Why the supply of EV nickel is so constrained
Purity and the need for greener mining methods limit the availability of suitable nickel for electric vehicles, writes McKinsey in a report on the metal published last week.
Lithium-ion batteries require high chemistry purity, currently halving the world's supply of nickel given the current state of the world's technology. There are two broad types of nickel, writes McKinsey, which are Class 1 and lower quality Class 2. Class 1 is mostly sourced from sulfide ore bodies.
"Class 2 nickel and low-quality mixed hydroxide precipitates are accordingly ruled out—at least with today’s technology. Consequently, at best only 46 percent of the world’s nickel production—Class 1 nickel—can be used in batteries...and a scarcity of sulfide deposits is contributing to a looming shortage of Class 1 nickel," writes the McKinsey authors of the study How Clean Can The Nickel Industry Become?
Out of that nickel supply, companies need to source material that is environmentally-friendl, requiring infrastructure such as electrified hauling fleets, power generation using renewables and dry-stacked tailings.
"Producers’ ability to demonstrate to OEMs and end users that all ESG challenges related to mining, smelting, refining, and tailings management in nickel production are being addressed throughout the value chain and improved over time will help them to position themselves as suppliers of 'clean nickel.'"
The demand is there. McKinsey estimates that demand will increase from 2.2 million metric tons "...to somewhere in the range of 3.5 million to 4.0 million metric tons by 2030."