SYDNEY/MELBOURNE (Reuters) – Battery makers are increasingly turning to nickel to help power growing global electric car sales, but only half of the world’s producers of the metal are likely to benefit, mining analysts and executives say.
Lithium batteries containing nickel, which helps keep a charge over longer distances, are being installed in electric cars from Tesla’s top-of-the-line Model X to General Motors Co modestly-priced Chevy Bolt.
The battery boom promises a new and growing market for miners producing high-grade nickel products. However, half the world’s supply of the metal, comprised of so-called ferronickel and nickel pig iron grades, is unsuitable for battery production, according to analysts at UBS.
Some of the biggest producers of the higher-grade ores, including BHP Norilsk Nickel, Vale and Sumitomo Corp, are moving quickly to take advantage and seal long-term supply deals with battery producers.
Smaller producers with ores suitable for batteries, such as Australia’s Independence Group and Western Areas also stand to win. These producers are building plants to convert the metal into a powder-like sulfate that is particularly suited for use in batteries. Sulfate nickel regularly fetches a price premium over London Metal Exchange-traded nickel.