate, has long been anticipated and has been openly speculated on by the operation’s owner, First Quantum Minerals, since the second quarter of this year.

The development of potential new processing methods may also contribute a further source of supply. Companies such as CleanTeq, the Independence Group and Royal Nickel are exploring direct-from-concentrate production routes, bypassing traditional processing stages. Such new production routes could lend a cost advantage in the final processing stage but are yet to be commercially proven in a large-scale operation, and only partially overcome the high upfront capital expenditure required by projects not benefiting from pre-existing infrastructure.

Evolving trends on the demand side of the industry are expected to trigger a further change within the industry. Existing grades of nickel sulphate already distinguish between battery- and plating-grade material. The transition to higher-nickel battery chemistries is likely to trigger a requirement for higher-purity battery-grade material, owing to a decreased tolerance for impurities.

Over the longer term, the eventual introduction of solid state batteries may decrease unit requirements for nickel and other battery raw materials. In these batteries, the liquid lithium electrolyte is replaced by a solid polymer alongside changes in anode materials, to provide higher energy density, ensuring a bigger bang for one’s buck of nickel, or ensuring that less nickel will be required per kilowatt-hour. In Roskill’s new report, this factor combined with increased sourcing of nickel from recycled materials, is expected to lead to an eventual slowdown of primary demand for nickel sulphate from mined materials – so that any new entrants into the market depend not only on adequate premiums, but must also demonstrate a competitive cost position to guarantee their long-term viability.

Roskill’s new Nickel Sulphate Market Outlook to 2029 is available now and provides a full review of the trends and outlook for the production, consumption, processing cost, trade, and prices of nickel sulphate. For more information, visit www.roskill.com or contact info@roskill.com.


        

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