PRIYESH MEHTA

PRIYESH MEHTA

Head Research Analyst at Bovell Global Macro.

Is This the Start of the Nickel Boom?

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The main use of nickel is to produce stainless steel, but in the coming years batteries could become another major use for nickel. Until now, cobalt has been the main metal used in producing batteries for electric vehicles (EVs). However, nickel is gaining a lot of traction as an alternative and demand is expected to boom for the metal this decade.

 

The Race to Eliminate Combustion Engines

 

In the last decade a lot of focus has been put on getting control over climate change and reducing our carbon footprints. A key part of this is reducing carbon emissions from cars and this means going electric. Hybrid models have gained a lot of popularity in recent years because they are much more efficient, cheaper to run and owners don’t need to worry about charging electric batteries. However, many governments and automakers have set out plans to move to full electric vehicles over the next twenty years or so.

 

We always knew that oil was a limited commodity and would run out someday. For this reason, a lot of research into EVs has taken place but the plans have been brought forward in recent years since global warming will be a much bigger issue first. This year’s pandemic has further sped up plans because the auto industry has taken a significant hit and automakers realise the next big opportunity is in EVs. Tesla is one of the leading companies in this space, and although they have had a great deal of success, many issues need to be addressed before the vast majority of people can start buying EVs.

 

Firstly, there’s the cost issue. EVs can be quite costly, particularly because of how expensive it is to make the batteries. There’s also the factor that EVs have not been around long enough for there to be a substantial ‘used’ market where the cars would be much cheaper. As the demand for EVs rises, there will eventually be enough used models to bring the prices right down. Although the batteries are expected to last for quite a long period of time, there will be instances where they need to be replaced earlier, and with an average cost of $7000 maintenance could easily get expensive. Then there are the issues with driving range and charging ports. Many of the issues here come down to the battery and this is where the use of nickel could be much more efficient.

 

Why Is Nickel Better?

 

Cobalt has been the go-to metal up until now for the production of EV batteries, mainly because of its safety characteristics. Cobalt batteries are less likely to catch fire but the metal can be quite expensive and a large quantity is required to produce a suitable car battery.

 

Nickel, on the other hand, is much cheaper and provides a greater charge with smaller volume. This would mean that a smaller amount of nickel could provide the same level of range as the current cobalt batteries on the markets. This would solve many of the issues with current batteries, but safety concerns would need to be addressed. Reducing the amount of cobalt in batteries means that there is a risk of overheating. Although the risk is small, it is not one that automakers can afford to make. There is currently a lot of research going on in Asia to make safe lithium-ion batteries without cobalt, and there are promising signs that a suitable solution will be found in the coming years.

 

How Will Nickel Prices be Impacted?

 

Over the next decade, nickel prices will very likely boom on the back of increased nickel demand for batteries. EVs are undoubtedly the future and many automakers are working towards have a greater number of EVs in their fleet over the next ten years. In the UK, the government is to ban the sale of petrol vehicles by 2035 and similar measures will likely be seen across Europe, which is the home of several automakers.

 

Electric cars are not the only product on the agenda either. Zero emissions are the target for many countries in the next twenty to thirty years, and whilst EVs will go a long way to achieving this, there is the issue of air travel. If we ignore the air travel disruption caused by the pandemic this year, we can see that in the last ten years, air travel has increased significantly. Emissions from air travel needs to be brought down if governments are going to achieve their zero emission targets, and this has seen aircraft makers looking into electric aircraft. Electric commercial aircraft models are probably still some distance away given how much power they would need, but it would not be surprising if we had some hybrid models in the next two decades. This is another area where nickel demand could rise. It’s also worth remembering that the current cobalt batteries have a mixture of nickel in them so even if it takes some time to remove cobalt from batteries, nickel demand is still expected to increase.

 

This is a long-term idea being discussed in this article but with automakers bringing forward their plans for EVs, it seems like this is a good time to start looking at investments in nickel and nickel miners. Cobalt is also a viable idea in the short term as it could take some time before a completely cobalt-free battery is on the market.

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