Glencore and Trafigura Group Pte are often at loggerheads, but one thing they agree on: The nickel market will be transformed by the rise of electric cars.
Nickel sulphate, a key ingredient in lithium-ion batteries, will see demand increase 50 per cent to three million metric tonnes by 2030, Saad Rahim, chief economist at Trafigura, said in an interview. While other battery metals like cobalt and lithium have more than doubled since the start of last year, nickel prices have been subdued because of large inventories.
“When you look structurally, we should start to get bullish now,” Rahim said. “Are you going to be able to meet that demand when the time comes, given underinvestment in the supply side?”
His view echoes the outlook from Glencore, which told analysts recently that nickel production would need to increase 1.2 million tons by 2030, equal to more than half of current global output, to keep up with demand from the battery industry. Prices are currently more than double what it costs Glencore to mine the metal.
It’s a surprising mood change for a market with a disastrous reputation. Nickel was long a thorn for Glencore, which was saddled with unprofitable operations following its takeover of Xstrata. It sold an Australian nickel mine, which Xstrata bought in 2007 for $2.4 billion, for just $19 million in 2015.
“The nickel industry’s been a bit of a dog since about 2007,” Oliver Ramsbottom, a partner at McKinsey & Co. in Tokyo, said by phone.
The battery industry could revive the fortunes of miners more than a decade after nickel collapsed from a peak of $51,600 a ton in 2007, when Indonesia and the Philippines started to flood the market with low-grade supply. Nickel rose to $13,030 a metric tonne on the London Metal Exchange last week, the highest since June 2015.
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