This is an annual phenomenon. While many metal fabricators take downtime over the holiday period, most smelters keep operating, leading to a jump in visible inventory.

Copper has experienced the sharpest seasonal stocks build this year, leaving exchange inventory at the highest levels since 2020.

The rise in ShFE zinc inventories has closely matched last year’s pattern, while aluminum has seen a highly muted rebuild by historical standards.

Nickel stocks were increasing before the holiday break and are now at four-year highs. Those of tin are the highest since ShFE launched its tin contract in 2015.

Copper surge

ShFE copper stocks have mushroomed from just 30,905 metric tons at the end of December to 285,090 tons.

The scale of this year’s seasonal surge has been the strongest since 2020, when registered inventory peaked at 380,085 tons. The New Year holiday period that year coincided with the first wave of COVID-19 lockdowns and the resulting slump in Chinese manufacturing activity.

This year the jump in exchange stocks likely reflects the combination of fast domestic production growth and higher imports.

The country’s output of refined copper rose by 9.0% year-on-year in January-February, equivalent to an extra 159,000 tons, according to local data provider Shanghai Metal Market. Imports rose by 2.6% over the same period.

Stocks registered with Shanghai’s International Energy Exchange have also jumped from 9,760 tons at the end of last year to a current 40,511 tons. However, this year’s mid-March peak of 45,298 tons fell short of last year’s peak of 82,575 tons.

Muted rise in aluminum stocks

ShFE stocks of aluminum fell to 199,757 tons this week from last week’s year-to-date high of 206,417 tons.

If that turns out to be this year’s seasonal peak, it means the rebuild has been extremely muted relative to the last four years.

Stocks are up by just 100,728 tons on the start of January. By this time last year they had risen by 229,000 tons. The seasonal effect was even stronger over the 2020-2022 period.

Visible inventory remains remarkably low after last year’s high imports of over 1.5 million tons and the bullish optics reinforce the narrative of a tight domestic market.

Seasonal norm for zinc and lead

Exchange stocks of zinc in Shanghai crept a little higher this week to 121,873 tons and are now up by 100,658 tons on the start of January.

This is very close to last year’s seasonal build of 103,441 tons and to that seen in 2021.

Shanghai lead stocks stand at 53,631 tons and are up by just 747 tons since the start of 2024, which is comparable to the 333-ton rise seen over the first three months of last year.

Lead is less exposed to the new year holiday effect, having its own seasonality in the form of car battery kill rates over the northern hemisphere winter months.

China is also exporting ever more refined lead. Shipments rose by 62% year-on-year to 188,000 tons in 2023, the highest annual volume since 2007.

The steady outbound flow has served to keep Shanghai inventory below the 100,000-ton level for the last two years.

Nickel stocks at four-year high

Shanghai nickel stocks dwindled to just 560 tons in May last year, reflecting a shift in domestic production from the refined nickel that trades on the ShFE to nickel sulphate used in electric vehicle batteries.

The dynamic has changed dramatically over the last year. A new generation of Chinese nickel refineries has started up to capitalise on the burgeoning import flow of Indonesian raw materials.

ShFE stocks have grown to 20,713 tons, the highest tally since December 2020. The build has been mirrored on the London market, where the London Metal Exchange (LME) has been fast-tracking Chinese companies wanting to list their brands. LME stocks have risen by 21% so far this year.

Tin stocks hit record high

Global exchange stocks of tin, by contrast, are showing divergent trends.

Those in London have fallen by a third this year to below 5,000 tons as supply is constrained by export delays in Indonesia.

Shanghai tin stocks have been rising steadily since the start of December and now total 12,021 tons, which is the highest inventory in the contract’s nine years of trading history.

The country has been stocking up on refined tin in recent months, imports hitting a record high of 33,470 tons last year.

(The opinions expressed here are those of the author, Andy Home, a columnist for Reuters.)

(Editing by David Evans)

Graphic: Congo overtakes Peru on copper output, still behind on exports

On Thursday, an investor group led by Harry Lundin (Bromma Asset Management) and Rick Rule signed a binding agreement with the company for a $50 million debenture financing. The debentures will bear annual interest equal to the secured overnight financing rate (currently 5.3%) plus 4%, and are convertible into Lifezone’s common shares.

The nickel developer went public last July following a business combination between special purpose acquisition company – GoGreen Investments – and Lifezone Holdings Ltd. At the time, the combined entity was valued at $1 billion by the SPAC.

The New York-listed Lifezone pairs one of the world’s largest and highest-grade undeveloped nickel sulphide deposits in Kabanga with a proprietary processing technology, known as Hydromet, to produce cleaner metals in support of growing demand for batteries.

The company acquired the rights to the Kabanga project in early 2021, and in the same year, was awarded a mining licence by the Tanzanian government, a key partner on the project alongside BHP, which has committed financial backings of $100 million.

Kabanga’s previously owners include Barrick Gold and Glencore, which had spent $293 million on exploration prior to having their retention licence revoked in 2018.

Since taking over, Lifezone continued with drilling at Kabanga, leading to high-grade discoveries and a significant mineral resource update in late 2023. The deposit is now estimated to contain 881,000 tonnes of nickel metal within 43.6 million tonnes of measured and indicated resource grading 2.02% nickel. Another 391,000 tonnes (17.5 million tonnes at 2.23% nickel) are in the inferred resource category.

The company also made advancements in the metallurgical refining testwork using its Hydromet technology, which is said to have lower carbon footprint than the conventional pyrometallurgical smelting method. Test results showed nickel recoveries of over 98.5%.

Refinery licence

On the same day of the $50 million financing, Lifezone announced it has received a multi-metals processing licence from the government for its facility at Kahama, located approximately 340 km southwest of Kabanga.

The site, situated within a newly established special economic zone, stands to benefit from the legacy infrastructure of Barrick’s former Buzwagi gold mine nearby.

With the licence, the company will be able to produce finished metals in-country, potentially reducing capital and operating costs, as well as reducing costs associated with transport of concentrate or other intermediate products.

“With the receipt of our Kabanga special mining licence, and now the Kahama refinery licence, we have a clear path to delivering a direct-to-metal solution and enabling the production of nickel, copper and cobalt in Tanzania,” Lifezone CEO Chris Showalter said in a news release.

Shares of Lifezone Metals gained 3.2% to $8.19 by 10:00 a.m. Friday in New York, giving the company a market capitalization of $639.3 million.

Nickel geology overview

Nickel deposits come in two forms: hard rock sulphide deposits, which consist of nickel-bearing minerals known as pentlandite and nickel laterite deposits.

Sulphide deposits are scattered worldwide, from northern Europe, South Africa, Canada and Western Australia.

We then have the laterites, which typically form in high-rainfall equatorial regions. As rain dissolves and removes minerals and elements from the soil it leaves behind immobile elements like nickel, iron and aluminium. That leads to a natural concentration of nickel in these regions.

There are outliers. Shifts in the global climate over geological history have enabled places like arid inland Australia to form laterite deposits. This region was once bathed in tropical rainfall and lush jungle.

But of the two sources of nickel, sulphides are far easier to process and refine into high-purity products, the ideal choice when it comes to EV battery material. For this reason, sulphide miners have retained a competitive edge.

However, that started to shift in 2018 when the world’s largest nickel producer, China’s Tsingshan Holding Group, announced a $700-million plan to produce battery-grade nickel from nickel laterites. Processing laterite ore into high-purity nickel uses a system known as High-Pressure Acid Leaching (HPAL). The innovation unlocked a swathe of new supply and Indonesia’s nickel output exploded after integrating HPAL technology in 2018.

Cloudy data in nickel outlook

In early March, the Macquarie Group’s nickel expert, Jim Lennon, claimed supply gluts could be overblown.

That assessment was based on a recent visit to China where Lennon claimed the demand for stainless steel and other nickel alloys is far higher than the official numbers report. According to Lennon, nickel inventories are also far lower than the stated figures. In other words, he believes the consensus forecast of a nickel oversupply is wrong.

It’s an interesting perspective. Chinese officials are known for under- or over-reporting figures to suit political motives.

But are Lennon’s observations, alone, enough for investors to move into this beleaguered market? Perhaps.

Resource stocks coming off a low base can result in large ‘recovery gains’ as sentiment creeps back into the market. It’s also worth noting that U.S. officials recently excluded Indonesian nickel from lucrative tax credits as part of its Inflation Reduction Act (IRA). That’s thanks to a tight interlink between Indonesian operators and Chinese investors.

So, where does that leave investors?

Everything is not what it seems in the nickel market and that’s where contrarian opportunities are born. Given that China plays a major role in supply and demand, this suggests there could be a lot more to this story. The data remains cloudy, meaning there could be more surprises in the months ahead.

A prime value opportunity may emerge with several nickel producers and explorers trading at multi-year lows.

I’ll explore that with my Diggers and Drillers readers over the coming months.

James Cooper runs the commodities investment service Diggers and Drillers. You can also follow him on X @JCooperGeo.

But are customers willing to pay more for low-carbon nickel? Some analysts say yes — under certain conditions.

“If the market sees a benefit in paying a premium for certain supplies then it will,” Jim Lennon, managing director of commodities at Macquarie Group, told The Northern Miner in an interview. “A buyer would be willing to pay a premium if they can see an economic benefit in using that product, such as receiving a government subsidy or securing a sale of a ‘greener’ electric vehicle.”

The price of nickel has been on a downtrend since late 2022 when it was $33,575 per tonne ($15.23 per pound). The price on Tuesday was $17,678 per tonne ($8.02 per lb.) and in February dipped as low as $15,850 per tonne ($7.19 per pound).

The price doldrums have prompted Wyloo Metals and BHP (ASX: BHP) to suspend operations in Australia, with BHP announcing it would take a $2.5 billion impairment on its assets.

Given the devastation to its nickel sector, Australia has been the most vocal in creating new variable price brackets for low-carbon emissions nickel.

The idea for premium ESG pricing isn’t new. In fact, some experts argue that there’s already a premium.

Canada Nickel (TSX: CNC) CEO Mark Selby says people might be surprised to learn that price premia have already been paid for various North American products perceived as cleaner on Asian markets.

Selby notes that domestic premiums for certain materials have been sustained over several years, which might not be directly attributable to lower carbon footprints or ESG factors alone but could be influenced by a combination of factors, including local supply.

But this type of premium isn’t helping Australian nickel miners. And deliberately imposing an ESG premium would be a different story.

“The main challenge is defining what ‘ESG-compliant’ actually means,” Macquarie’s Lennon said.

It’s an obstacle that the London Metal Exchange (LME) is facing as it investigates and prepares for the potential emergence of premium pricing for low-carbon products on separate trading contracts.

Georgina Hallett, LME’s chief sustainability officer, says that there’s increasing interest from producers, consumers, and investors in establishing a price premium for metals produced with lower carbon footprints. However, defining what constitutes ‘low carbon’ or ‘green’ metals isn’t easy due to the lack of a standardized, universally accepted framework for measuring and verifying the environmental impact of metal production processes.

“The aim is to build a robust framework that supports the gradual introduction of sustainability-linked pricing mechanisms while ensuring broad market participation and avoiding undue disruption,” Hallett told The Northern Miner. “By taking a step-by-step approach, the LME hopes to align the interests of various stakeholders and drive meaningful progress toward the integration of sustainability into the global metals market.”

Free market forces

Lennon suggests that establishing a special low-carbon contract for metals on the LME is unnecessary. This is because the prices for different products are already determined by normal market activities, such as supply and demand. Just like prices for different metal shapes and origins adjust based on market conditions, the prices for products with various ESG qualities would naturally adjust in the same way.

“Exchanges don’t need necessarily to get involved since they can focus on ‘objective criteria for delivery (shapes, metal purity, etcetera) and leave the market to decide on ‘subjective’ factors such as value-in-use of different products/shapes and ESG,” Lennon said.

From an exchange perspective, like the LME, there is also a risk of damaging liquidity if they were to introduce multiple contracts. Compared with large commodity derivative markets, nickel is not particularly liquid and dividing this liquidity could reduce the usability of the market for some participants.

Lennon says markets will ultimately determine the outcome. Currently, nickel prices vary significantly between products depending on supply and demand.

Today’s primary nickel products that are LME deliverable include metal rounds, pellets, cut cathode, and full plate cathode. When delivered to LME warehouses, each product is assigned a associated warrant. When buyers want to take delivery from the LME, they are often willing to pay LME brokers a premium for warrants of a particular material shape or origin.

Similarly, other non-LME deliverable products, including intermediates (concentrates, mattes, MHP, MSP, etc.) or finished products (ferronickel, nickel pig iron, nickel sulphates, nickel chlorides, etc.) also sell at varying discounts or premiums to LME base prices. Lennon said these premiums/discounts can shift dramatically due to changes in supply and demand.

For example, nickel pig iron was selling at a premium to the LME price at the start of 2022 and then had fallen to a discount of 40% to the LME by the first half of last year.

“Product type, ESG, and country of origin are all important properties and presumably were factors that led major automakers to agree to term supply contracts with BHP and Vale in recent years. ESG was no doubt a factor in these negotiations,” Lennon said.

Canada Nickel’s Selby emphasized the importance of provenance tracing rather than setting up a formal two-tiered pricing system.

He points out that imposing a pricing mechanism before the market is ready can lead to inefficiencies, such as a benchmark that does not accurately reflect market conditions. He suggests letting the market sort it out.

“We will continue to observe the distinction between Western-supplied, clean, green nickel and the high-carbon, less ESG-compliant nickel from China and Indonesia,” he said. “As for the necessity of a formal pricing mechanism, it’s typically better if such mechanisms emerge naturally in the marketplace before establishing a formal platform for trading them.”

Aussie nickel rout

An increase in supply from Indonesia has cratered nickel prices, as the southeast Asian nation boosted production of refined and semi-refined nickel, mainly on the back of an export ban on raw ore, which led to massive investment from China in new processing plants, according to Lennon.

Indonesia has become the dominant nickel producer, accounting for 55% of global supply, up from 7% in 2015, according to Bank of America data. But it relies on coal-fired power.

Higher-cost Australian supply can’t compete. Australia’s federal resources minister Madeline King responded to the raft of nickel suspensions by adding nickel to the country’s critical minerals list, enabling industry access to part of the A$4 billion ($2.6 billion) federal funding earmarked for critical energy transition minerals exploration and development.

“Prices paid for Australian minerals need to recognize the high ESG standards the Australian industry adheres to and the fact that Australian workers enjoy good working conditions and the highest safety standards.”

At PDAC, she noted that Canada and Australia have agreed to jointly advocate for robust ESG credentials to be built into global, transparent and traceable critical minerals supply chains.

Laying foundations

The LME has been considering introducing a premium for green or sustainable metals since it released a 2020 white paper on the topic, Hallett noted.

In 2021, the LME collaborated with Metalshub, a digital metals procurement platform which facilitates buyers’ access to the physical metal that meets specific attributes including carbon intensity and other ESG criteria. The LME said that low-carbon nickel, classified as producing 20 tonnes of carbon dioxide or less per tonne of nickel, could already be traded on Metalshub’s system.

The platform aims to allow market participants to specify and search for metals that meet specific sustainability standards, thereby fostering the emergence of a market-driven definition of ‘green’ metals.

Hallett says the critical missing component to formalizing a new price bracket is doing the less sexy but foundational work around how one measures emissions the same way across the industry. The point is to create an equal playing field for products in the value chain included in that new contract.

The LME has initiated several measures to promote sustainability within the metals market. One of the key initiatives is the development of metal-specific measurement methodologies, in collaboration with metal industry associations, to standardize measuring carbon emissions across different metals.

However, the LME’s taking a deliberate approach to implementing a low-carbon pricing mechanism for nickel and other metals, given the still-evolving market for low-carbon metals.

“Our approach remains one of cautious optimism and pragmatic progression,” Hallett says. “We are committed to leading the industry towards a more sustainable future, understanding that real change is achieved not by rushing but by thoughtful, collective action.”

Norway is one of the first countries to formally authorize seabed mining activities in its waters after its parliament backed plans in January to prospect for minerals across 280,000 square kilometers (108,000 square miles) of its Arctic continental shelf.

“We will be attentive to the developments of deep sea mining in Norway and also around the world,” Maros Sefcovic, the bloc’s green deal chief, said at a press briefing. “Norway is one of the countries which is very careful when it comes to the protection of the environment.”

The nation meanwhile signed a memorandum of understanding with the EU on Thursday to develop land-based raw materials and Sefcovic didn’t rule out potential further collaboration in the future.

Sefcovic added that in May the EU would open a call for proposals for prospective mining projects for key raw materials from friendly countries as part of its plans to protect its supply chains during the transition to net zero by the middle of the century.

In trying to shift away from Russia for fossil fuels and China for key raw materials, the EU has boosted its reliance on Norway, which has an abundance of both.

But scientists have condemned sea bed mining and caused for a moratorium, citing a lack of data on its environmental and climate impacts. Jan Christian Vestre, Norway’s trade minister, defended the move.

“We need to extract more minerals for the green and digital transition,” he said. “We’re also talking about our resilience and strategic autonomy. We don’t want to be so dependent on countries from other parts of the world.”

(By John Ainger)

It was also down sharply from a surplus of 28,900 metric tons in December 2023.

In 2023, the nickel market surplus widened to 238,800 metric tons from 103,900 metric tons in 2022, the data showed.

Data below in thousands of metric tons:

(By Anjana Anil; Editing by David Gregorio)

In a paper published in the journal Frontiers in Bioengineering and Biotechnology, the scientists explain that electronic waste is notoriously difficult to recycle because it’s hard to separate the different metals in the waste from each other.

“Getting the metals in solution is a first step, but the selective recovery of the metals remains a challenge. Compared to processes such as chemical precipitation, biosorption using spent brewer’s yeast presents a cheap and environmentally friendly approach,” Klemens Kremser of the University of Natural Resources and Life Sciences, Vienna, and corresponding author of the article, said in a media statement.

Several options already exist for separating the different component metals of electronic waste, including other biosorbents—biological materials that can be used to soak up pollution. However, they all have significant downsides. For instance, chemical precipitation produces contaminated slag, while biochar—a biosorbent that is similar to charcoal—is difficult to separate from wastewater.

So the scientists turned to brewer’s yeast.

They acquired 20 litres of spent brewer’s yeast, separated the biomass from leftover brewing residues, and dried out the biomass. Electrostatic interactions on the surface of the yeast allow metal ions to stick to that surface—a process called adsorption. Changing the pH of this solution alters the interactions, which can allow the yeast to adsorb more or different metal ions, depending on the contents of the solution and the specific pH.

The researchers then chose to test the yeast biomass against zinc, aluminum, copper, and nickel, economically important metals. They tested each metal solution at different pHs and temperatures, to gauge whether it was possible to increase the strength of the interactions and recover more metal. They also tested the yeast against a real polymetallic waste stream.

“Using waste biomass for metal recovery is not a completely new process, but the selectivity of biosorption processes is a key factor for efficient metal recovery from polymetallic waste streams,” Anna Sieber, Ph.D. fellow of K1-MET, an Austrian metallurgical research center, and first author of the article, said.

“We demonstrated high metal recovery rates from a complex metal solution using an environmentally friendly and cheap biomass. Yeast biomass is considered a safe organism, and the demonstrated reusability of the biomass makes it an economically feasible approach.”

High recovery rates

The group was able to recover more than 50% of aluminum, more than 40% of copper, and more than 70% of zinc from the test metal solutions. Over 50% of copper and over 90% of zinc were retrieved from the polymetallic waste stream they tested the yeast on.

Changing the temperature had little impact on efficiency, except for zinc, where it raised the recovery rate by 7.6%. Similarly, adjusting the pH had a limited effect on most of the metal solutions, except for aluminum, where it improved the recovery efficiency by 16%.

“The metals can be removed from the yeast surface by acid treatment and thus could be recycled,” Sieber said. “It would be interesting to investigate potential applications for these reclaimed metals.”

The yeast itself could also be recycled without heavily impacting its ability to recover metal: the scientists were able to use it five times to recover different metals.

The team, however, cautions that the new process needs testing with much larger studies in real-life conditions before it can be implemented on an industrial scale.

“The metal removal process in this study was optimized for the four metals in question,” Kremser said. “The concentration of potentially interfering metal ions was very low in our starting solutions, but this would be important to consider when applying this approach to different mixed metal solutions.”

The French government has been holding talks to salvage the South Pacific territory’s loss-making nickel industry and has drawn up a deal to continue providing support.

“I’m calling for the nickel pact to be signed by the end of March … as it was drafted,” Le Maire told journalists. “Let there be no ambiguities, there is no question of changes.”

New Caledonia President Louis Mapou has criticized the deal as being insufficient, but has nonetheless put it to the territory’s congress for a vote on March 28.

Under the proposed deal, the French state would in particular subsidize energy prices alongside local authorities up to 200 million euros a year and invest in electricity production benefiting local nickel plants.

With local producers facing cheaper competition from Indonesia, the state aid would help lower their production costs and allow them to become profitable, Le Maire said.

The nickel firms would also commit to supplying more of their output to Europe, Le Maire said, as the region tries to secure minerals such as nickel to make electric vehicle batteries.

New Caledonia has three nickel processors – KNS, Prony Resources and SLN – that have been on the verge of collapse due to high costs, political tensions and weak international prices linked to Indonesian competition.

Mining group Eramet, the majority shareholder of SLN, this month reached an agreement with Paris to remove from its balance sheet hundreds of million of euros of debt related to SLN.

Paris had been seeking to finalize a deal with the nickel companies and local authorities in January to overhaul the industry but an agreement has proved elusive, partly due to parallel negotiations over constitutional reform.

France has offered loans to help avert the collapse of the nickel processing firms. But Eramet has refused to inject more funds into SLN while KNS co-owner Glencore last month suspended output at the KNS processing plant while it seeks a buyer for its stake.

(By Gus Trompiz and Leigh Thomas; Editing by Alison Williams)

The most-traded May nickel contract on the Shanghai Futures Exchange (SHFE) closed day-time trade 2% lower to a nearly two-week low at 136,450 yuan ($18,953.23) per metric ton.

The most-traded April tin contract fell 2.6% to 224,430 yuan per ton, after dropping as much as 3% – the biggest loss in three months – earlier in the session.

Prices of the metals in London fell on Tuesday after a senior Indonesian mining ministry official said the country had issued production quotas of 152.62 million tons of nickel ore and 44,481.63 tons of tin so far this year, and was working to accelerate the approval process.

The delayed issuance had sparked fears of supply tightness, supporting prices over the past few months.

“Signs of faster approval and better supply offset recently improved demand supported by better stainless steel production,” Hongyuan Futures analysts noted.

Nickel, a key metal for stainless steel and battery production, is plagued by a global supply glut. An executive at Vale said on Tuesday the market would swing to a deficit by 2028.

Three-month nickel on the London Metal Exchange rebounded 0.4% to $17,465 per ton by 0821 GMT, while LME tin was down 0.3% at $27,365 per ton.

“We are very strong on nickel fundamentals,” Vale chief sustainability and corporate affairs officer Emily Olson told the CERAWeek energy conference in Houston. “Despite the short-term pain, we see the long-term gain.”

(By Ernest Scheyder; Editing by Simon Webb and Leslie Adler)

The Swiss company totalled 432.8 million tonnes of carbon dioxide equivalent last year, compared with in 2022, reversing the downward trend of recent years.

In its 2024-2026 Climate Action Transition Plan (CATP), Glencore noted it was still “on track” to meet its 15% reduction of carbon dioxide equivalent emissions for its industrial assets from 2019 levels by the end of 2026, and of 50% by the end of 2035.

The rest of Glencore’s revised climate plan is much like a previous plan it released — but this time includes the interim 2030 target.

“[The new plan] reflects a wide range of inputs, including analysis of the evolving market landscape, new regulatory requirements, mining and energy peer approaches, the IEA’s latest modelling, stakeholder inputs, and emerging insights from the most recent United Nations Framework Convention on Climate Change (UNFCCC) dialogue,” chief executive officer Gary Nagle said in a statement.

“We have also undertaken extensive engagement with our shareholders and appreciate their time and support as we have developed this CATP,” Nagle noted.

Glencore, like most of the world’s biggest listed companies, published its first climate action plans in 2020 in a bid to help with reaching the 2015 Paris Agreement goal of capping temperatures within 1.5 degrees Celsius.

The Baar, Switzerland-based firm, one of the top global thermal coal exporters, has faced backlash for being one of the few top miners still involved in the extraction of the fossil fuel used to generate electricity.

After facing pressure from major investors and shareholders, Glencore committed to run down its coal mines by the mid-2040s, closing at least 12 by 2035.

“We recognize the different roles of thermal coal and steelmaking coal – and the different transition pathways for both,” Nagle said while presenting the new strategy.

The executive noted the company “remains committed” to the responsible phase-down of its coal portfolio and is not progressing any greenfield thermal coal investments. 

The company continues to produce and recycle commodities considered key for today’s cleaner transition technologies. Nagle said the speed and direction of Glencore’s decarbonization efforts are significantly shaped by geopolitics, policy decisions, and technological advancements.

Tackling Scope 3 emissions

Glencore plans to cut “Scope 3” emissions — those produced when customers burn or process a company’s raw materials — by 30% by 2035 and achieving net zero Scope 3 emissions by 2050.

The company did not include its marketing activities in the these goals. It justified the decision by saying that, by trading in the third party volumes, its activities do not generate additional Scope 3 emissions, “which in the ordinary course are associated with the transformation or use of the product by third parties”.

Glencore recently acquired a 77% interest in Teck’s (TSX: TECK.A, TECK.B)(NYSE: TECK) steelmaking coal business, Elk Valley Resources (EVR). The transaction remains subject to mandatory regulatory approvals and is expected to close by no later than Q3 2024.  

Prateek Gupta was last year accused by commodities giant Trafigura Group of orchestrating a massive fraud against it. The company said that it had paid nearly $600 million for nickel, only to discover that the cargoes actually contained worthless rubble.

In December, a judge rejected Gupta’s attempt to lift a court freeze on his assets, saying that he had failed to present convincing evidence that Trafigura staff knew that there was no nickel in the cargoes it was buying. He was ordered to pay £330,000 on account toward Trafigura’s legal costs.

Gupta faced an initial deadline of late February to make the payment, and on Tuesday a judge ordered that around one-third of the overdue funds be paid by the end of next week.

Gupta’s lawyers argued that the London court should then wait for Gupta’s firms to sell steel sheet inventories rather than be required to liquidate his $71.7 million life insurance policies to pay the remaining amount.

“This is a short-term cash flow issue, and will not affect our ability to fight the case,” a spokesman for Gupta said in a statement. The businessman has significant illiquid assets, “which they are working hard to liquidate.”

While Trafigura says it paid nearly $600 million to companies linked to Gupta for cargoes that turned out not to contain nickel, it’s far from clear where those funds have gone.

Earlier this month, Trafigura’s lawyers said that several of Gupta’s companies had disclosed assets with only a “negligible face value,” as it successfully sought to force additional companies linked to Gupta to disclose information about their assets.

Several of Gupta’s companies have become insolvent since Trafigura first obtained the asset freeze last February. In December, TMT Metals Holdings Ltd., a UK holding company was wound up following a request by a broker. And UD Trading Group Holding Pte, a Singapore holding company, is also being wound up, according to filings.

Gupta’s lawyers said in court documents prepared for the hearing that the he and his companies were “experiencing a temporary period of impecuniosity.” They said his assets included zinc ingots, copper cathodes and steel sheets worth approximately $540,000, which he had sold to Noble Exim FZ LLC.

The lawyers said Gupta was able to point to potential assets that he controls including $191 million of funds that could be raised by selling the rights to “third party receivables” as well as settlement money from a court claim in Australia.

(By Jonathan Browning and Jack Farchy)

Resource-rich Indonesia requires all miners to secure production quotas, known locally as RKAB, before they can start production, but they have faced delays this year amid changes in the approval process.

In total, the government has issued approvals for 191 miners, including for 107 nickel miners, 12 tin miners, two copper miners, among others, ministry director general Bambang Suswantono said.

Production quotas for 99.24 million tons of copper ore and 15.88 million tons of bauxite have also been handed out, he added.

These production quotas were allotted for 2024, Bambang said.

In 2023, Indonesia produced 193.5 million tons of nickel ore, and ore output this year was estimated to increase by 5% to 10% this year, an official said in January.

More than 500 production proposals for various minerals were still being processed.

Authorities are boosting efforts to accelerate the process, but are also pleading with miners to quickly fulfill the requirements needed to achieve approvals, he added.

Most miners who have not been granted RKAB had unpaid mining royalties, Bambang said.

“We were asked why the RKAB process is very slow, but we need to ask the miners, have they fulfilled their royalty payments,” he told members of parliament.

The backlog has disrupted exports in the first two months of 2024 and boosted prices of nickel and tin in global markets.

Meanwhile, the government has also approved coal production quota totalling 922.14 million tons this year, above the production target of 710 million tons.

(By Fransiska Nangoy and Bernadette Christina; Editing by Kanupriya Kapoor, Janane Venkatraman and Louise Heavens)

Even better was the highest ever assay from the first hole of 2024 at the Reid property – 675 metres at 0.25%, including 142 metres at 0.32% and 24 metres at 0.40% in REI24-17.

Mark Selby, CEO of Canada Nickel, said: “Our 2024 exploration program has started very strongly with the best drill interval to date at Reid and a new discovery at Newmarket. The long drill interval of higher-grade material at Reid is very encouraging and the first section delineating an over-800-metre width of target ultramafic sequence – nearly two times thicker than Crawford – highlights the very large-scale potential of this property.

“The initial Newmarket results are also very encouraging, despite the fact we were only able to drill at the least attractive geophysical target due to seasonal logistical constraints,” he continued. “This initial drilling occurred on the edge of the eastern end of the 7-km long Newmarket target, which is contiguous with the Mann Southeast target and is part of an overall geophysical target more than three times larger than Crawford,” Selby continued.

The Newmarket target is 35 km east of the Crawford project, and the Reid target is 16 km to the southwest.

The Crawford project has measured and indicated resources in two separate zones. The pit-constrained M+I mineralization in the East zone includes 1.03 billion tonnes grading 0.23% nickel, 0.013% cobalt, 6.31% iron, 0.60% chrome, plus platinum and palladium. In the Main-West zone, the M+I resource is 1.54 billion tonnes grading 0.22% nickel, 0.013% cobalt, 6.91% iron, 0.58% chrome, plus palladium and platinum.

Within the resources of both zones, are proven and probable reserves of 1.72 billion tonnes grading 0.22% nickel, 0.013% cobalt, 0.014 g/t palladium, 0.009 g/t platinum, 6.44% iron and 0.57% chrome.

The East and the Main-West zones also contain close to 1.69 billion inferred tonnes with similar of slightly lower grades.

Canada Nickel is developing the Crawford nickel sulphide deposit, located in the Timmins-Cochrane mining camp of Ontario, as an open pit mine. The project has a 41-year mine life, during which time it will produce 3.5 billion lb. of nickel, about 53 million lb. of cobalt, 490,000 oz. of palladium and plating, 58 million tonnes of ire, and 6.2 million lb. of chromium.

Not only will the mine be net-zero as to carbon emissions, but Canada Nickel is building one of the largest carbon capture projects in Canada. The facility will capture and store 1.5 million tonnes of carbon annually by injecting carbon dioxide into the tailings where it will bind chemically to create inert carbonate minerals.

“We are ready now for carmakers to begin to gear up,” Trade and Industry Minister Ebrahim Patel told reporters. “A carmaker can commence immediately to put in place the production capabilities and production systems,” he said Monday on the sidelines of a Black Industrialists and Exporters Conference in the capital, Pretoria.

South Africa, in an effort to preserve a key export industry, last month announced a 150% tax deduction on investments in the local production of electric and hydrogen-powered vehicles from March 2026.

The country’s vehicle exports generated more than $21 billion in earnings last year. But car companies were worried about the lack of government support for EVs, amid shrinking demand for conventional petrol and diesel-powered engines in Europe, South Africa’s primary export market.

Patel said the long lead time was designed to give South African carmakers enough time to prepare production facilities and win support from their parent companies.

“As they incur that expense off the back of our incentive, they know they will be reimbursed,” he said.

The tax break is key for South Africa, which despite its natural advantages, has done little to develop an EV industry in the country.

South Africa has abundant supplies of raw materials vital for the manufacture of lithium-ion batteries, including increasing supplies of nickel and the world’s largest reserves of manganese. it also holds the world’s largest platinum reserves, a metal used in fuel-cell engines that run on hydrogen.

(By Mpho Hlakudi)

Greenpeace activists in late 2023 disrupted a research expedition when they boarded sea explorer The Metals Company’s vessel in the remote Pacific. Five Greenpeace activists boarded the MV Coco on November 25 and disabled its A-frame hoist/crane.

The vessel, engaged by TMC’s subsidiary, Nauru Ocean Resources (NORI) for environmental assessments, faced a week of disruptions from Nov. 23 by Greenpeace activities, which a Dutch court deemed unsafe and unlawful.

In December, a Dutch court ordered the activists to vacate the research vessel after the deep-sea mining company sued Greenpeace in the Netherlands, where the organization is headquartered.

The Metals Company says the research trip interrupted by Greenpeace was for scientific research aimed at improving knowledge of the effects of nodule collection.

It says the work had been requested by the ISA as part of an impact assessment, and that Greenpeace deliberately hampered those efforts when its activists boarded the company’s research vessel.

Greenpeace says the action was justified because The Metals Company has stated its plans to proceed with mining before regulations have been agreed upon.

Minerals and metals such as cobalt, nickel, copper, and manganese can be found in potato-sized nodules on the ocean floor. Reserves are estimated to be worth anywhere from $8 trillion to more than $16 trillion, and they are in areas where companies, including The Metals Company, plan to target.

Many NGOs and environmental groups, however, argue that mining the seafloor could have a devastating impact on the planet.

A recent report by the non-profit Planet Tracker says mining the seafloor for key minerals and metals could negatively impact the mining industry, resulting in $500 billion of lost value and causing damages to the world’s biodiversity estimated to be up to 25 times greater than land-based mining.

Read More: US bill supporting seafloor mining lifts The Metals Company

The plant, named “SOA HPAL”, will be the company’s third such project to turn nickel ore into mixed hydroxide precipitate (MHP) – a material used to make electric vehicle batteries, according to presentation material shown by Indonesia’s Investment Minister Bahlil Lahadalia.

A Vale Indonesia spokesperson declined to comment.

The plant could have an annual output capacity of 60,000 metric tons of nickel in MHP, the ministry said, adding Vale Indonesia is completing its final stage of exploration and it will partner with automakers.

Vale Indonesia already has two HPAL plants under construction in Sulawesi Island, in Pomalaa and Sorowako. Both projects are in partnership with Zhejiang Huayou Cobalt.

US carmaker Ford is involved in the $4.5 billion Pomalaa plant.

Last month, Indonesia’s state mining company MIND ID agreed to acquire a 14% stake in Vale Indonesia from Vale Canada and Japan’s Sumitomo Metal Mining to become a top shareholder.

($1 = 15,685.0000 rupiah)

(By Stefanno Sulaiman; Editing by Louise Heavens)

Read More: Indonesia and China killed the nickel market

The workforce at the A$1.7 billion project has been cut from about 400 to 300 people, the AFR reported, without saying where it got the information. A company spokesman said the exit of some workers didn’t mean the entire project – acquired from OZ Minerals Ltd. last year – has been canceled, the AFR said.

In February, BHP took a $2.5 billion impairment on the value of its Australian nickel assets after a surge in supply of the battery metal dragged down prices. The miner also said it would shutter its Kambalda concentrator, which processes ore, and could mothball its other Australian nickel assets after a review.

The price of nickel — a metal traditionally used to strengthen steel that’s become key to the energy transition due to its use in electrification and batteries — has dropped 40% since the start of 2023 on the London Metal Exchange.

(By Georgina McKay)

According to the study, confidence in the world’s ability to achieve net zero by 2050 seems to be eroding as it becomes more difficult to ensure adequate investment returns and progress diverges in a fragmenting world. This view is consistent across most regions and is most strongly held among people working in the oil and gas sector.

Bain & Company surveyed over 600 industry executives in mining, oil and gas, utilities, chemicals and agribusinesses across the globe to better understand their views on the energy transition, new technologies, and investment opportunities, and where they see the greatest challenges for decarbonization.

“This year’s survey found that energy and natural resource companies have not dampened ambitions for their transition-oriented growth businesses. However, customers’ willingness to pay is a growing issue, as is the ability to generate adequate return on investment (ROI) in energy transition-oriented projects. As a result, companies are focusing on projects with a viable ROI path,” said Joe Scalise, head of Bain & Company’s energy and natural resource practice. “The longer the executives are at the front lines of the energy transition, the more sober they are getting about the transition’s practical realities.”

The survey points out that executives in the Middle East (61%), Asia-Pacific (55%), and Latin America (51%) are feeling more optimistic about the prospects of their transition-oriented growth such as renewables, hydrogen, bio-based products, and lithium and other transition commodities that will contribute to their company’s valuation and profits by 2030. Hence, they are maintaining or increasing green investments. Only 4%, 12% and 10%, respectively, of executives from the three regions expressed less optimism, while the remainder showed no significant change.

The survey revealed a more balanced picture in Europe where 30% of executives revealed more optimism vs. 27% who were less optimistic about their new energy growth business areas contributing to the bottom line.

In North America, 29% of executives were more positive compared to 17% who were less positive on their transition-related growth areas.

Returns to scale-up

“Like last year, executives say the greatest obstacle to scaling up their transition-oriented businesses is finding enough customers willing to pay higher prices (or having equivalent policy support) to create sufficient return on investment,” the report states. “In fact, the share of executives identifying this as a very significant roadblock jumped 14 percentage points from 2023 to 2024, to 70% of executives.”

The experts behind the study note that the direct impact of higher interest rates on the cost of transition projects is likely shaping executives’ perspective on the challenges associated with customer willingness to pay. 

Bain has found that higher rates put upward pressure on the effective cost of low-carbon projects and a 500-basis-point increase in the cost of capital can increase the total annual revenue required to finance a project by as much as 50%.

Trendy North America

The survey presents North America as an emerging leader for green investments as 79% of all executives view it as an attractive region for energy transition investments. The next most attractive region is Europe at 65%. 

Australia and New Zealand come in as second runner-ups at 43%. 

Even as increasing government subsidies make some regions, such as North America, more attractive for investment, executives have growing concerns about policy stability.

The US Inflation Reduction Act is a major factor in North America’s investment attractiveness, but factors such as the availability of relatively low-cost natural gas feedstock also influenced the result. 

“However, while almost two-thirds of US executives surveyed agree that the IRA’s subsidies target the right areas, less than one-quarter believe that the policy regime will remain stable over the next five to 10 years,” the dossier states. “Furthermore, 42% of US executives think the IRA’s subsidies are unclear and that the rules are not easy to follow.”

About 70% of executives worldwide say that reducing policy uncertainty would very significantly improve their ability to scale up transition-oriented businesses.

Tumbling metal prices account for more than half all of impairment charges, declared when fixed assets fall below market values, the study of 105 TSX-listed mining companies found. They incurred $68 billion in charges from 2002 to 2015. Using unfamiliar technology and locating in developing countries also contributed, data show.

Metal price drops accounted for 143 of 268 cases and $25.2 billion in impairment charges, according to the study published last month in Resources Policy, an international journal on mineral rules and economics with editors in the United States, Australia and China. The research appears appropriate at a time when nickel and lithium prices have crashed from 2022 highs as gold has set new records.

“While impairments have been shown to be a common occurrence across mining companies, they also are a major contributor to the industry’s low average returns,” said the authors led by Andrew Gillis of Edmonton-based Aurora Hydrogen.

“The degree of impairments is higher at mines in developing countries and at mines where the geographic location and mining processes are new to the company operating the mine,” said the authors, which included John Steen and W. Scott Dunbar of the Department of Mining Engineering at the University of British Columbia in Vancouver, and Andrew von Nordenflycht of the Beedie School of Business at Simon Fraser University in Burnaby, BC.

Get lucky

Forecasting by its nature is uncertain. But some firms get lucky and only face a few impairments, while others get unlucky and suffer many or large impairments, the authors said. Their targeted years of research coincided with the rise of the commodity super-cycle 20 years ago followed by the financial crisis and declining metals prices from 2012.

The group recommended mining companies should improve their forecasting of mineral reserves, capital costs, production costs and commodity prices, which all impact future cash flows. It noted how C-suites might blame falling metal prices for impairments because other slips in capital or operating costs could be directly attributed to their own forecasting. The flip side is that rising metal prices can hide some other forecasting errors. And forecasting in foreign lands is simply more difficult, the authors said.

“Higher impairments in developing countries stem from lower information availability about market conditions and/or more volatile local market prices and conditions,” the authors said. “The sources of uncertainty are just greater, making forecasts harder and forecast errors easier, even for experienced forecasters.”

In the end, the researchers recommended more studies on forecasting. They could try to pinpoint the root causes of forecasting errors through personal interviews with project participants, detailed comparisons of feasibility studies and actual outcomes as well as assessing their methods of error prevention.

“Asset impairments have been identified as a primary determinant of long-term shareholder returns across Canadian mining firms,” the authors said. “Our findings suggest looking more closely into price forecasting procedures at mining companies to see if certain techniques or circumstances lead to more or fewer price-driven impairments.”

Ambassador Cong Peiwu said the Canadian government is “wrong” to prevent Chinese investors from buying majority stakes in domestic mining companies, like it did in 2022 when it forced three Chinese state-owned firms to divest from a trio of lithium companies.

“Politicizing normal commercial cooperation and using national security as a pretext for political interference is wrong. China has expressed firm opposition to this,” said Cong in an interview with Bloomberg News on Wednesday.

“We’ll continue to do business on the basis of mutual respect and mutual benefit.”

The comments follow remarks by Canada’s Natural Resources Minister Jonathan Wilkinson last week warning miners that Chinese stakes will face strict national security reviews.

Chinese investment has continued to flow through Canada’s mining sector more than a year after Trudeau moved to tighten its foreign ownership rules.

This year alone, Zijin Mining Group Co. initiated plans to buy a 15% stake in Canadian copper company Solaris Resources Inc., Ganfeng Lithium Group Co Ltd. moved to take a 15% stake in Vancouver-based Lithium Americas Argentina Corp. and Yintai Gold agreed to buy gold explorer Osino Resources Corp. for C$368 million ($271 million).

Canadian government officials, speaking on condition they weren’t named, have told Bloomberg they are tracking the issue closely and are considering whether further measures are needed beyond the current national security review regime.

While Wilkinson warned that recent transactions will be subject to rigorous reviews, Cong urged Canada’s government to “respect market laws, rather than shouting slogans against China and waging these wrong-placed accusations against China by over-stretching the concept of national security.”

China has found an ally in Canada’s cash-strapped junior mining firms, some of which have called on Ottawa to relax tougher rules on Chinese investment while the sector struggles to raise capital while commodity prices are low.

China’s investments provide capital to those firms at a time when metals have become an essential ingredient to the global transition away from fossil fuels. Minerals including lithium, copper, nickel and cobalt are key components of electric vehicles, solar panels and wind turbines, though countries like Canada and the US have pushed to build a domestic supply chain to reduce China’s dominance in the global mining industry.

“Critical mining is about those materials to be used in sectors like new-energy vehicles,” said Cong. “That’s good for the whole world. We’re talking about coping with climate change.”

(By Jacob Lorinc and Brian Platt)

CHART: China’s Belt and Road mining investment hits record

The Responsible Use of Seafloor Resources Act calls for federal resources to be allocated towards refining polymetallic nodule materials and advises several analyses across benefit sharing, technology development, trade, and environmental and human health.

The Act calls for the government to coordinate and expedite the development of infrastructure to process and refine seafloor nodules within the United States.

It also asks the Office of Science and Technology Policy to annually submit to the President and Congress a report including quantitative and qualitative analysis of the benefits to the US of importing seafloor nodules and processing and refining nodules domestically.

“The strength of US national security and energy independence will be determined by how we choose to respond amid increasing reliance on China. This legislation is common sense and encourages the needed strategic decoupling from China that is long overdue,” said Congresswoman Miller.

China controls roughly 60% of the global critical mineral production and over 85% of the world’s refining capacity.

“Over the last two decades, the Chinese Communist Party has strategically invested in putting a stranglehold on global critical mineral supply chains. It’s vital to our security and economic interests that the CCP controlled monopoly on these materials is broken,” said Congressman Joyce.

Following the introduction of the Bill, shares of the deep-sea mining pioneer rose as much as 15%. The Metals Company has a $588 million market capitalization.

“With commercial deep-sea nodule operations expected to begin soon, Congressional action to lay the foundation for processing and refining this remarkable resource is a game-changer,” CEO Gerard Barron said in a news release.

Minerals and metals such as cobalt, nickel, copper, and manganese can be found in potato-sized nodules on the ocean floor. Reserves are estimated to be worth anywhere from $8 trillion to more than $16 trillion, and they are in areas where companies, including The Metals Company, plan to target.

Many NGOs and environmental groups, however, argue that mining the seafloor could have a devastating impact on the planet.

A recent report by the non-profit Planet Tracker says mining the seafloor for key minerals and metals could negatively impact the mining industry, resulting in $500 billion of lost value and causing damages to the world’s biodiversity estimated to be up to 25 times greater than land-based mining.

Prabowo, said by independent pollsters to have won the Feb. 14 election, has said he will pursue the effort to extract more value from Indonesia’s vast resource wealth by halting exports of key raw materials and developing domestic processing instead.

The policy drew investments of billions of dollars from smelting firms, most of them Chinese, and boosted Indonesia’s exports.

But it led to an oversupply of processed nickel that caused a drop of 45% in prices last year, squeezing producers in Australia and elsewhere, although they have since recovered to stand up about 12% in 2024.

Experts advising Prabowo are discussing ways to stem a further decline in prices while still generating more jobs and boosting value-addition, members of his campaign team said.

“We must control supply so prices can be underpinned,” Erwin Aksa, a campaign vice-chair, told Reuters, adding that current conditions are likely to drive investors to avoid new projects.

“If there is too much oversupply and those smelters stop their operations, that would impact the whole supply chain,” he added.

Prabowo himself has not publicly detailed his nickel strategy, but told a Feb. 6 rally, “We are determined to guard Indonesia’s wealth. We want to manage and control this wealth, so the value-add can be enjoyed by all Indonesian people.”

Indonesia produced about 1.4 million tons of primary nickel last year, or about 40% of global output, data from the International Nickel Study Group showed.

“Indonesia is flooding the nickel market with low-cost supply, and we don’t think it’s going to stop anytime soon,” said S&P Global Ratings, which predicts the country will add 300,000 metric tons of smelting capacity this year.

S&P Market Intelligence expects the oversupply to continue beyond 2025, as Indonesia has excess capacity for an intermediate product, nickel pig iron (NPI).

Taking stock?

Some of Prabowo’s advisers have called for a moratorium on new smelters, allowing time to take stock of reserves and improve governance.

Last year, a miners’ association warned that reserves of high-grade nickel ore could be depleted in about six years. Recently, a government official said overall nickel ore reserves were sufficient for 30 years.

No decision has been made on a possible moratorium, however, said Eddy Soeparno, another vice-chair of Prabowo’s campaign team, while adding, “It is good to take a pause and give the policy an overview.”

Prabowo will push for further processing of NPI, helping to ease oversupply, said another campaign official, Anggawira, who goes by one name.

The main challenge was building domestic industries to consume the nickel, he said.

“When the nickel is cheaper, that would make our industries more efficient,” added Anggawira, who also chairs the Association of Indonesian Energy, Mineral, and Coal Suppliers.

(By Fransiska Nangoy; Editing by Tony Munroe and Clarence Fernandez)

Read More: Wyloo says industry will turn from LME without green nickel

Forrest had told Australian media last month that the LME should classify its contracts into clean and dirty to give customers more choice. Wyloo is set in May to shutter two nickel mines in Australia that it bought last year for $504 million.

The LME said that low carbon nickel, which it classifies as producing 20 tonnes of carbon dioxide or less per tonne of nickel, could already be traded on its partner MetalsHub’s system.

“Wyloo has been contacted by several parties seeking to develop a green nickel premium, so there is clearly demand for greater transparency and differentiation between clean and dirty nickel,” Wyloo CEO Luca Giacovazzi told Reuters.

“As the world’s largest metals exchange, the LME should be leading in this area,” he said.

“If the LME is to continue to set the standard for ethical metal supply practices, it cannot afford to take no action, or the industry will look for an alternative marketplace.”

Calls for a nickel price that reflects strong environmental and governance standards have grown from high-cost producers such as Australia, where low prices have forced miners to shutter operations due to a flood of Indonesian supply, most of which is produced using coal.

(By Melanie Burton; Editing by Michael Perry)

Decarbonization emerges as one of the industry’s foremost challenges, as the survey conducted last month with 75 mining company decision-makers revealed.

Survey respondents anticipate heightened scrutiny from investors this year regarding their decarbonization strategies.

Findings indicate that fewer than a quarter have made formal commitments to achieve all scope-related carbon emission reductions by 2050 or earlier. About a quarter have not yet made formal commitments but are actively developing emission reduction plans. Moreover, 10% lack both ESG and carbon reduction strategies, while 7% either do not intend to implement such strategies or face challenges in reducing emissions at present, according to KMPG data.

Scope 1 encompasses greenhouse gas (GHG) emissions directly owned or controlled by organizations, while scope 2 includes indirect emissions resulting from the production of purchased energy. Reducing scope 3 emissions, which traverse the company’s value chain, poses a considerable challenge.

“Many in the industry face substantial hurdles to reducing scope 3 emissions, particularly due to Canada’s limited smelting or refining capacity for critical minerals,” wrote Heather Cheeseman, national mining leader for KPMG in Canada.

Intermediary minerals produced in Canada are shipped to smelters worldwide.

“Until Canada develops smelting or refining capabilities for mined minerals, miners will encounter limitations,” Cheeseman said.

According to the survey, nine out of 10 Canadian mining leaders are optimistic about the country’s potential to emerge as a global leader in critical minerals.

However, an overwhelming majority (98%) said there is an urgent need for increased investment, government commitment, and favorable tax policies to bolster the sector’s growth.

Read More: Canada plans scrutiny of Chinese offtake deals, minister says at PDAC

“Tesla will give you a giant contract for a long period of time,” the carmaker’s CEO said during a call with investors. That was July 2020.

Since then, use of the metal required to power electric vehicles has soared, rising 37% last year to 290,000 tonnes, according to research firm Adamas Intelligence.

Yet this year miners including BHP, Anglo American, Glencore, and Wyloo, owned by magnate Andrew Forrest, have been mothballing, writing down, or trying to sell their operations.

Blame the tumbling price of nickel, which by February had fallen below $16,000 a tonne on the London Metal Exchange, almost half its level a year earlier. That decline tipped half the world’s production of the commodity into the red, BHP calculates.

Despite a modest recovery to $17,700 a tonne in recent weeks, the ructions have lessons for the West’s energy-transition hopes.

Nickel increases the energy density of a battery, enabling it to store more power and add more range to electric vehicles than alternative chemistries like lithium iron phosphate. Up to 50 kilograms of the stuff goes into each power pack that uses it.

Supply has risen more than two-fifths over the past three years, almost entirely due to Indonesia. The archipelago increased its output of the metal tenfold over the past decade; most other countries flatlined or reduced production. Last year Indonesia accounted for 50% of the 3.6 million tonnes excavated globally.

Demand has proved less reliable. China last year appeared to use less nickel for steelmaking, which tends to account for around two-thirds of worldwide consumption. Production of electric-vehicle batteries, which scoop up a tenth of global output at best, is also hard to predict. Ford Motor, General Motors and other major carmakers have slowed their electric-vehicle plans.

Separately, power pack makers in the People’s Republic, like BYD and Contemporary Amperex Technology, met rising demand for their products in part by raiding their own stockpiled nickel, keeping the amount they bought to the same level as in 2022. Combined, that left global supply exceeding demand by as much as 10%, though new data suggests it may be nearer 4%, analysts at Macquarie argue.

The mismatch masks longer-term shifts.

Several years ago Indonesia’s government, eager to capture more value from the metal, ceased exporting the raw material and ramped up domestic processing. Incentives like 15-year tax holidays helped suck in investment from China, its main customer. Firms including Tsingshan and Lygend Resources & Technology built processing plants.

The two countries then developed and deployed a way to manufacture Class 1 nickel – defined as being at least 99.8% pure and the only type used in EV batteries – out of the lower-grade Class 2 supplies abundant in Indonesia.

That production came online around the time the LME experienced a spectacular squeeze in nickel in March 2022.

One of the problems worsening that crisis was a shortage of the metal in the bourse’s warehouses; the LME only trades and warehouses Class 1 nickel, which at the time did not include Indonesia’s innovation.

The LME last year started accepting some of it, which shifted pricing power to Indonesia, because the country can turn Class 2 into Class 1 nickel more cheaply than miners in developed countries can dig up the higher-quality metal.

All else being equal, these factors should have been manageable for miners from Australia to New Caledonia to Latin America.

Even at $16,000 a tonne the price was 20% higher than when Musk issued his 2020 plea. Inflation and other outlays, though, have pushed up expenses. The average cost of production Down Under is now $17,000 a tonne, 49% higher than in 2019 and 28% more than some Indonesian operations, calculates Mandala Partners in a report for The Chamber of Minerals and Energy of Western Australia.

Most solutions so far look piecemeal.

France this week agreed to swap into equity 320 million euros of loans to a New Caledonia operation held on French miner Eramet’s balance sheet. That, though, won’t do much to improve the profitability of the South Pacific territory’s nickel industry, which accounts for 6% of global supply. Glencore is mothballing its part-owned outfit there and wants to sell its stake.

Instead, governments and miners are coalescing around the idea of a green premium.

The concept is compelling. Turning lower-grade nickel into Class 1 material requires lots of energy, and Indonesian power relies heavily on burning coal. This means carbon emissions per tonne of Class 1 Indonesia nickel are up to six times higher than in Australia. Makers of electric cars – and their customers – might therefore pay more for batteries made with greener nickel.

Miners want the LME to take responsibility for the green premium by creating a separate contract for low-carbon nickel. Yet even if the exchange could define the parameters, the idea runs counter to a lesson of the 2022 squeeze: the nickel contract needed more liquidity.

Faced with sluggish EV sales and squeezed margins, carmakers want to minimize costs and secure supplies.

Indonesia is the only region that has markedly increased production in the past 10 years. That’s why Jakarta has successfully wooed auto and battery giants including Ford, LG Energy Solution, Volkswagen, Hyundai Motor Group and others to invest in the country’s nickel industry – often with Chinese partners.

On the one hand, that’s just business. But it’s also a consequence of leaving the supply of critical minerals at the mercy of the market.

Jakarta telegraphed its intention for years. Now the world’s car industry is dependent on a more carbon-intensive product with China’s fingerprints all over it – just as the US and Europe are trying to reduce their exposure to the People’s Republic.

Other materials used in EV batteries are also vulnerable. The price of lithium is down 80% in the past year, prompting some producers to slash output. Copper only declined around 15%, but Rio Tinto’s return on capital employed digging up the reddish-brown metal halved to just 3%, per LSEG data.

Meanwhile, more countries are following Indonesia’s lead: Ghana, Namibia, Tanzania and Zimbabwe are banning exports of raw lithium, while Chile, Bolivia and Mexico are at least partly nationalizing the industry.

Western governments could mimic Indonesia by granting tax holidays to critical minerals operations. Or perhaps overseas buyers will pressure Indonesia’s industry to be more environmentally conscious, pushing up costs. Musk may be the best hope for that: Tesla has unrivalled experience mapping its supply chain’s emissions.

Greening the archipelago’s operations is probably a years-long process, though. Even more reason for Australia, Canada, the Philippines and others to devise smart long-term strategies for critical minerals sooner rather than later.

(The author is a Reuters Breakingviews columnist, Antony Currie. The opinions expressed are his own.)

(Editing by Peter Thal Larsen and Katrina Hamlin)

Assessed by researchers at James Cook University, the automated approach to large-scale road mapping uses convolutional neural networks trained on road data.

According to the scientists, many roads in developing countries, both legal and illegal, are unmapped, with road-mapping studies in the Brazilian Amazon, Asia-Pacific and elsewhere regularly finding up to 13 times more road length than reported in government or road databases.

Previous studies, on the other hand, have shown that earth is experiencing an unprecedented wave of road building, with some 25 million kilometres of new paved roads expected by mid-century.

“Traditionally, road mapping meant tracing road features by hand, using satellite imagery. This is incredibly slow, making it almost impossible to stay on top of the global road tsunami,” Bill Laurance, senior author of the study published in the journal Remote Sensing, said in a media statement.

Laurance explained that he and his colleagues trained three machine-learning models to automatically map road features from high-resolution satellite imagery covering rural, generally remote and often forested areas of Papua New Guinea, Indonesia and Malaysia.

“This study shows the remarkable potential of AI for large-scale tasks like global road-mapping. We’re not there yet, but we’re making good progress,” he said. “Proliferating roads are probably the most important direct threat to tropical forests globally. In a few more years, AI might give us the means to map and monitor roads across the world’s most environmentally critical areas.”

The quest for substitutes for fossil fuels has increased the need for metals used in the batteries that power electric vehicles (EVs) and in green-energy applications. Minerals and metals such as cobalt, nickel, copper and manganese can be found in potato-sized nodules on the ocean floor. Reserves are estimated to be worth anywhere from $8 trillion to more than $16 trillion and they are in areas where companies, including deep-sea mining pioneer The Metals Company (NASDAQ: TMC), plan to target. 

According to the report, entitled “How to lose half a trillion” by non-profit Planet Tracker, extracting metals from the seafloor could cost the mining industry $30 to $132 billion in value destruction.

François Mosnier, head of Oceans and report lead author at Planet Tracker, told MINING.COM this estimate is the result of adding the combined value loss the activity would cause for both ocean floor and terrestrial miners.

“For the deep sea mining sector, focusing only on polymetallic nodules in international waters, the cost would reach $35 billion-$49 billion of value destruction,” Mosnier said. 

“This amount was computed based on the estimated invested capital in the sector in 2043 ($115 billion), the industry’s estimated return on invested capital (-2%) and the industry’s weighted average cost of capital (WACC) and long-term growth (3%).”

Put simply, the deep-sea mining industry would not beat the cost of the capital it requires to exist, he said.

“Before factoring in any environmental impacts, the economics already appear uncompelling,” Mosnier said. “High operating expenditures mean that returns will be negative for investors in deep sea mining, which will also destroy value in other sectors, such as terrestrial mining and fishing.”

On top of that, major global banks such Credit Suisse, Lloyds, NatWest, and Standard Chartered, Dutch bank ABN Amro, and Spanish group Banco Bilbao Vizcaya Argentaria, have all introduced policies that rule out funding deep-sea exploration and extraction.

The report highlights the positive financial impact of respecting nature as sectors dependent on preserving intact ecosystems have outperformed those exploiting resources threefold over the last three decades.

It also urges investors to focus on nature preservation rather than resource extraction a repeats its call for a moratorium on deep-sea mining.

Ready to start

While the International Seabed Authority (ISA) has yet to set rules for the extraction of minerals and metals from the ocean floor, there already is a country that doesn’t need to wait: Norway.

The nation secured in December parliamentary majority to go ahead with plans to open the Arctic Ocean to seabed mineral exploration, despite environmental groups and the fishing industry’s warnings that the move would risk the biodiversity of vulnerable ecosystems.

The European country, where vast oil and gas reserves have made it one of the world’s wealthiest nations, plans to search for minerals on its extended continental shelf.

China is another nation investing heavily in deep-sea mining technology, including remotely operated vehicles, vessels, and sonar scanning systems.

Chinese companies, according to the Pentagon, hold more International Seabed Authority contracts (five out of 31 for exploration and development) than any other country.

Opponents to seafloor mining have long-warned that consequences of both exploration and extraction of minerals from the seabed are unknown and that more research should be conducted before going ahead.

Those that support the expansion of activity believe deep-sea mining is central to meeting the increasing demand of mineral growth. The demand for copper and rare earth metals is predicted to grow by 40%, according to the International Energy Agency. 

The agency also expects that the demand share for nickel, cobalt and lithium from clean energy technologies alone will grow by 60%, 70% and 90%, respectively. 

According to a study published in the Journal of Cleaner Production, producing battery metals from nodules could reduce emissions of CO² by 70-75%,  cut land use by 94% and eliminate 100% of solid waste.

The cobalt and nickel producer has axed or made part-time 30% of its senior corporate management roles, while fees for non-executive directors have been cut by the same amount, it said in a exchange filing. Some 5% of staff at its project in Finland have been let go, Jervois said.

Cobalt prices have plummeted by almost two-thirds over the past two years on rising supply — the Democratic Republic of Congo and Indonesia have been mining more of the metal — and a slowdown in demand growth. Chinese plants processed 80% of global cobalt supply last year, according to specialist trading house Darton Commodities.

Jervois mothballed a project in Idaho, which would have been the first new US cobalt mine in decades, about a year ago, highlighting the challenge facing the Biden administration as it attempts to chip away at China’s dominance in the supply chains of metals vital to the energy transition.

The recent cost-cutting is due to “adverse cobalt market conditions caused by Chinese overproduction and its impact on pricing,” Jervois said, adding that it remained “determined to deliver a responsibly sourced, Western supply chain of critical minerals.”

The company’s shares tumbled as much as 17% in Sydney. They have plunged from a peak of 96.29 Australian cents (63 cents) in April 2022, to less than 3 cents as of 11:35 a.m. local time on Thursday.

(By Jason Scott)

First Quantum Minerals (TSX: FM) inked a $500-million deal last month to supply Jiangxi Copper from the Kansanshi mine in Zambia as the Vancouver-based miner strives to shore up finances after authorities shut its Cobre Panama mine in the Central American country.

“There are active conversations going on about how best to approach some of those kinds of issues,” Natural Resources Minister Jonathan Wilkinson told reporters in Toronto. “What you’re going to find increasingly moving forward is democratic countries around the world coming together to try to find pathways through which we actually are ensured of access of the minerals we’re going to need.”

The largest shareholder in First Quantum is Jiangxi Copper, but Wilkinson said the government won’t pursue investments that pre-date its critical minerals divestment strategy. It began in November 2022 by targeting three TSX-listed lithium companies. Ottawa hasn’t changed its stance on reviewing Chinese investments in Canadian critical mineral companies, he said, even as recent deals highlight continued interest from the mining and processing behemoth.

“We’ve been pretty clear that we are not interested in investment generally from state-owned enterprises,” Wilkinson said in reply to a question from The Northern Miner at the Prospectors and Developers Association of Canada annual conference in Toronto. “Certainly the ones that are raising significant flags would be those that actually require some kind of offtake agreements, those that require control – effectively controlling shareholders – or provide for significant board representation.”

Competing interests

The federal reviews must walk a line between competing interests. On one side are mining companies, especially at the junior level, who are facing what they believe is an unprecedented funding crunch from lack of stock markets investing in the industry and who turn to industrial power China for backing. On the other side is the rising trend of resource nationalism for security as countries in the West try to diminish China’s dominance in critical mineral mining and processing.

China’s Yintai said last month it would buy Osino Resources (TSXV: OSI; US-OTC: OSIIF) for C$368 million, Zijin Mining invested $97 million for 15% of Solaris Resources (TSX: SLS; US-OTC: SLSSF) in January and Vital Metals (ASX: VML) said in December that Shenghe Resources was buying stockpiles of rare earth elements mined at its Nechalacho project in the Northwest Territories.

Each of those deals might have some wiggle room under a review. Osino’s primary asset is the Twin Hills gold project in Namibia. Gold is not one of Canada’s 31 critical minerals. Solaris is digging for copper, a critical mineral, but 15% isn’t regarded as a controlling stake. Vital is an Australian company, so Ottawa doesn’t have direct recourse under Canada’s Investment Act, though it does have a say in permits for the project.

On Tuesday, Montreal-based SRG Mining (TSXV: SRG) said it’s cancelling a $12.5 million deal with China’s Carbon ONE New Energy Group to take a 19.4% stake in the graphite miner. It had said last week it would incorporate in Abu Dhabi while maintaining its Toronto listing.

“That was a helpful decision that they would essentially not re-domicile in order to accept Chinese investment,” Wilkinson said. “But certainly we will be looking at all transactions that involve Chinese state owned enterprises and those companies related to them.”

Calls for a nickel price that reflects strong environmental and governance standards have grown from high-cost producers such as Australia, where low prices have forced miners to shutter operations due to a flood of Indonesian supply, most of which is produced using coal.

“Market participants have expressed concern that there remains significant market debate as to how to define ‘green’,” the LME said in a statement.

“Further, that an LME contract representing a narrower sub-segment of the market would not attract sufficient stocks and trading volumes to be viable.”

The LME sees limited appetite for contracts for segments of the nickel market, so-called class 2 materials, such as nickel sulphate, matte and other materials. Its nickel contract, so called class 1 refined nickel, has a purity of 99.8 pct and above.

Last week, Australian mining magnate Andrew Forrest, chairman of Fortescue, said the LME should classify its nickel contracts into “clean” and “dirty” to give customers more choice.

Canada this week joined Australia in calling for robust ESG credentials to be built into global supply chains for critical minerals, Australia’s resources minister, Madeleine King, who is visiting Canada this week, said in a joint statement.

Green specs

While the market is not yet liquid enough to accommodate a green premium, MetalsHub has moved to build an index price that reflects consumer demand for green nickel.

The LME has classified low carbon nickel as that for which a single ton can be produced for 20 tons of carbon dioxide equivalent (C02e) or less, it said. Currently, the carbon footprint for a ton of LME nickel varies from 6 tonnes to more than 100 tons of C02e.

Already, any class 1 nickel on the Metalshub platform, which counts Outokumpu and Aperam among its users, can be listed with specific ESG credentials, including its carbon footprint, which allows buyers to filter for carbon intensity.

“This functionality is in place today and there is no need to split the LME contract to assess a ‘green’ premium,” Metalshub managing director Frank Jackel told Reuters.

From this month, Metalshub will start reporting monthly data that includes trades of low carbon carbon nickel, the LME said.

As traded volumes increase, it plans to publish a low carbon index price that could eventually grow to become a “green” nickel premium index reflecting additional sustainability metrics, the LME said.

“CO2 footprint and ESG performance will play an important role and it gives producers the opportunity to market their products with a premium if the market is willing to pay it,” Jackel said via email, adding that Metalshub was keen to work with Australian miners.

(By Eric Onstad and Melanie Burton; Editing by Clarence Fernandez)

Indonesia has rapidly emerged as the new powerhouse of global nickel production but until now has not produced the metal in the high-purity form traded on either the LME or the Shanghai Futures Exchange.

That will change if PT CNGR Ding Xing New Energy gets the official nod for its “DX-zwdx” brand of full-plate nickel cathode.

It is likely to do so since the LME is fast-tracking new nickel listings as part of its recovery plan after the market meltdown in 2022. The policy appears to be paying off for the exchange with stocks and trading volumes rising.

For many other nickel producers, however, it marks an ominous moment in the transformation of Indonesia’s growing production dominance into exchange pricing power.

The reaction is building in the form of growing calls for a premium “green” nickel contract.

Stocks booster

Ding Xing New Energy has the capacity to produce 50,000 metric tons a year of Class I refined nickel having mastered the technology of converting Indonesia’s relatively low-grade ore into pure metal form.

Many others, mostly Chinese operators, are now building out similar new processing capacity in both Indonesia and China.

The LME has already approved four new Chinese brands with another application pending. They bring a collective 91,600 metric tons of annual Class I metal capacity.

Rebuilding stocks liquidity is part of the LME’s pathway to restoring confidence in its nickel contract after the suspension of trading two years ago.

LME registered stocks have been trending upwards since the start of the year, hitting a near two-year high of 73,992 tons at the end of last week. The volume of Chinese metal in LME storage rose from zero in August to 7,884 tons at the end of January.

Rising inventory has been accompanied by greater trading activity on the LME contract. Volumes surged by 74% year-on-year over January and February. Open interest is also creeping back up towards levels seen before the market suspension.

The previous price divergence between Class I nickel and Class II products such as ferronickel has been closing as refiners like Ding Xing convert surplus in the Class II segment of the market into exchange-traded form.

But will the LME contract become a market defined by Indonesian metal, or in the case of the newly-listed Chinese brands, metal derived from Indonesian mines?

Princing power

Indonesia’s mined nickel production has jumped from under 800,000 tons in 2020 to 2.03 million tonnes in 2023, when it accounted for 55% of global output.

What happens in Indonesia already shapes nickel’s pricing landscape.

LME three-month nickel is on a bit of a roll right now, up by over 7% on the start of the year at a current $17,590 per ton.

Underpinning the rally is Indonesia’s backlog of new mine licence approvals, a bureaucratic logjam that threatens to curb smelter production.

But the price bounce comes after a year of sliding prices, which was also down to Indonesia’s supply surge.

Indonesian officials do not hide their ambition to convert that market influence into explicit pricing power.

A price of around $18,000 per ton is about right, opens new tab for Indonesia, according to Septian Hario Seto, deputy coordinating minister for the mining sector. It’s high enough to allow most local producers to make a healthy margin but low enough to keep nickel in the electric vehicle battery chemistry mix.

That price, however, isn’t right for many non-Indonesian producers. The last few months have brought a slew of closures and writedowns in the face of low prices. Class II producers have to date borne the brunt of Indonesian oversupply and have been particularly hard hit.

Fracturing the market

Australian iron ore magnate Andrew Forrest is the latest industry figure to call on the LME to introduce a “green” premium contract to complement its existing product.

Forrest’s Wyloo Metals will be shuttering its Australian nickel operations in May to low prices.

A “green” contract would be a way of differentiating Australian nickel from Indonesian nickel, which is cheaper but comes with a higher carbon footprint due to the processing route from ore to metal.

The LME today issued a notice to members saying that it has no current plans either to launch a new parallel contract or to change the specifications of the existing one.

It would risk fracturing the London market again just as it is showing signs of recovery. Moreover, “the LME believes the market for ‘green’ nickel is not yet large enough to support vibrant trading in a dedicated green futures contract.”

A green nickel market?

This cuts to the heart of the “green” premium debate.

Producers carrying the extra costs of tight environmental compliance should not be put out of business by those with lower thresholds. There is a strong case that such metal should be priced at a premium.

But there can be no premium if buyers aren’t prepared to pay one for “clean” metal, a choice that ends up with the ultimate buyer of a new electric vehicle.

Some big consumer brands pay up extra for low-carbon aluminium. Austrian copper producer Brixlegg charges a green premium, opens new tab on its recycled low-carbon metal.

But these are still outliers in the global aluminium and copper markets and nickel is some way behind the broader “green” premium debate.

Is there a market for green nickel? If there is, the LME thinks “it is most effectively conducted through digital spot trading platforms” such as LME partner Metalshub.

Metalshub has been operating a physical procurement metals trading platform since 2016 and already calculates a weekly European Duty Paid Nickel Briquette Premium.

The company will start reporting monthly on the number of transactions and market value of its Class I nickel trade, including a subset of brands with a registered carbon footprint lower than 20 tons of CO2 per tonne of metal.

The idea is that if there are enough transactions, Metalshub could calculate a “green” nickel index, which could then be the basis of a futures product.

It all depends, though, on how many buyers are prepared to pay up for low-carbon, high-ESG nickel.

(The opinions expressed here are those of the author, Andy Home, a columnist for Reuters.)

(Editing by Marguerita Choy)

Related: Indonesia and China killed the nickel market

The approval process for the quotas, known locally as RKAB, has been delayed this year, raising concerns from nickel smelters who are facing depleting ore stock.

Indonesia, a major producer of minerals such as nickel, tin, and copper, requires all mining companies to secure RKAB approvals periodically before they are allowed to conduct mining activities.

“RKAB approvals for minerals are still on progress and the plan is to complete them by the end of March,” said Irwandy Arif, special staff to the energy and mineral resources minister.

A total of 723 mineral mining companies applied for quota approvals, Irwandy said.

He did not provide the tonnage for the approved RKAB, nor the breakdown of each of the minerals. But he said the ministry has completed approvals for coal miners.

However, Indonesia Mining Association Executive Director Djoko Widajatno estimated that around 259 million wet metric tons of production quota for nickel have been approved, he said in a text message on Tuesday.

Last week, a director at the ministry said approvals have been issued for 145 million metric tons of nickel ore production this year, with approvals for more underway as authorities focused on processing requests for nickel and tin.

(By Fransiska Nangoy; Editing by Martin Petty and Christian Schmollinger)

“Market participants have expressed concern that there remains significant market debate as to how to define ‘green’,” a statement said.

“Further, that an LME contract representing a narrower sub-segment of the market would not attract sufficient stocks and trading volumes to be viable.”

There was also limited appetite for contracts for other segments of the nickel market such as nickel sulphate, matte and other so-called class 2 materials, it added.

The LME futures contract trades in class 1 refined nickel.

Last week, Australian iron ore magnate Andrew Forrest said the LME should classify its nickel contracts into “clean” and “dirty” to give customers more choice.

The comment by Forrest, chairman and founder of Fortescue Metals Group, is part of a push by miners and Australian lawmakers to save the country’s nickel industry after prices collapsed amid a jump in cheaper supplies from Indonesia.

The LME, the world’s oldest and largest market for industrial metals, said its partner Metalshub already offers a solution since nickel can be listed there with specific ESG credentials, including the carbon footprint.

The LME is owned by Hong Kong Exchanges and Clearing Ltd.

(By Eric Onstad; Editing by Jason Neely and Sharon Singleton)

The hit on Sibanye’s income comes as the company advances projects including a lithium mine in Finland and plans to develop another one in the US.

CEO Neal Froneman said Sibanye may consider a capital raise if the lower metal prices persist for longer, but he ruled out a rights issue.

“We are going to raise additional capital, but this perception that it’s going to be a rights issue is completely wrong,” he said during a results call.

The precious metals producer swung to the loss last year from a $1.2 billion profit the previous year and record earnings in 2021, when prices for rhodium and palladium rallied.

It reported impairments of $2.6 billion at its US palladium mines, a nickel operation in France and a gold mine in South Africa due in part to the significant decline in metal prices and an uncertain outlook.

The loss comes after Sibanye embarked on a deal spree, buying battery metal assets in France, Finland, Australia and the US.

The fall in prices for PGMs, mostly used by automakers to curb toxic emissions, is forcing South African mining companies to restructure and cut jobs.

Froneman said in a statement that more restructuring might be required, especially at Sibanye’s US PGM operations and the Sandouville nickel refinery in France.

“We recognize however that if low commodity prices persist, earnings are going to remain under pressure and, with ongoing inflationary cost pressure, there may be further restructuring required,” Froneman said.

Sibanye’s peers Anglo American Platinum and Impala Platinum are also restructuring loss-making operations and cutting costs, a process which will cost thousands of jobs.

(By Nelson Banya and Felix Njini; Editing by Jason Neely, Jan Harvey and David Evans)

This has to involve a colossal boost in the production of mined metals, including lithium, graphite, cobalt and nickel for lithium-ion batteries used in EVs, renewable energy grid storage and consumer electronics; copper for electric vehicle motors, charging stations and renewable energy plants; silver for solar panels and EVs.

By attempting to break free of fossil fuels though, are we setting ourselves up for a new dependence on critical metals, including lithium, graphite, cobalt, nickel, even copper? A dependence that brings with it the threat of environmental devastation?

Renewable energy proponents are reluctant to discuss the harsh labor conditions or non-existent environmental regulations associated with mining many of the battery and energy metals.

Done improperly, mineral extraction has the potential to damage local communities and ecosystems, destroying cultures and biodiversity in the process.

The most obvious example is the DRC, where the majority of the world’s cobalt, a key ingredient in lithium-ion batteries, is mined, often by children in dangerous working conditions. 

In a previous article, we wrote that life expectancy in the Democratic Republic of Congo is less than 48 years, one of five children will die before age five, and almost 60% of the country’s 71 million people live on less than $1.25 per day.

The DRC is also racked by political violence in eastern Congo, where clashes between the DRC’s army and Rwanda’s Tutsi-led rebels have killed scores of people and displaced hundreds of thousands.

Unfortunately, nickel mining appears to be following the same example of the Congo, not “blood cobalt” extracted from mines run by warlords, but nickel mined from equatorial laterite deposits and processed using the environmentally damaging HPAL technique.

And China has been a very willing player having invested heavily in Indonesia, building smelters and using their technology to produce battery-grade nickel cheaply, though at a horrendous cost to the environment.

Cheap Indonesian nickel, controlled by China and dumped on the market, has collapsed nickel prices and forced global mine closures.

Battery- and auto-makers seem unaware, or don’t care, where the nickel for their batteries comes from, or about the destructive and horribly polluting way its processed. All they care about is bringing down the cost of battery raw materials and electric-vehicle sticker prices – to make EV’s as price competitive to ICE vehicles as possible – by receiving the full credit available under President Biden’s IRA (Inflation Reduction Act).

Leading to the question: What’s the point of making supposedly “clean & green” battery components when the refining process is so dirty and environmentally damaging? Why switch from fossil fuels to electrification if mining the metals required for renewables and EVs uses coal-fired power and damages, wrecks, the environment the energy transition is trying to save?

Nickel sulfides vs laterites

Nickel deposits come in two forms: sulfide or laterite. About 60% of the world’s known nickel resources are laterites, which tend to be in the southern hemisphere. The remaining 40% are sulfide deposits.

Nickel sulfide deposits, the principal ore mineral being pentlandite (Fe,Ni)₉S₈, are formed from the precipitation of nickel minerals by hydrothermal fluids. They are also called magmatic sulfide deposits. The main benefit of sulfide ores is that they can be concentrated using a simple separation technique called flotation.

Nickel laterite deposits — the principal ore minerals are nickeliferous limonite (Fe,Ni)O(OH) and garnierite (a hydrous nickel silicate) — are formed from the weathering  of ultramafic rocks and are usually operated as open pit mines. There is no simple separation technique for nickel laterites. The rock must be completely molten or dissolved to enable nickel extraction.

Historically, most nickel was produced from sulfide ores, including the giant (>10 million tonnes) Sudbury deposits in Ontario, Canada, Norilsk in Russia and the Bushveld Complex in South Africa.

It used to be that there were two markets for nickel: the higher-grade, or Class 1 nickel went into batteries, and the lower-grade, Class 2 material was used to make stainless steel.

The higher-grade nickel was derived from sulfide nickel deposits in the northern hemisphere, whereas the lower-grade stuff came from nickel laterite deposits found along the equator, for example Indonesia, the Philippines and New Caledonia.

Up to now, the main method for processing laterites ores has been High Pressure Acid Leaching.

HPAL involves processing ore in a sulfuric acid leach at temperatures up to 270 degrees C and pressures up to 600 psi to extract the nickel and cobalt from the iron-rich ore; the pressure leaching is done in titanium-lined autoclaves. 

Counter-current decantation is used to separate the solids and liquids. Separating and purifying the nickel/cobalt solution is done by solvent extraction and electrowinning. 

The advantage of HPAL is its ability to process low-grade nickel laterite ores, to recover nickel and cobalt. However, HPAL is unable to process high-magnesium or saprolite ores, it has high maintenance costs due to the sulfuric acid (average 260-400 kg/t at existing operations), and it comes with the cost, environmental impact and hassle of disposing of the magnesium sulfate effluent waste. 

As Indonesia ramps up its mining sector to feed the world’s hunger for zero-emission vehicles, it is faced with a problem: what to do with all the waste.

HPAL breakthrough

China saw an opportunity to exploit lower-grade nickel deposits in Indonesia, and have used their capital to build smelters in the country, and their technology to process the nickel into battery-grade material.

Traditionally, processing nickel laterite deposits was more expensive than sulfides, but China has changed the game. As Bloomberg reported recently,

Many of the world’s biggest nickel mines are facing an increasingly bleak future as they wake up to an existential threat: a near limitless supply of low-cost metal from Indonesia…

A huge Indonesian expansion of low-grade production led to a surplus, and, crucially, processing innovations have allowed that glut to be refined into a high-quality product.

The world’s largest nickel producer, China’s Tsingshan Holding Group, shocked the nickel world in 2018 by announcing a $700 million plan to produce battery-grade nickel.

Now, a new generation of HPAL is being used to turn Indonesia’s lower-grade nickel ore into metal suitable for powering electric vehicles. Working with Ningbo Lygend Mining Co., Harita Nickel became the first in Indonesia to process the ore into mixed hydroxide precipitate or MHP, Bloomberg reported last year.

Its Obi Island operation is one of three producing HPAL operations, with nearly $20 billion of further projects announced.

A venture combining Zhejiang Huayou Cobalt Co., CMOC Group and Tsingshan Holding Group Co. — Huayue Nickel Cobalt — has built a $1.6 billion plant on the island of Sulawesi. GEM Co. has backed a separate $1.6 billion facility nearby.

Until this new generation, HPAL was known mostly for cost over-runs and delays.

“China has done with HPAL in Indonesia what they did with nickel pig iron in China 20 years ago,” Angela Durrant, principal nickel analyst at Wood Mackenzie, was quoted saying. “It’s like teaching a child something new again and again — and suddenly they get it. Then they run with it, they catapult onward. This is what Indonesia is doing with China’s technology.”

According to AME Research, HPAL uses ore grades as low as 0.9% Ni, and it costs Harita Nickel just $5,225 a ton, 48% less than with electric-furnace smelters. The process also yields cobalt, a bonus for batteries.

Yet the dark side of HPAL remains.

While making MHP is less carbon-intensive than producing battery-grade nickel through coal-powered smelting, the latter forms the bulk of Indonesia’s capacity.

HPAL produces nearly double the amount of tailings that need to be treated and stored, raising the risk of severe contamination.

Bloomberg says Harita presses the water out of its waste slurry then stacks the dry soil in former mine sites (dry stack tailings), but there’s not enough space. The company proposes building a tailings dam but that comes with its own set of problems, including leakage.

While Indonesia banned the controversial practice of “deep sea tailings” — dumping waste into the ocean via a submerged pipeline — in 2021, imo, this is still happening. For example Ramu, the plant in Papua New Guinea that inspired Harita, still does it, Bloomberg said.

In 2022, China’s CNGR Advanced Material Co said it will invest in three new projects in Indonesia to produce nickel matte — adding to the two nickel matte projects the company is already funding on the island of Sulawesi with Singapore-based Rigqueza International.

The process however is highly energy-intensive and polluting, more so than HPAL and about four times dirtier than traditional nickel sulfide processing.

“The technology is definitely real, but does not meet ESG standards,” Bloomberg quoted Jon Lamb, portfolio manager at metals and mining investment firm Orion Resource Partners.

China’s gain

Despite the environmental costs, Indonesia’s HPAL and matte projects have pushed the nickel market into surplus. The archipelago nation now accounts for more than half of world supply, with the potential to reach three-quarters of all production toward the end of the decade.

The problem is that much of this nickel is locked up in offtake agreements and will never reach Western end users. In a recent article, Reuters notes that Indonesian nickel, in the form of nickel pig iron (NPI) has been used to feed China’s stainless steel industry, and continues to do so; NPI remains the largest-volume category of trade between the two countries, growing 47% in 2023.

More recently, however, Chinese nickel imports have including rising amounts of matte and MHP.

After Indonesia banned exports of nickel in 2020, to build its domestic nickel refining sector, China’s NPI producers started building processing capacity in Indonesia itself.

China’s nickel matte imports have exploded from 10,8000 tons in 2020 to 300,500 tons in 2023, with Indonesia accounting for 93% of the total. Imports of MHP grew from 336,000 tons in 2020 to 1.32Mt last year, 63% of which came from Indonesia.

“The exponential growth in this Sino-Indonesian trade reflects the continuing boom in Indonesian production that followed the country’s ban on exports of unprocessed ore,” writes Reuters metals columnist Andy Home.

By 2023, there were 43 nickel smelting facilities in operation, 28 under construction and 24 more being planned, according to The Oregon Group. Indonesia is now the world’s largest nickel producer, mining 37% of global supply and forecast to increase to two-fifths by 2030, states Benchmark Mineral Intelligence in an article.

Nickel price collapse

Chinese companies refining battery-grade nickel from Indonesia have flooded the market, pushing prices down about 45% last year and making about half of all nickel operations unprofitable.

Last week Anglo American took a $500 million writedown on its nickel business. This week, BHP’s CEO Mike Henry said the company will have to decide whether to shutter its flagship nickel business in Australia; $2.5 billion of its Western Australia Nickel operations has already been written down. 

Glencore, one of the world’s biggest producers, is closing its nickel operations on the islands of New Caledonia. The company’s Murrin Murrin nickel-cobalt mine in Western Australia will keep producing for now, despite Glencore’s call for “persistent oversupply”.

According to Macquarie Group, about 250,000 tons of annual production has been taken out of the market by closures, with another 190,000 tons of planned output delayed. The Australian bank says at $18,000 a ton, 35% of production is unprofitable; at $15,000 that number jumps to 75%. LME nickel is currently trading at $17,665.

A Bloomberg chart using Macquarie data shows 150-175,000 tons of annual nickel oversupply lasting until 2027.

Indonesia recently warned struggling producers not to expect any meaningful price revival. The government official overseeing the nickel boom reportedly said prices are unlikely to rise above $18,000 a tonne, and that the country will ensure the market remains well supplied to keep costs lower for electric-vehicle manufacturers.

The official also said prices shouldn’t drop below $15,000, lest Indonesian smelters be forced to cut production below that level.

US-Indonesia FTA?

Additionally, he noted that several European automakers have been aggressively approaching Indonesian miners to lock up supply deals.

Companies like Volkwagen and Stellantis are competing with American firms like GM, Ford, Tesla and Rivian, that are concerned about China dominating the global battery supply chain.

But, rather than taking steps to mine/ process critical minerals domestically, the US government instead is pursuing a trade deal with Indonesia. Incredibly, such a deal would allow the island chain’s China-controlled nickel mining and processing industry to take advantage of provisions in the Inflation Reduction Act aimed at reducing US dependence on China.

The Inflation Reduction Act aims to grant incentives to companies that source their battery materials within the US and outside of China.

Passed by the Biden administration in 2022, the IRA provides US consumers tax credits of up to $7,500 per electric vehicle, if the parts or materials are sourced from the United States, or from countries with which the US has a free trade agreement. This includes lithium, graphite, cobalt and other critical minerals.

As well as offering consumer incentives, the IRA subsidizes up to 30% of manufacturing costs related to battery cell assembly and battery pack production, helping to encourage carmakers and battery suppliers to invest in US-based supply chains.

(Remember, the Biden administration prefers to leave “dirty” mining and mineral processing to foreign countries, and instead invest in cleaner, more upstream activities like battery EV manufacturing.)

One of the first things the Biden administration did upon passing the IRA was to send officials to the DRC to try and secure a steady supply of cobalt, an important EV battery ingredient. They did this despite major miners and big tech companies fleeing the country because they don’t want to be associated with child labor and environmental destruction from illegal mining.

The next thing they did was to start negotiating a free trade agreement with Indonesia. At the end of November, The Oregon Group reported that The US and Indonesia are in talks on a potential critical minerals trade partnership to secure supply chains between the two countries, with Indonesia requesting a limited free trade deal.

Not content with being the almost sole supplier of NPI and battery-grade nickel to China, Indonesia has set its sight on the US market. The Inflation Reduction Act announced investments of more than USD$365 billion in clean energy programs and is expected to stimulate about $3.5 billion in private capital spending on the energy transition.

“Indonesia is a producer and holder of the world’s biggest nickel reserves amounting to 21 million metric tons, so Indonesia can become a supplier for … batteries and EVs in the US,” said Indonesian President Joko Widodo.

The first problem with the United States partnering up with Indonesia is the country has employed what some have considered unfair trade practices in banning the export of raw nickel ores. This is also a form of resource nationalism. The European Union has contested the export ban at the World Trade Organization.

The second problem is a trade agreement goes against the spirit of the Inflation Reduction Act, which is to reduce US dependence on China. To qualify for IRA tax credits, a company processing and/or extracting critical minerals must get the minerals from the US or a country with a free trade agreement, not a “foreign entity of concern”. China is among the four nations currently deemed a FEOC; the others are Russia, North Korea and Iran.

Yet according to The Oregon Group,

A free trade deal between Indonesia and the US would allow Indonesia access to domestic US tax credits and give US electric automakers access to 37% of the world’s supply nickel and the second largest cobalt supplier.

Let’s remember that Indonesia’s nickel industry was set up, bought and paid for by China.

“Indonesia now has three plants capable of producing 164,000 metric tons/year of Mixed Hydroxide Precipitate (MHP), a nickel intermediate suitable for battery production, and over 25 more such plants have been proposed. All but three involve PRC companies,” states United States Trade Representative Katherine Tai, in Concerns Regarding a Potential Critical Minerals Trade Agreement.

A 2022 report by New York-based China Labor Watch said Chinese companies have invested more than $30 billion in Indonesia’s nickel supply chain. (ABC News, Nov. 4, 2023)

It should be noted that US-Indonesian rapprochement has not gone un-noticed in Washington. The Oregon Group states:

In October, a bipartisan group of nine US senators, sent a letter “to express concern regarding media reports of a potential critical minerals “limited free trade” agreement between the United States and Indonesia.”

The senators highlight concerns over domestic sourcing opportunities, as well as trade, labor and environmental concerns.

And there has already been calls by US senators for an investigation into Ford’s plan to invest and partner in Indonesia.

The third problem regarding an FTA with Indonesia is the way Indonesia processes nickel, i.e., using the highly polluting HPAL process and the even dirtier means used to produce nickel matte utilizing deep-sea tailings. If the goal of the IRA is to provide financial incentives for clean energy, why should Indonesian nickel producers, most of which are Chinese, be allowed to benefit from it when what they are doing is anything but green?

While Indonesia’s president has promised to clean up the industry and monitor mining standards, alleviating carbon dioxide emissions and tailings from HPAL plants will arguably be difficult if not impossible.

The Oregon Group concludes, and we agree, that the United States will not sign a free trade agreement with Indonesia because of concern over China’s influence there — especially in an election year.

However, note that several automakers hold no such grudges against China, and have been more than willing to invest in Indonesia. This includes Ford, which signed an agreement with an Indonesian unit of nickel miner Vale and China’s Zhejiang Huayou Cobalt to partner in a $4.5 billion HPAL plant; Hyundai, which in 2023 opened a new plant with a $1.55 billion investment to produce Indonesia’s first locally assembled electric car; and Mitsubishi’s plan to invest $372.25 million in the country this year to expand its EV production capacity.

Toyota and Volkswagen are also looking at agreements worth a respective $1.8 billion and $4.7 billion.

We also agree with The Oregon Group’s statement,

A deal with Indonesia would significantly undermine US efforts to produce a domestic, secure supply of nickel — with a significant knock-on effect across the global critical minerals and mining industry.

Note that the United States only has one operating nickel mine, Eagle in Michigan, but it plans to close by 2026. There are no nickel smelters. 

It’s estimated that countries with a free trade agreement with the US only account for 9.3% of global nickel production. This presents a liability, in terms of security of supply, but also an opportunity, in that some FTA countries, like Canada, have sulfide nickel reserves that could be tapped, and government-supported, to make battery-grade nickel that is a lot cleaner than the kind being produced in Indonesia.

We are pleased to see some overtures in this direction. As The Oregon Group mentions, a proposed nickel mine in Minnesota has received $20.6 million from the Department of Defense and $115 million from the Department of Energy to help build Talon Metals’ (TSX: TLO) ore processing plant in North Dakota.

Large scale low grade ultramafic nickel deposits

The supply of industrial metals that will power the global energy transition has increasingly become a concern.

“Large scale low-grade ultramafic nickel deposits are the only potential multicycle scalable sources of large quantities of nickel required to meet massive new nickel demand from electric vehicles and continued strong growth from stainless steel. The original example of this type of deposit is [Australia’s] Mt. Keith — successfully built and operated by BHP’s nickel business for more than 25 years as one of the largest nickel sulphide mines in the world. 

BHP has now developed a similar scale sister deposit — Yakabindie, and [last] year, acquired the Honeymoon Well deposit. While many investors are familiar with high-grade nickel discoveries in Western Australia, and Sudbury – it is important to note that [low-grade] Mt. Keith has remained open through many nickel cycles while the high grade deposits at Kambalda [Western Australia] have been shut for many years — highlighting some insights into the underlying economics.

large, low-grade deposits can be very profitable even at their low grades and recovery levels, as the revenue generated from each tonne of material is a multiple of the operating costs. The copper industry moved to large low-grade deposits several decades ago and a generation of companies generated hundreds of millions/billion of dollars for shareholders by advancing these projects during the prior past 2 decades. These nickel deposits represent a whole new generation of investment opportunities which could be even more lucrative for those investors prepared to do the work and trapped in investment paradigms that stopped being meaningful 20 years ago. If these type of deposits are good enough for BHP Billiton, they should be good enough for the rest of us.” Can Low-Grade Bulk Nickel Ever Be Profitable?

Capital intensity for new nickel mining has gone through the roof. The discrepancy between the initial per-pound capital cost of nickel projects and the ultimate construction cost is over 50%. Larger-scale projects have not demonstrated lower per-unit capital costs. Sometimes large projects have even higher capital intensity. Thats all because global nickel supply is increasingly coming from laterite nickel deposits, which require high-pressure acid leach (HPAL) plants.

We are now looking at north of $35 per pound capital intensity as we move into these multibillion-dollar ferronickel and HPAL projects.

Other companies exploring for sulfide nickel in Canada and the US include FPX Nickel (TSXV: FPX), Renforth Resources (CSE: RFR), Canada Nickel (TSXV: CNC), and Flying Nickel Mining (TSXV: FLYN).

Dark side of green

Something nobody in the clean-tech, green-energy space likes to talk about is the “dark side of green”. This can be seen as a hidden cost of electrification/decarbonization.

Batteries for electric vehicles and grid-scale energy storage are great ideas, but we must remember, these are only devices to store energy. The electricity that goes into them has to come from somewhere. If it’s from coal, natural gas or oil, it cannot be considered green.

Moreover, the extraction of minerals for battery components may be extremely polluting, depending on where the mining/processing takes place and how.

What’s the point of making “green” battery components when the refining process is so dirty?

In China’s Inner Mongolian city of Baotou, dozens of pipes churn out a torrent of thick black chemical waste that flows into an artificial lake filled with toxic sludge. A constant smell of sulfur pervades the apocalyptic scene. Most people in the West haven’t heard of Baotou but its mines and factories are one of the biggest suppliers of rare earth minerals used in a plethora of so-called green applications, everything from wind turbines to electric vehicles to nuclear reactors.

The ecological risks of rare earth mining aren’t confined to China, which mines and processes most of the materials.

This includes air pollution, biodiversity loss, desertification/drought, food insecurity (crop damage), loss of landscape/aesthetic degradation, soil contamination, soil erosion, waste overflow, deforestation and loss of vegetation cover, surface water pollution, decreasing water quality, groundwater pollution or depletion, mine tailings spills, and large-scale disturbance of hydro and geological systems.

In 2019 Malaysian environmental groups demonstrated over concerns about radioactive waste from Australian rare earths miner Lynas Corp’s processing plant located there. 

In Indonesia, nickel is produced from laterite ores using the environmentally damaging HPAL technique. The advantage of HPAL is its ability to process low-grade nickel laterite ores, to recover nickel and cobalt. However, HPAL employs sulfuric acid, and it comes with the cost, environmental impact and hassle of disposing the magnesium sulfate effluent waste.

Most of four HPAL plants currently under construction, led by Chinese stainless-steel producers and battery makers, plan to continue the environmentally egregious practice of Deep Sea Tailings (DST), due to the much higher cost of managing the tailings on land.

Chinese nickel pig iron producers in Indonesia now are looking to make nickel matte, from which to turn laterite nickel into battery-grade nickel for EVs. The process however is highly energy-intensive and polluting, as well as far more costly than a nickel sulfide operation (up to $5,000 per tonne more).

According to consultancy Wood Mackenzie, the extra pyrometallurgical step required to make battery-grade nickel from matte will add to the energy intensity of nickel pig iron (NPI) production, which is already the highest in the nickel industry. We are talking 40 to 90 tonnes of CO2 equivalent per tonne of nickel for NPI, versus under 40 CO2e/t for HPAL and less than 10 CO2e/t for traditional nickel sulfide processing.

Mining practices in the Democratic Republic of Congo (DRC) have elevated the issue of “conflict minerals” to the public consciousness, with stories of armed groups operating cobalt mines dependent on child labor. Environmental standards are non-existent.

Rare earths mining and processing in China, the extraction and refining of laterite nickel in Indonesia, and cobalt mining in the Congo, are three good examples of the disconnect between the rhetoric being delivered lately regarding the so-called new green economy, and reality.

In many respects the widely touted transition from fossil fuels to renewable energies, and the global electrification of the transportation system, are not clean, green, renewable or sustainable.

Conclusion

China and Indonesia are killing the nickel market, flooding it with cheap laterite production they make into nickel chemicals suitable for batteries. The nickel price fell 45% last year and there hasn’t been much improvement so far in 2024.

Some of the largest nickel producers are closing mines. Indonesia is promising to keep ramping up production keeping supplies adequate and prices low.

Indonesia is by far the largest nickel producer, with a mined output in 2023 of 1.8 million tonnes. Traditionally, Indonesia sent nickel pig iron to China for processing into stainless steel. They still do that, but now, the refined nickel exports to China include the battery chemicals nickel matte and mixed hydroxide participate (MHP).

China has invested tens of billion into Indonesia, building smelters and using their technology to dominate the nickel market. In this way, it’s no different from the choke hold China has put on cobalt — mined in the DRC then sent to China for processing — rare earths, steel, copper etc.

Beijing is now the world’s critical minerals processing hub, but the West is doing very little to stop it. For nickel, the response is to close nickel mines until prices go back up. That’s not going to happen, they might think it’s the right thing to do for shareholders, but it doesn’t do anything to improve security of nickel supply for the West or help the environment. Remember too, that Indonesia has built its nickel industry through resource nationalism — mandating that no raw nickel be exported and that it be beneficiated, refined and smelted locally — a mercantilist policy that goes against the spirit of free trade and the US’s “Friend Shoring” policy.

The worst part of this is what Indonesia’s nickel industry is doing to the environment. We’re supposed to be putting clean power into batteries to electrify the world and save ourselves from fossil fuels, yet China and Indonesia are using coal-fired smelters to produce battery-grade nickel using HPAL, which creates far more carbon emissions than sulfide nickel operations do, and ends up with tailings that are dumped into the sea.

Though Deep-Sea Tailings (DST) was suppose to be banned in 2021 it’s still happening.

It all leads to an existential question: If the processes for refining nickel aren’t clean and green, why are we using them in the energy transition?

We’d be better off sticking to fossil fuels.

At least some of the responsibility for countering cheap Indonesian nickel built, bought and paid for by China, lies on the demand side. While at least one US company, Ford, has inked a supply deal with Indonesia, the US government could use the Inflation Reduction Act to prohibit the use of Indonesian nickel by battery-makers.

Instead of trying to negotiate a free trade agreement with Indonesia that allows nickel buyers to access tax credits and subsidies contained within the IRA, US officials should, imo, recognize the influence that China has on Indonesian nickel and simply ban it from the IRA. Treat it the same as any other mineral not produced by the United States or a country the US has a free trade agreement with. Ban it not only because it isn’t green, but because it’s produced by Chinese-owned smelters and sold back to China.

In my opinion there also needs to be an attitude change, about how North American governments feel about mining and refining. One solution to ending the China/Indonesia nexus for nickel, or the China/DRC nexus for cobalt, is to explore for and develop mineral deposits here. Currently we have kind of a “plantation mentality” — we want the dirty mining to happen somewhere else, and we want the value-added upstream part of the supply chain to happen here.

We’ve written about this before.

Paraphrasing ‘It’s not that hard to dig a hole and process the stuff, anybody can do that, we’ll leave the dirty part for others. We’re focused on creating jobs that take the ore and battery chemicals mined and refined elsewhere and transforming them here into electric vehicles.’

Such a plan would cut US reliance on industry leader China for EV materials while also enticing unions with manufacturing work.

The current administration wants to go the easy route and get its battery raw materials from places like Indonesia and the DRC, but the problem is that these jurisdictions are controlled by China — the very country the US is trying to take out of its supply chain. Not only that, the mineral processing methods China uses are not green, which casts doubt on the entire electrification enterprise, the end goal of which is to clean up the environment and save the planet from global warming/ climate change.

There must be a better way, and there is. I believe we should be doing more to find and develop nickel sulfide deposits in North America. Above we named five companies doing that.

Where will mining companies look for new nickel sulfide deposits, from which the extraction of high-grade nickel needed for battery chemistries is economically and technically feasible? I’d suggest Canada.

Decades of under-investment means few new large-scale greenfield nickel sulfide discoveries. The result of such limited nickel exploration is a low pipeline of new projects, especially sulfides in geopolitically safe mining jurisdictions. Any junior resource company with a sulfide nickel project will, if we prioritize Security of Supply and consider where our ‘clean & green’ isn’t coming from, therefore be attractive to potential acquirers.