The nickel market has undergone dramatic changes over the last six years through the growth of the EV industry and the rise of Indonesia as a major producer. Our material flow analytics allows us to quantify the changing supply concentration to better understand risk – Indonesia now accounts for 43% of global primary nickel production up from 13% in 2018 – and discuss how this increases the carbon footprint of nickel and reduces the availability of “Western-produced” battery-grade material.
The growing need for nickel
The global nickel market has been undergoing significant change over the last 10 years, from both supply and demand sides. Whilst still primarily used within stainless steel manufacturing, the rise of electric vehicles has led to increased consumption within nickel-specific cathode chemistries, notably lithium-nickel-cobalt-aluminium (L-NCA) and lithium-nickel-manganese-cobalt (L-NMC), with the latter including some particularly nickel-rich chemistries (e.g. NMC 8:1:1). Depending on the specific chemistry, nickel represents the second or third largest metal component, by weight, for an EV battery. However, by value it is easily the largest component compared to the other metals (e.g. lithium, manganese, cobalt, graphite, copper).
On the supply side, Indonesia has grown over the last few years to become a dominant player in global nickel production. The rapid growth of supply has led to suppressed prices and caused consternation amongst many other producing countries, particularly Australia. Understanding global nickel production flows is crucial to understanding potential risks to supply in the context of specific value chains.
Nickel flow analysis method & results: Indonesia’s rise
We have performed a detailed analysis to trace nickel material flows from the mining stage, to processing of intermediates, refining of primary nickel, and to consumption, to better understand the global nickel market and how it changed over time. We use a combination of reported mine production data, processed/primary material production data, and bilateral trade data for specific nickel commodities, and shipment data reported by customs agencies to illuminate the country-to-country flows of nickel, between the mining, processing, and consumption stages. We have performed this analysis for the years 2018 to 2023, to see how the flows have evolved over this period. Indonesia has become the dominant player in both mining and processing of nickel.
Figures 1 & 2 show the nickel flows for years 2018 (top) and 2023 (bottom). The column titles correspond to the following: mining and production of ores and concentrates location, possible processing location based on post-trade balances of ores and concentrates, intermediate (MHP and nickel matte) producing location, primary metal producing location, post-trade consumption location. The tonnes scale is shown for Indonesian and Philippines mining on each image for relative comparison between all flows on each image.
We can also see which countries are supplying to which others between the mining and processing stages, to understand possible risks. for example, a large proportion of Russia produced nickel intermediate matte is refined in Finland (at Nornickel’s Harjavalta refinery), and Canada refines a large fraction of matte in Norway (Glencore’s operations). We also see that the Philippines has consistently been a major supplier of nickel ore to China and Indonesia has completely stopped exporting ores and concentrates to China by 2023.
Quantifying the change in mining and processing concentration, Indonesia has moved from 25% of global mined production in 2018 up to 52 % in 2023. And it has increased its share of primary nickel production (mainly in the form of NPI and ferro-nickel) from 13 % to 43 % in the same time period. The ranked concentration scores for all producers are shown in Figure 3.
Ranked concentration scores (%) for each mining and primary producing country, for the years 2018, 2020, and 2023.
Recent developments for nickel supply – Australia’s woes
Following steadily lowering prices through 2023, several major companies have announced mine and plant closures in 2024. This includes:
- BHP’s Nickel West Operations, Western Australia, from 2024 to 2027,
- Wyloo Metals mines, Western Australia (these feed ore to BHP’s Nickel West Kambalda concentrator),
- FQM’s Ravensthorpe mine, Western Australia (moving to only processing stockpiles),
- Panoramic Resources’ Savannah mine, Western Australia,
- Mallee Resources’ Avebury mine, Tasmania,
- Glencore’s Koniambo nickel plant, New Caledonia (for six months in 2024 while they try to sell their ownership stake),
- EuroNickel’s ferro-nickel plant, North Macedonia (entered bankruptcy in February 2024),
The overall picture is therefore that the supply of nickel will further concentrate in Indonesia over the medium term. This ultimately increases the risk impact to global supply from possible natural disasters or regulatory changes. It also further increases the carbon footprint of nickel, as Indonesian nickel is largely produced using coal-fired power plants, and Indonesia’s nickel open-pit mines require extensive deforestation. The available forms of nickel on the market will also concentrate around ferro-nickel as this is the dominant product produced by Indonesia to feed China’s stainless steel industry. The loss of multiple Australian nickel producers mostly reduces the availability of battery-grade refined nickel, which adds to supply risk for the battery sector. Although Australia’s overall contribution of 3 % to global primary supply in 2023 isn’t likely to cause major shifts in the nickel price through 2024 and into 2025.
Upcoming analysis
Our future plans are to break these flows down by specific product type, so we can better link the flows to specific assets within the countries. And we will look to expand this capability to additional commodities. Our Supply Monitor platform will soon be unveiling a ‘Commodity View’ where users can explore these flows in detail.
If you are interested in utilising our expertise for critical mineral supply chain intelligence, please get in touch.
