With the emergence of “evil nickel”, will the price of electric vehicles be able to remain unsustainable?

The price of nickel has been rising like crazy recently, and it is called "demon nickel". Nickel is a key material for the production of power batteries for new energy vehicles. How much impact will the price increase have on the industry? What other uses does nickel have? Let's take a look.

Compiled by New Media Editor Fang Yongzhen

Recently, a metal called "nickel" has become the absolute protagonist in the financial market. Because its price has risen so wildly, it has been called "demon nickel". On March 8, the LME (London Metal Exchange) nickel futures quotation, which has soared for two consecutive days, once again set a new record, breaking through the $100,000/ton mark, with the highest intraday increase exceeding 103%.

How outrageous is this price? There is a joke circulating on the Internet: one kilogram of one-yuan RMB coins is about 107 yuan, while the melted nickel is worth 150 yuan.

(Editor’s note: The capital market is changing rapidly, so don’t take it for granted if you want to protect the RMB.)

There are many rumors in the market about the sharp rise in nickel prices, some of which are close to conspiracy theories. Some financial industry insiders analyzed that the sharp rise in LME nickel prices was caused by a variety of factors such as low inventory, international situation, and long-term capital squeeze.

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Nickel price increase may increase cost pressure on power batteries

Speaking of nickel, it is easy to think of batteries. Indeed, nickel is a key raw material for electric vehicle power batteries, mainly used in the manufacture of ternary positive electrode materials. With the rapid development of the new energy vehicle industry in recent years, the attention paid to nickel has continued to rise.

The nickel traded on the LME is so-called primary nickel, which is at least 99.8% pure. But about half of the world's nickel is actually less pure secondary nickel, mostly in the form of products such as ferronickel and nickel pig iron, which can be made into stainless steel at low cost at Chinese smelters.

Primary and secondary nickel are usually extracted from two completely different ores. Nickel sulfide ores are ideal for processing into high-purity products such as primary nickel, but they are relatively rare and only occur in a few areas of temperate countries. The boom in recent years has been secondary nickel, which comes mainly from laterite nickel, a low-grade ore that is easily stripped from regolith in Southeast Asia and other tropical regions.

Russia accounts for only about 9% of global nickel supply, but it produces nearly a third of the world's nickel sulfide ore. This gives its exports a huge impact on the price of LME primary nickel. Primary nickel is currently also the product best suited for producing nickel sulfate, which will become increasingly important in the coming years due to its use in electric vehicle batteries.

In the past few years, cobalt and lithium have successively become precious metals that are "stuck in the neck" of the power battery industry chain, but nickel has always been tepid and has a relatively stable supply. As an important raw material for lithium batteries, the surge in nickel prices has caused market concerns that the new energy industry may be unable to withstand the pressure of high costs.

▲A semi-autonomous driving car is transporting nickel plates (Source: First Financial News WeChat)

Data released by the China Automotive Power Battery Industry Innovation Alliance shows that China's installed capacity of power batteries totaled 154.5GWh in 2021, of which ternary lithium batteries with nickel demand accounted for 74.3GWh. Taking the most common 523 ternary lithium battery (the ratio of nickel, cobalt and manganese in the battery positive electrode material is 5:2:3) as an example, each GWh of ternary battery requires about 5,000 tons of positive electrode materials, of which about 1,519.5 tons of nickel are required.

It can be seen that nickel has become an indispensable metal element for the development of the new energy vehicle industry. The rise in nickel prices has made the new energy vehicle industry, which has already suffered from the price increase of raw materials in the supply chain, even worse.

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Nickel reserves are high on Earth, with Indonesia being the richest

Nickel is a very important metal in industrial production. As a common metal element, nickel is both "old" and "young". Ancient Egypt, China and Babylon used nickel-containing meteoric iron to make objects, but relatively pure nickel was not produced until 1755 and was confirmed as an element. It has quite good ductility, ferromagnetism and corrosion resistance.

▲The position of nickel in the periodic table (Source: Knowledge is Power WeChat)

Nickel is an element with a high content on the earth, with a nickel content of about 3%, ranking fifth after iron, oxygen, silicon and magnesium. Nickel is mainly concentrated in the core of the earth, with a content of about 8.5%. Nickel is an iron-loving element, and nickel on the surface and in the crust mostly coexists with iron. Although the total nickel content on the earth is high, the nickel resources currently available for human development and utilization are limited to nickel sulfide ores and laterite nickel ores on land. According to data from the United States Geological Survey (USGS) in 2020, the global nickel resource reserves are about 89 million tons, of which about 60% are laterite nickel ores and about 40% are nickel sulfide ores.

(Photo source: Jinshi New Media)

According to the "Global Lithium, Cobalt, Nickel, Tin and Potash Mineral Resource Reserve Assessment Report (2021)" released by the China Geological Survey, as of 2020, the global nickel resource reserves are about 90.63 million tons. The top five countries in the world in terms of nickel resource reserves are Indonesia, Australia, Russia, Cuba and Brazil, accounting for 31.72%, 13.96%, 8.5%, 7.14% and 6.26% of the world respectively.

Due to its rich nickel ore reserves, Indonesia has always been a "must-fight place" for nickel mining companies. Considering the strategic position of nickel resources and industrial construction, Indonesia began to plan an export ban in 2009, which officially came into effect in January 2014. In 2017, the policy was relaxed and it was announced that nickel ore exports would be allowed conditionally, but then the government once again banned nickel ore exports in 2020.

Although a series of policies prohibit the export of raw ore, smelted concentrates and deep-processed products are not affected by the export ban. This forces foreign companies to build factories and smelt in Indonesia. Under the policy background and driven by the demand generated by the new energy vehicle boom, several Chinese companies have built factories in Indonesia and invested in the nickel industry.

▲Nickel ore comes from two sources: sulfide nickel ore and laterite nickel ore (Source: Guojin Securities)

my country is the world's largest nickel producer and consumer. my country has a proven nickel ore reserve of 2.8 million tons, mainly distributed in the northwest, southwest and northeast regions, with a focus on Gansu, Xinjiang, Yunnan, Jilin, Hubei and Sichuan. China's nickel consumption accounts for about 53% of the world's total consumption, but China's nickel resource dependence on foreign countries is as high as 86%, and it needs to import a large amount of nickel ore from countries such as Indonesia and the Philippines.

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Nickel is widely used, with the largest application in stainless steel

Nickel has good plasticity, corrosion resistance and magnetism. It is needed in the production of new energy batteries, stainless steel materials, and coins. Nickel has become an indispensable metal in the development of modern defense industry, aviation industry and people's daily life.

Going back to ancient times, as early as 235 BC, my country began to use nickel minerals to make coins. Copper as the main material accounted for 78%, and nickel content was second only to copper, at 20%. The nickel content in ancient bronzes unearthed in Yunnan is also very high. China had weapons and alloy utensils containing nickel components as early as the Spring and Autumn Period and the Warring States Period. According to research, in the 1st century BC, China already knew how to use nickel and copper to make an alloy - nickel white copper, which was used to make ink boxes, candlesticks, plates, etc.

In modern times, with the development of metal smelting technology, nickel has been more widely used.

The main use of nickel is in the production of stainless steel, which accounts for 70% of global consumption. Adding nickel to stainless steel can increase its strength and toughness, and improve its machining properties. Moreover, stainless steel with nickel can significantly enhance its rust resistance and corrosion resistance, and is widely used in industrial machinery manufacturing, household goods, as well as aerospace, tanks and ships, and nuclear reactors.

The second is to produce alloys. Adding nickel to the alloy can make different types of nickel alloys have different properties. This alloy has a characteristic - transition temperature. Above the transition temperature, it has a certain structure. For example, when a titanium-nickel memory alloy is above the transition temperature, it is very hard and strong, but below the transition temperature, it is very soft and easy to cold work. We can deform it to a considerable extent. When it needs to be restored to its original shape, just heat it above the transition temperature.

▲The main use of nickel is in the production of stainless steel, with consumption in this field accounting for as much as 70% (see picture for source)

In addition, the application of nickel also includes the following aspects:

(1) Used for electroplating. The main method is to plate a layer of metal nickel film on the surface of the metal material, which can play an anti-corrosion role and is 15%-20% higher than the effect of metal zinc film.

(2) Used as a chemical power source, nickel metal is used as a material for making batteries. For example, Cd-Ni (cadmium nickel), Fe-Ni (iron nickel), Zn-Ni (zinc nickel) batteries and H2-Ni sealed batteries have been produced in industry.

(3) Used as a catalyst, mainly in the hydrogenation process of petrochemical industry to increase reaction efficiency.

(4) Used in making pigments and dyes, nickel can form yellow-orange pigments.

(5) Used in the production of new ceramics, it can be used to make ceramics such as nickel ferrite and nickel-zinc ferrite.

(Content compiled from Wu Xiaobo Channel, Financial Circle, Financial Magazine, Knowledge is Power, etc.)

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Produced by: Beijing Science and Technology News | Beijing Science and Technology Media

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