FOOD FOR THOUGHT

The green transition necessitates an increase in mining nickel — one of the most important materials used in the production of batteries for the electric vehicles (EV) industry. For this reason, global nickel mine production is expected to see growth in the long term.

This is according to the Global Nickel Mining Outlook, released by Fitch Solutions Country Risk & Industry Research earlier this year.

Just as has been the case with other commodities, nickel ore production was also severely affected by the Covid-19 pandemic, with this industry now showing signs of recovery and growth year on year, although some regions will be affected by other factors in terms of their ability to supply nickel ore to the ever-growing global market.

One such country is Russia, which will only see modest nickel mine production growth over the next few years — this despite the country accounting for 21.0% of global Class 1 nickel, and 9.3% of the world’s nickel mine production in 2021. As export-related difficulties put Russia under strain, 2.0% year-on-year growth is expected in 2023, with 1% and 1.5% expected in 2024 and 2025 respectively. This growth production forecast evens out over the long term, with expected nickel mine production volumes averaging at 2.0% between 2026 and 2031.

As Russia’s dominance dwindles as a result of the economic and political fallout of its conflict with Ukraine, this market is now opening up to Indonesia, the Philippines and Australia, with investment in these regions expected to increase.

Although Class 2 nickel is not refined enough to be used in batteries, where higher-grade sulphide deposits are required, countries like Indonesia may yet become big players in the battery-grade nickel market, provided they are able to covert Class 2 nickel ores to Class 1.

Australia’s rich deposits of higher-grade sulphide makes this country one of the leading suppliers to the battery market. Next year sees a whopping 9.0% year-on-year increase in nickel mine production volumes, with moderate growth until 2026, when 8.0% year-on-year growth is expected, after which moderate growth is expected in the longer term.

South Africa’s contribution the global nickel market remains consistent at 2.50% from next year until 2031, which is heartening as the demand for electric vehicles is expected to grow globally — something which allows local mines to take advantage of this trend and add to South Africa’s stake in the global commodities market.

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