Nickel is a valuable element found deep in the Earth. Many different industries need it to function, and the rise of electric vehicles has made the demand for high-grade nickel surge.
While nickel is a fairly common element that is plentiful on Earth, various factors make it difficult to retrieve. In this article, we’ll take a look at where nickel comes from, why there’s a shortage, who is being affected and the future of nickel.
Where Does Nickel Come From?
Nickel is obtained from two sources of mineral deposits — laterites and magmatic sulfide deposits. Laterites are caused by the weathering of rocks and can be found near the Earth’s surface. Sulfide deposits usually occur at a greater depth and result from volcanic activity and magma cooling beneath the earth. Most believe that the majority of nickel is concentrated in the Earth’s core.
The mining processes for these two sources differ — for sulfide deposits, mainly underground techniques are used, while laterites require basic earth-moving that requires large shovels, draglines and front-loaders. Large obstructions like boulders and waste are removed while the nickel-rick strata are extracted. This ore is then hauled into a truck and driven to a smelter, where the remaining nickel is further refined.
In 2020, Indonesia accounted for around 30% of the total mining production of nickel, followed by the Philippines at 12.8%. Russia, Canada and Australia are other mining hotspots for nickel, with companies like Vale and Norilsk Nickel driving production. The United States is largely dependent on imports for nickel, which makes many companies reliant on the effects of global supply chain operations.
Why Is There a Nickel Shortage?
Even though nickel is a plentiful element found beneath the earth, many industries still suffer because they can’t get the amounts they need. So why is there a shortage?
Lack of Active Mines
The main problem lies with mining nickel. It takes a large production and amount of investment to actually set a mining project into motion. Another major hurdle lies in the effects of current events. Supply chain issues have slowed production and trade, resulting in shortages.
Global Supply Chain Volatility
Companies’ reliance on the global supply chain has been tested by recent events, forcing many industries to look domestically for resources. The U.S. is short on nickel production, with the country’s primary nickel mine — the Eagle Mine — set to close in 2025.
The proposed Tamarack Mine in Minnesota — developed by Talon Metals and Rio Tinto — is a hopeful sign of continued domestic production. The mine has already secured a deal with Tesla to supply nickel for EV batteries. New sources of nickel at home may make it easier and more reliable for companies like Tesla to operate effectively. Still, there are many factors at play regarding nickel production.
Russia’s invasion of Ukraine also spiked nickel prices, as the Kremlin owns a large percentage of high-grade nickel. This caused the London Metal Exchange to go as far as to suspend nickel trading for a week.
Need for High-Grade Nickel
Emerging industries like electric vehicles also rely on a certain purity of nickel for their unique batteries. The more nickel you have in a battery, the more energy-dense it will be. Many EV batteries are trending towards 90% nickel. This means that many companies need to find places to mine and areas with high-grade nickel.
Ultimately, a lack of mining production, current events and demand for high-grade nickel have caused a shortage in the nickel alloy market.
Industries Affected by Nickel Shortages
While the electric vehicle market has been in the news as one of the industries suffering from a lack of nickel, many other industries feel the effects of the volatile nickel market.
The majority of nickel is used for refined metals. Around 65% of nickel consumed in the Western world is used in stainless steel. The next largest consumer is superalloys, making up around 12%. Superalloys, also known as high-performance alloys, are known for their excellent mechanical strength, resistance to high temperatures and durability.
A variety of industries, including defense, chemical and electronics, rely on nickel uses to power their products. The aerospace industry makes up a large portion of nickel usage, as items like turbine blades and jet engines are crafted with superalloys.
Batteries only make up around 6% of total nickel production. Still, this number is likely to continue to rise as electric vehicles become more popular. Many see batteries becoming the main industry consumer for nickel.
What Is the Future for Nickel?
Nickel will be an essential element in many industries in the future — particularly for electric vehicles, whose demand for high-grade nickel will continue rising in the ensuing years. Batteries will likely begin to fill up the demand for the production of nickel.
Nickel prices will likely remain subject to supply chain changes and current events. Companies that can secure a solid stream of production domestically — like Tesla in the United States — may be able to get a hold on regular production of nickel for their batteries.
Though the future of nickel still seems relatively uncertain, it’s clear that the demand for nickel will continue to grow in the future as electric vehicles continue becoming a popular choice for consumers.
Ensure the Validity of Your Nickel
When you receive raw materials for your company, it’s essential to know exactly what you’re getting. This will ensure you’re paying a fair price and getting the exact quality agreed upon in contracts. Still, it can be challenging to get a good sample and test it accurately for its quality. The quality of the testing, after all, relies on the quality of the sample taken.
To get a good sample, you should partner with a professional service that is versed in all the intricacies of sampling. The process is best left in the hands of a company that follows a systematic, industry-accepted process that relies on accuracy and experience.
At McCreath Laboratories, we make sure you get the best sample possible. We have an expert team of field engineers with decades of experience in sampling materials. We make sure the sample we take from our clients’ stockpiles is representative of the larger whole, ensuring its quality and your confidence in the results.
Contact McCreath Labs for More Information
Dealing with raw materials requires precision and specific expertise. To gain confidence in your nickel samples, work with McCreath Laboratories. With help from our expert field engineers, we can attain a quality sample that will give you valuable insight into your larger stockpile. Contact us today!