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The perfect storm that increases the price of nickel, one of the key metals of the future (and of the present) - Fintech Morning

The perfect storm that increases the price of nickel, one of the key metals of the future (and of the present)

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In the coming years, millions of people will buy electric vehicles. All those cars and trucks will run on batteries containing metals like cobalt, lithium and nickel.

But metal shortages could slow the rise of these vehicles.

“A lot of people don’t realize that we don’t have enough critical materials mined around the world right now,” says Megan O’Connor, CEO and co-founder of battery material mining and recycling company Nth Cycle.

His company has devised a way to extract nickel and other metals from shredded old batteries , so these materials can be reused.

It’s called electrowinning and it works by using an electrical current to separate the metals from the shredded battery waste, known as “black mass.” The separated metals are isolated and trapped in a special filter.

Nth Cycle’s technology extracts nickel, not only from pulverized old batteries, but also from the accumulations of rock and metals extracted from the mines.

It is a potentially more sustainable method of recovering nickel than traditional techniques such as pyrometallurgy, which O’Connor says is not an environmentally friendly process.

Megan O'Connor
For O’Connor, traditional techniques for recycling nickel are not environmentally friendly.

“Think of it like a big furnace, where everything is melted at very high temperatures – you can imagine the carbon footprint,” he explains.

Affected by the war in Ukraine

In the years to come, the industry will need all the supplies of nickel it can get, as it is part of many of the products we use every day.

Lithium-ion batteries, which power many devices including your phone, rely on a mixture of nickel, manganese, and cobalt.

But in some batteries, nickel is by far the largest component, making up 80% of the mix.

The problem is that nickel sourcing, like so many materials right now, is subject to supply chain headaches, caused in part by the war in Ukraine, with Russia being one of the biggest suppliers. of nickel in the world.

Countries like Indonesia and the Philippines are likely to increase their nickel production as buyers look for other sources of the metal. Although there are doubts about the sustainability of this new production.

Nickel mine managed by the Compañía Guatemalteca de Níquel
Mines that are not in Russia, like this one in Guatemala, have seen increased demand.

O’Connor says new mines won’t be able to open fast enough to meet growing demand for nickel, which is also used to make stainless steel and wind turbine components. Instead, recycling old batteries will help “patch” that supply problem, he suggests.

Other companies are also taking this approach: Redwood Materials in the United States already procures the disused batteries from between 60,000 and 80,000 electric vehicles each year.

“We recover, on average, 95% of battery elements, such as nickel, cobalt, lithium and copper,” says vice president of communications and government relations Alexis Georgeson.

volatile price

But general confidence in the nickel market has yet to return after a difficult episode in March, when the price of nickel on the London Metal Exchange (LME) soared 250% before falling again. This prompted LME traders to suspend nickel trading for a week, a more or less unprecedented move.

“It was a disaster,” says Keith Wildie, head of trading at metals recycling company Romco Group, noting that the price of nickel remains volatile. Although it has fallen again, the price is still 60% higher than at the beginning of the year.

The price shock occurred, in part, because a Chinese company, Tsingshan Holding Group, had created a large “short position” in the market, that is, it had entered into contracts betting that the price of nickel would fall. When this was not the case, the company was forced to buy back those contracts or commit to supplying the nickel. Taking either option would be a huge loss.

The company did not respond to a request for an interview from the BBC.

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Factory in Wuxi, Jiangsu Province of China
More than two-thirds of world nickel production goes to the stainless steel industry.

The market turmoil and panic have dented trader confidence, adds Wildie: “Volumes have absolutely plummeted.”

Both the Financial Conduct Authority and the Bank of England have announced reviews of the incident.

In a statement, the LME pledged “to ensure that the actions of all participants…are fully reviewed, and that appropriate action is taken both to restore confidence and to support the health and efficiency of the market through long term”.

Future

However, before this episode took place, there was already concern about the future supply of nickel.

Electric vehicle maker Tesla, for example, had already moved to secure access to the metal by becoming a technical partner in a new nickel mine on the Pacific island of New Caledonia.

Not all companies can opt for this.

Tesla factory in Germany
Tesla anticipated the crisis.

More than two-thirds of the world’s nickel production goes to the stainless steel industry, where it eventually ends up in everything from cutlery to bathroom taps and washing machines.

Some European stainless steel mills have already cut production , due to concerns over nickel prices and supply.

Although Lisa Reisman, founder and executive editor of trade publication MetalMiner, predicts short-term demand for the metal in some industries could drop.

High interest rates could cause a slowdown in the housing market, which will likely mean fewer people may be able to buy new appliances containing stainless steel in the coming months, he says.

However, electric cars will almost certainly need a constant supply of nickel.

Earlier this year, market research firm S&P Global Platts forecast that worldwide sales of light electric vehicles (EVs) would reach 26.8 million by 2030. The company noted that EV sales doubled with you grow between 2020 and 2021.

Battery factory in China's Anhui province
Nickel is essential for batteries.

Jason Sappor, a senior analyst at S&P Global Platts, says the high nickel price probably won’t have a big impact on EV sales.

But he adds that electric vehicle batteries are becoming an increasingly important driver of the nickel market.

Could recycling old batteries help fill the gap, as O’Connor suggests? Perhaps, Sappor says, but that requires access to enough old batteries to make it worth mining the small amounts of nickel they contain.

“The only problem is that there has to be stock to recycle,” he says. This approach makes sense, she adds, “in the long run . “

O’Connor stresses that recycling alone will not be enough to meet our nickel needs in the near future:

“We need to start extracting more of these materials, and doing it more sustainably.”

Link: https://www.bbc.com/mundo/noticias-61311006

Author:

  • Chris Baranuk
  • Reporter specialized in Technology and Business
Author avatar
Edinson Love
https://fintechmorning.com

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