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Nickel will be the key beneficiary of electric vehicle (EV) adoption against the backdrop of other battery metals such as lithium and cobalt, supported by its dominant long-range capabilities. Furthermore, a wealth of nickel deposits will position Africa to benefit from an uptrend in prices in the coming years writes GERARD PETER.

THIS ARTICLE FIRST APPEARED IN MINING REVIEW AFRICA ISSUE 3, 2021
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These are the key findings of a recent Fitch Solutions report that looks at the opportunities and risks for nickel in the battery revolution. The basis of the report has been founded on a recent Mining Review Africa webinar titled, Nickel: The Forgotten Battery Metal where Fitch Solutions, Carly Cassidy was a participant.

The webinar discussed an anticipated uptick in nickel demand from the accelerated growth of EV adoption and the opportunities for Africa to benefit from the battery boom. According to the report, when surveyed about the role nickel currently plays in the EV and battery  markets, most Webinar attendees expressed the opinion that nickel holds a, “weak role as it could be replaced by other commodities as technology evolves.”This attests to the perception of nickel as a ‘forgotten’ battery metal.

“However, Fitch Solutions expects nickel to remain intrinsic to batteries, especially those for EVs, due to its significant energy density which provides it an unparalleled advantage to vehicle range and charging capacity. Nickel demand is set to be further bolstered as battery makers continue to minimise the proportion of cobalt metal in batteries,” added Cassidy.

Furthermore, Cassidy explained that Nickel’s dominant range capabilities will keep demand anchored in large automotive markets such as the US and Canada where charging infrastructure will face long-term challenges accommodating more spread out populations. Furthermore, automakers such as Tesla will employ nickel-heavy batteries in commercial trucks and higher-end models.

Webinar: Nickel: The forgotten battery metal

Africa to benefit from demand

With battery-grade nickel to remain in a deficit, Africa’s wealth of nickel deposits will position the country to benefit from an uptrend in prices in the coming years. According to the report, African nickel production will rise in the coming years, with South Africa and Tanzania to benefit the most.

At present, most of Africa’s nickel mining occurs in Botswana, Zimbabwe and South Africa. In the latter two countries, nickel is most commonly mined as a by-product of PGMs. The boom in nickel demand for batteries, and accompanied increase in prices has already begun to renew interest in the subsector.

The development of the Kabanga nickel project in Tanzania points to upside potential to future developments of untapped reserves present in the East Africa nickel belt (EANB). In January this year, UK mining firm Kabanga Nickel signed an agreement to develop what is currently the largest global deposit of battery-grade nickel-sulphide through a joint venture with the Tanzanian government. With four new projects, Tanzania leads the region in relation to nickel development projects.

Meanwhile, a high amount of nickel sulphide and potential access to value-added processing will further support Africa’s capacity to supply the battery industry. The EANB’s nickel sulphide resource base gives the region a key advantage comparative to Indonesia, the dominant global nickel miner at present. Africa boasts significant resources of both nickel sulphide and laterite ore, whereas Indonesia lacks the former.

While laterite ores can also be converted into battery grade nickel, nickel sulphide can be much more easily processed through traditional mining methods followed by smelting and refining.

The ease of processing also signifies that nickel processing utilising African sulphide deposits would be less energy intensive, and thus more sustainable, enhancing the investment appeal for ESG-conscious Western producers along the battery value chain. Indonesian laterite ores require energy-intensive processing such as high-pressure acid leaching (HPAL), which carries environmental concerns particularly about its waste disposal methods.

Read: Fitch raises short-term 2021 metal price assumptions

South Africa can cash in on upward trend

The report further states that the commencement of production at Thakadu Battery Materials US$20 million nickel sulphate refinery in South Africa introduces Africa into value-added processing activities. Thakadu began production in March 2021, and aims to produce 16 000 tpa in 2021, later ramping up to a steady state of 25 000 tpa, sourcing predominantly from Sibanye-Stillwater’s operations.

Finally, the report says that South Africa is also well-positioned to provide downstream processing for battery-grade nickel, benefiting from a higher mining risk reward index (RRI) score comparative to riskier jurisdictions in the region. In addition, South Africa’s strong potential for green hydrogen production, could result in a more sustainable nickel sulphide smelting process in the future.