We don’t need nickel from Russia. There is a critical need for nickel and other metals for electric vehicle batteries around the world, but we don’t need to get them from Russia.
In March 2022, Morgan Stanley’s Adam Jonas raised concerns about Russia’s outsized role in the electric vehicle nickel supply chain. CNBC Phil LeBeau then discussed Jonah’s note. Jonas noted that Ford has announced a goal of 2 million EV unit sales by 2026, and that would require a lot of EV battery metals. The question he posed was where Ford would source all of these raw materials. LeBeau pointed out that everyone in the auto industry has been talking about this issue for quite a while.
“If you listen to all the projections that we put out, and it seems like we get a new one every three or four weeks from a different CEO in the automotive industry around the world, it’s always a greater number of electric vehicles that they plan to build by 2025 or 2026 or maybe even by 2030, and yet the supply just isn’t there, and today Adam Jonas is focusing on nickel.
In the note, Jonas wrote that it was not a question of capital in the short term – the problem is that no amount of capital would be able to create new nickel mines by 2024. LeBeau pointed out that Ford last week said it plans to increase the number of electric vehicles in production on an annual basis to two million a year by 2026. “This is a dramatic increase from the previous projection.” Where will the nickel come from?
In recent weeks, the nickel market has been more than a little crazy. The price of battery-grade nickel – of which Russia supplies 20% – soared in March, doubling overnight to more than $100,000 a tonne on pressure from a massive short position held by one of the largest major nickel producers in China, Tsingshan. , in the face of fears of Russian supply shocks.
CNN was the first to Remark that President Biden’s recent sanctions against Russian energy have given EV battery materials like nickel a free pass – while pointing out that the International Energy Agency said earlier this year that demand for nickel in EVs will have to increase 19 times until 2040. Worryingly, the United States produced only 0.7% of the world’s nickel in 2020 and is home to only one operating mine (expected to close in 2025). Basically it also houses Nope nickel processing capacity.
Tesla CEO Elon Musk sounded the alarm about nickel in 2020. In an earnings call in July 2020, he said:
“I would just like to re-emphasize that all mining companies, please mine more nickel.
“Tesla will give you a giant contract for a long time if you mine nickel in an efficient and environmentally friendly way.”
But therein lies a key problem. Granted, there are other sources outside of Russia, but sourcing nickel from under the rainforest in Indonesia or the Philippines – the world’s two largest producers – is a pretty big deal. dirty business. More so, China has already locked in most of this new nickel supply.
That leaves automakers in deep trouble. While Tesla recently entered into a nickel partnership with Talon Metals from its Minnesota business which is expected to start production in 2026, the volumes to be delivered will barely move the needle. And in the case of Volkswagen, which recently agreements signed With two Chinese companies picking nickel from rich rainforests in Indonesia, its eco-friendly sourcing claims clearly play second fiddle to owning the actual metal.
We’ve yet to see Ford and other automakers express interest in getting their hands dirty, which begs the question: how will they get their money’s worth and navigate these rough roads?
The nickel solution is on the seabed
There is another potential source of nickel, less known but abundant, located at the bottom of the Pacific Ocean. See my previous interviews with The Metals Company CEO, Gerard Barron, if you missed our articles on this option. Formerly known as DeepGreen, the company focuses on the literal collection of nodules from the seabed – in a way that has far less impact on the environment than other nickel mining methods.
The company is not Russian. It’s Canadian, huh, and it has the largest undeveloped nickel project on the planet. The company offers a real alternative to nickel supplies under Russian and Chinese control.
Letter from Senator Murkowski
Senator Murkowski, a leading voice on metals in the US Senate, addressed a letter to US Energy Secretary Jennifer Granholm and referred to a report the DOE gave to President Biden that identified risks in the high capacity battery supply chain.
“The U.S. strategy should focus on securing access to battery raw materials, supporting the growth of the domestic materials processing base, and public-private partnerships. Collection of polymetallic nodules and their subsequent processing in the United States can support these goals,” said Senator Murkowski.
“Relying on strategic partnerships is not enough for these minerals and while recycled materials may increase supply, they cannot meet projected demand.”
You can read his full letter here.
Letter to the Secretary of Defense from 17 Admirals, Generals and Officers
In a separate letter written to US Secretary of Defense Lloyd J. Austin III and signed by 17 admirals, generals and officers, the focus was on securing the supply chain of critical minerals from the bottom of the ocean.
The retired officers noted that their previous military experience meant they shared Secretary Austin’s concern for strong and secure supply lines, especially for critical minerals. The group stressed that the national security imperative of creating enough mineral supplies to build future electric vehicles and energy infrastructure such as wind turbines must include a robust and secure supply chain under US control.
“Given that electric vehicles and wind farms require six and nine times more critical minerals respectively than traditional technologies they could displace, and defense systems increasingly rely on critical minerals and rare earths , the need for the United States to develop the domestic supply of minerals is clear. ”
The group stressed that the solution to the lack of domestic sourcing and processing of critical lithium-ion battery cathode materials such as nickel, cobalt and manganese should include the responsible development of polymetallic nodules, which could help relocate mineral supply chains. You can read this letter here.
I think the letters and The Metals Company are onto something here. Scooping up little balls of nickel – along with cobalt, copper and manganese – from the bottom of the ocean is a better alternative than outsourcing our mineral supplies to adversarial countries such as Russia and China, and could help bring key industries to the home energy transition.
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