Nickel Free: Unnoticed, the raw material runs out (2023)

In less than eight years, the Philippines will run out of nickel. As early as 2030, at the current Philippine production levels and the required increase rates, it will not be possible to recover more nickel from currently known deposits due to increased demand. Deposits in Canada end in 2032. In 2034 in the United States. It will be China's turn in 2035, followed by Indonesia in 2036. And in 2039 Russia will also run out of nickel.

Nickel: Was $100,000 a Ton Just the Start?

At the latest from theNickel prices rose to over $100,000 a tonAt the beginning of March 2022, the general public was made aware of the importance of this raw material. ORevaluation and distortions through manipulation of the nickel marketwill reverberate for some time.

Stainless steel: an indispensable raw material, not only here

Overall, the incident illustrated that nickel is an essential raw material, such as in the production of stainless steel, which not only amounts to billions of US dollars, but is also an integral part of the green transformation towards a net-zero society. In the midst of a global energy crisis, the possible loss of Russia as the most important European energy supplier and the demand to switch to renewable energies as quickly as possible, the demand for the metal should continue to rise significantly.

a limited resource

But nickel is a finite resource. We have taken the trouble to correlate the available numbers. The Philippines, the first producer country, will run out of raw materials as early as 2030. This is likely to put more pressure on China as the Philippines is currently the main supplier of nickel to the Asian giant.

And even if Russia now potentially sells its production to China due to Western sanctions, those volumes will be lacking elsewhere in the global market — notably in Europe and North America.

This analysis is based onTotal Nickel Demand by Sector and Scenario 2020 – 2040by the International Energy Agency (last updated on January 24, 2022).

Where is all this leading?

We are predicting the outcome only to the extent that known nickel deposits will be depleted as early as 2040 based on currently available data. And as early as 2022 we are facing a dramatic shortage in the supply of high quality nickel for environmentally friendly processing. And assumed European demand for EV batteries for 2030 alone equals total global demand for 2021.

Where the 2 million tons of nickel for global stainless steel production or the need for high-quality nickel for electric vehicles in the USA or China will come from remains unanswered even by scientists. Recycling alone cannot and will not achieve this. And the faster the transformation to a net-zero society progresses, the faster the metal will run out.

Already in 2030 a deficit of 650,000 tons of nickel

Assuming that deficits caused by the loss of producing countries are not compensated for by an increase in production volumes in other countries, it will no longer be possible to cover a nickel demand of around 650,000 t from 2030 onwards. In 2033 it will be more than 900,000 MT, in 2035 around 3 million MT, in 2038 3.5 million MT. And by 2040, according to calculations by the IEA, there will be a shortage of 4.2 million tons of nickel per year. What about the net zero society in 2050 anyway?

Can't other producer countries intervene?

Of course, producing countries like Australia or Brazil, which have large nickel reserves, can step in to remedy deficiencies in other countries. But that would exhaust its own reserves much faster than currently assumed.

Ore deposits are limited

Nickel as a raw material is alarmingly limited. It is currently estimated that there are 95 million tonnes of known and mineable nickel reserves. In some cases this includes reserves that have yet to be explored.

2021: Demand at 2.85 million tons

According to the unanimous opinion of government agencies, the International Energy Agency (IEA) and mining companies, around 2.75 million tons of nickel will be produced worldwide in 2021. Reserves and produced quantities per country, but also demand and consumption are approximately known. AccordinglyAmerican authoritiesemanufacturer data, the demand in 2021 was around 2.85 million tons. A supply gap of around 100,000 tons was already apparent here.

If we take a simple approach and divide known deposits by known production, it doesn't look all that bad at first. If the demand for nickel had not increased significantly.

2040: 6.2 million tons per year

However,IEA sea, the rush towards a green transformation and a net-zero society will fuel demand for more than 6.2 million tonnes of nickel per year by 2040. And if you add the necessary rates of increase in nickel mining, it's no wonder that the IEA forecast ends in 2040. Then there will simply be no more nickel.

No more nickels? This can not be true!

Some may say, “No more nickels? This can not be true! Politics says otherwise. This first reflex is not surprising. We can understand that, and the objection is justified. However, we don't like making political assumptions. On closer inspection, the European UnionGreen hydrogen utopiait has already proved beautifully calculated by politicians, and when it saw the light of day, Russia had already failed and the bubble burst as the energy supplier for these hydrogen dreams.

Therefore, we do not include political illusions in our calculations. Instead, we use the IEA's Sustainable Development Scenario.

Demand will increase by almost 170% by 2040

And in our eyes, the IEA Sustainable Development Scenario is much more sustainable. In this scenario, demand is projected to increase by about 95% from 2020 to 2030. In 2040, additional demand is expected to be almost 170% higher than in 2020.

If we now look at the forecasts for the coming years, additional demand of 8 to 12% and growth in mining volume of 11 to 20% can already be expected for 2022 alone. Demand for high-quality battery-only nickel is expected to grow by 20% in 2022. This, of course, does not occur in its 99.9% form as traded on the Shanghai Futures Exchange and London Metal Exchange.

Isn't nickel the same as nickel?

The majority ofNickelthat can be mined is found in low-grade deposits near the surface. These laterite ore deposits are rarely high grade, containing only 1 to 2% nickel. So if 20 million tons of 1% material are mined, the end result will be 200,000 tons of nickel. The production and energy costs are enormous, the environmental impact is high and could increase further if Chinese nickel matte is extensively converted into high quality nickel.

It's not just themeconomically unviable matting process, it's much dirtier than real high-quality production.

The degradable amount is limited

In addition, there is probably around 300 million tonnes of nickel that are currently quite uneconomical and environmentally unsustainable to recycle, as they have an average nickel content of only 0.5%. High-grade sulphide occurrences account for 40% of the known amounts. In contrast, deposits of 60% laterite with very low nickel content are by far the largest stockpiles.

To make matters worse, sulfide ores can be found underground, so they cannot be mined in open pits.

There are also deposits in the Pacific Ocean. At 3.5 to 6 km below the surface, they are so deep that it would be easier to launch a human to Mars than to mine underwater.

Demand for electric vehicle batteries exceeded production in 2021

We're not the only ones coming to these conclusions. For example scientists fromFraunhofer Institute Germanyalso predicts a significant increase in nickel demand for EV batteries. According to this, up to 2.4 million tons will be required in the field of electric driving in 2040 - per year. For 2050, German scientists from the ISI still expect an increase in demand of up to 6 million tons.

The analysts ofRystad EnergyAlso from 2024 we see a significantly larger demand for EV nickel than could be produced. They forecast an annual deficit of 560,000 tons from 2026 onwards.

And see McKinsey consultantsNickel availability as one of the biggest challengesduring the transition to electric driving.

However, the consultants have not gone that far in their consumer considerations. If we take into account that 75% of new vehicles in the European Union will be electric by 2030, an EV battery weighs about 500 kg and about 300 kg of it is made of nickel, which for the EU is only 2.85 million tons per year are. This significantly exceeds the assumptions of the ISI scientists.

This is not a wonderThe European Commission has challenged the Indonesian government before the WTObecause of its export ban.

In this scenario, assuming that China also converts 75% of its current new car sales to electric vehicles by 2030, we will run out of nickels faster than the world can imagine.

Where's the stainless steel?

A valid question. Currently, global stainless steel production consumes 70% of the nickel mined. In 2021 it would be around 2 million tons. The IEA assumes that by 2030 only around 10% will contribute to consumption in stainless steel production. By 2040, that number is projected to increase by just 14% overall.

Are the IEA data really valid?

Overall, the information provided by the IEA on the Sustainable Development Scenario seems embellished or downright arrogant. Whether the economic growth in Asian countries such as Indonesia, India or China was really taken into account seems rather questionable in view of the available figures. Perhaps the criticism of the "European" International Energy Agencyfor not taking the development of new energies too seriouslyit's finally justified.

And recycle?

Recycling is an important part of recovering raw materials, especially nickel. Most stainless steel is recyclable, reducing nickel consumption and likely helping to save millions of tons per year. Another reason why the EU wants to ban its scrap exports. However, the EU lacks a circular economy in the battery sector of electric vehicles.

To build thiswould require an investment of several billion dollars, and before 2030 there will probably not be enough old EV batteries available to be economically recycled. China is much further along and with its demand and leadership in the green transformation, European battery recyclers are likely to struggle in the future.

Current study: Europe urgently needs more raw materials

Can you come up with something like this? NO. Because scientific studies, e.g. brand new fromfrom the Belgian university KU Leuven, concluded that Europe alone needs to increase its annual nickel consumption by 100% to achieve the green transformation by 2050. This would mean that instead of the current 200,000 MT per year, 400,000 MT per year would be used in Europe alone for the green transformation. Overall, the study assumes that Europe will need 900,000 tons of nickel per year in 2050.

This does not include increases for the rest of the world.

It is currently understood that the United Statesconsumes 210,000 MT per year. The required augmentation rates are likely to be similar to those in Europe.

Are the production demand forecasts invalid?

With this study, the forecasts of many nickel producers are already obsolete again. Production increases of this magnitude are almost impossible. And if the EU and the US increased their nickel consumption, the Philippine mines would be empty by 2029, a year earlier.

Does the study ignore other economies?

This does not include the economies of India or China with their total population of over 3 billion people. Only China currently has oneAnnual requirement of 1.31 million tons of nickel. If it doubles, it is estimated that the combined reserves of Canada, the Philippines and the United States will be exhausted before 2030. This raises the suspicion that other emerging economies - such as Indonesia, Brazil, Mexico and India - working hard to enter the economic arena from the west were forgotten in the calculations.

World nickel reserves smaller than previously assumed?

The world's nickel reserves may be even smaller than previously thought. OneDecember 2021 Indonesian studycalculated that known reserves are up to 10% smaller than those currently assumed by Western countries. And Indonesians are probably more familiar with nickel than westerners.

Belgian study assumes 50% recycling rate

ÖBelgian study suspectsthat by 2050 the EU can meet 50% of its raw material needs through recycling. Let's be realistic. The EU introduced an export ban on scrap to keep important raw materials in the European Economic Area. At the same time it increasesCBAMat the EU's external borders to keep dirty imports out.

Who else will sell raw materials to Europe?

This raises a very realistic question: who will sell all the raw materials to the EU? IfA)Raw materials are allowed, but higher value products from abroad suffer from CBAM andB)the raw materials are lost to the rest of the world because the europeans want to throw them in the dustbin - to have something. WhileC)the rest of the world is running out of raw materials.

Conclusion: the last one turns off the battery

Even in the most positive scenario, the world will run out of nickel in the near future. A little later from a political point of view, as political figures are expected there. From the point of view of the IEA, a little earlier, since renewable energies are apparently not given as much potential. From an economic point of view earlier, because here, too, people tend to work with expectations. And those expectations can come true.

If China alone needs 8 million tons of high-grade nickel for its electric vehicle sales in 2030, then nickel production would have to increase to over 12 million tons per year by 2030. Currently, global production is not even one room. And that would be just China (1.4 billion people). Excluding Europe (448 million inhabitants), North America (579 billion inhabitants) and India (1.38 billion inhabitants). And then there would be 3 years of nickel production left.

Nickel will be the new oil

Nickel is and will remain a scarce and finite resource. We have to put up with that. Also with regard to lithium, cobalt or aluminum. At the same time, demand there will increase. Stainless steel production has a direct competitor - renewable energies. In any case, it is already foreseeable that nickel will replace oil as the fuel that moves the world “the day after tomorrow”. ONickel price rises above $100,000may have been speculative at first glance. At second glance, it reveals a far from improbable reality awaiting us.

Update: Indonesia will run out of major nickel deposits by 2031

Update May 16, 2022 – General Manager of Minerals Indonesiaand coal at the Ministry of Energy and Natural Resources, Ridwan Djamaluddin said in an official statement last weekthat the country could run out of large saprolite hearts with more than 1.7% Ni by 2031.

By 2036, reserves could be stretched if the industry also processes ore with a Ni grade of 1.5% or more. The Indonesian government has now also confirmed that the important global nickel deposits, which are crucial for the green transformation, will be exhausted before 2040.

What (SE):Nickel short short but not yet delivered?

Note on our own behalf

We are not scientists, paid lobbyists or involved in the direct nickel trade. We are stainless steel and aluminum traders. And we have calculators, spreadsheets and free internet access. And we can do a little math too. Addition, subtraction, multiplication, division and percentages or the rule of three are sufficient for us in most cases. And if we have a finite amount X that is consumed a certain amount Y per year (which also increases every year), then at some point there will be nothing left of the original amount X. Very easily. Very easy.

very simply spoken

If I have $1000 in an account, I can withdraw $100 a year and have nothing left after 10 years. If I increase my payouts by 10% every year, I'll run out of money in my account even faster. In the seventh year there is not enough money left to withdraw the full amount in the eighth year. What if the money supply is limited and can't grow any further because my other €3,000 is in a burglar-proof vault in the Mariana Trench, then there's only €1,000 left in my account and eventually it's spent, even if I get a few nickels back - if you allow the pun at the end.

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