Guest Comment: March 2024 | Global Mining Review

Nickel activity is rising to accommodate multi-sector demand. Its importance…


Nickel activity is rising to accommodate multi-sector demand. Its importance as a transition metal has grown, but today’s production of critical clean energy inputs, from batteries to solar panels to critical materials, is concentrated in only a handful of countries, which is an issue.

Guest Comment: March 2024

Nickel will be required to support global population growth, which is anticipated to hit 8 billion in the next six years. At the same time, the world’s largest producer of nickel – Indonesia – may experience a change in its laterite nickel supply. Last year, the Indonesian Nickel Miners Association revealed the country’s reserves of high-grade nickel ore may be depleted by 2030, due to high annual production and increased demand from smelting facilities. If Indonesia exhausts its existing reserves without further exploration, this would mark a significant turning point for the global nickel supply chain.

On one hand, this would be the most ideal scenario for our environment. Indonesia and Chinese companies operating nickel mines, smelters, and refineries do not share the West’s standards for environmental protection. However, on the other, it could cause serious disruption, which is why long-standing dependence on Indonesia’s nickel supply is becoming highly unfavourable to activists and governments alike.

A new focus: Disseminated sulfide ores

While the West is far behind compared to where it needs to be to support demand and avoid an industrial bottleneck and supply chokehold, it has revived nickel exploration with a strong focus on the delineation and discovery of disseminated sulfide ores.
Sulfide deposits, which are typically formed in igneous or volcanic environments, contain higher concentrations of nickel and are generally easier to mine. Several decades ago, explorers overlooked this grade of nickel, but today it has gained favour, most notably in the electric vehicle sector, because it aids in the development of EV batteries. In order to keep pace with production expectations and keep decarbonisation goals on track, nickel exploration in the West must continue. In the US, for example, a sudden supply halt would be detrimental to various groups, including the country’s national defence.

Nickel exploration in the US

The US Geological Survey includes nickel on its list of fifty minerals critical to the country’s economy and national security. As of now, the US has only one existing nickel mine, and, while it is operational, the country imports 100% of the nickel it actually uses. This mine is anticipated to reach its end of life by 2027.

New federal legislation like the Inflation Reduction Act and the bipartisan infrastructure law have worked to encourage and create big incentives for domestic production, but mining operators in the US continue to be met with challenges. In the US today, there are only a few states in which nickel can be found. These include Michigan, Minnesota, Alaska, and a few others, but proposals for mining operations have not exactly been met with open arms. Alaska is particularly important because it is a pro-mining state with the gold standard environmental and regulatory regime to support truly responsible mining.

The hard truth

While the above is an ideal scenario, at the present time, Indonesian nickel production is up by one quarter from 2018 and currently accounts for half of the world’s nickel supply. Indonesia’s ministry is also working to attract more investment for exploration projects, but the Indonesian Institute has warned that if further exploration continues, it will not come without potential consequences, some of which we have already seen.

If Indonesia overbuilds nickel processing facilities, nickel reserves will decline due to over-mining and environmental risks will intensify – something we simply cannot afford if, globally, we are to meet our ambitious climate goals and protect the environment.

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