Glencore in talks to supply nickel to EV battery makers as Macquarie predicts supply crunch by 2025

Glencore supply nickel demand EV battery makers automakers Macquarie predicts supply crunch 2025
A nickel surplus is only expected to last a few years with demand forecast to reach “explosive” levels by 2025, according to market analysts.

Glencore, already a key cobalt supplier to automakers, is now closing in on nickel supply deals with them as well as with electric vehicle (EV) battery producers.

Glencore chief executive officer Ivan Glasenberg has confirmed “a lot of automobile guys and the battery guys are talking to us about nickel” while speaking at a London mining summit.

This comes after Tesla chief executive officer Elon Musk called on the mining industry to get busy and produce more nickel.

Nickel boosts the energy within batteries and, at the same time, allows battery makers to reduce the use of more expensive cobalt.

Glencore’s disclosure follows a forecast earlier this month that there needs to be greater investment in nickel production, even though the short-term picture suggests there will be a glut of the metal.

Demand forecast to reach “explosive” levels

A Macquarie Group presentation to a Perth mining conference this month said by 2025, demand for nickel will reach “explosive” levels.

Macquarie analyst Jim Lennon said while COVID-19 had caused a fall in nickel demand, this surplus problem will last for only a few years.

A surplus of 135,000 tonnes is expected for 2020.

But Mr Lennon expected nickel to be back in balance by 2024 and be in deficit the following year due to the uptake of nickel in the lithium battery market. However, other analysts have said the crunch may occur as early as 2023.

Glencore has already sealed a deal with Tesla to supply cobalt for two planned new auto plants.

Glencore produced 121,000 tonnes of nickel in 2019 from its mines in Australia, Canada and New Caledonia and a nickel refinery in Norway.

The company’s Murrin Murrin laterite nickel-cobalt mine in Western Australia already supplies BMW with cobalt.

Tesla is also reported to have spoken to other miners about nickel supply, including Brazil’s Vale and Australian mining giant BHP (ASX: BHP).

Tesla battery demand to rise 570% by 2030

There has been some commentary that the growing EV market could spur BHP to expand its nickel business to supply more metal to battery makers as customers — already 75% of its Nickel West output goes to battery makers.

BHP’s Nickel West operates the Mt Keith and Rocky’s Reward open pit nickel mines, the Cliffs and Leinster underground operations, the Kambalda concentrator, and a smelter in Kalgoorlie, WA.

Over the next decade, Tesla’s battery demand is forecast to rise by 570%.

In fact, Bloomberg calculates that by 2030 nickel demand for batteries will increase by a factor of 14 — compared with 10 times for graphite, nine times for lithium and just three times for cobalt.

Three-month nickel prices at the London Metal Exchange closed at US$15,652 per tonne (A$22,054/t) on Friday.

Its low for 2020 was US$10,865/t (A$15,309/t), recorded in March.

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