January 2023
The price of nickel was wildly volatile in 2022, with the European spot price surging to an unprecedented intraday US$100,000/t in March. The price was then capped at US$45,721/t, and trading was forcibly suspended on the LME for nine days as the market recovered.

Although this incident was primarily caused by the large volume of short positions held by Tsingshan Holding on the exchange, looming uncertainties induced by Russia’s invasion of Ukraine was also a major trigger.

Nornickel, Russia’s nickel and PGM giant, is responsible for the production of over 10% of the world’s class 1 nickel supplies. Potential disruptions to its production and deliveries have caused both investors and downstream producers to panic as they scramble to secure alternative feeds while fearing a market deficit.



In the June quarter, prices began recovering as manufacturers adjusted to new geopolitical relations between Russia and the West. The talk of implementing sanctions on Russia production, however, continues to elevate prices, with the quarter average ending at an all-time high of US$29,069/t.

The volume of contracts being traded on the LME has also almost halved, compared to the start of 2022. Investors were wary of the nickel market, with some believing that LME’s decision to suspend trading was a mistake.

Prices then calmed quicker than expected in the September quarter, bringing the quarterly average back to US$22,006/t. Skyrocketing energy prices in Europe, as a result of faltering trade ties with Russia, led to reduced finished nickel demand, as stainless-steel mills were forced to shut down. Prices were forecast to continue easing as market uncertainties subsided.

In the December quarter, prices returned to an upward trajectory, caused by rising tension between countries along supply chains as demand from the EV sector rose. The threat of Russian disruptions has exemplified the fragility of a global critical minerals supply chain. EV manufacturers realised that raw materials need to be secured early, while the supply chain also needed to be domesticated to ensure control.

This theme of resource protectionism is echoed by the US’ Inflation Reduction Act, which will only grant a US$7,500 tax credit to EVs manufactured with materials that are over 40% sourced domestically or from a free-trade agreement ally. Finished nickel consumers will become increasingly selective of the source of origin.

Although the global market is forecast to be in a massive surplus of 192kt in 2022, this has had little effect in restraining prices. Prices started at ~US$20,000/t at the beginning of the year but ended closer to US$30,000/t by the end of December.

This is due to the fact that supply growth will come predominantly from Indonesian smelters, which produce ferronickel, a low-grade product that is used for stainless-steel, instead of the quickly growing battery sector, despite the latter only contributing to ~10% of finished demand. Hence, prices continue to remain detached from physical market demand and supply conditions.


Major Producers


The 2022 surge in finished nickel production is largely attributed to Indonesia, who is responsible for 38% of total global production. New RKEF smelters being brought online, and their ramp ups, have propelled unprecedented capacity growth. This has caused ferronickel exports to increase dramatically over the year, from just below 400kt in January to a monthly high of approximately 600kt in September. 97% of this was exported to China, going into its stainless-steel industry.

The implementation of the proposed export tax on nickel products below 70% grade will further drive processing and downstream development, as producers integrate their operations to minimise production costs.

Despite the WTO ruling against the country concerning its 2020 ore export ban, claiming that the move was in violation of the General Agreement on Tariffs and Trade, Indonesia remains undeterred. The Ministry of Investment has stated that an appeal will be filed, and that the ban will remain. A similar policy may even be implemented on other raw materials such as bauxite.



A series of smelters were brought online in 2022 as Indonesian processing capacity continues to be built out. Notable RKEF projects include Nickel Industries’ Angel and Oracle smelters within the IMIP. Both operations are expected to produce at 130% of their stated 36ktpa nickel in ferronickel capacity when their captive 380MW coal-fired power plants come online.

Delong Holdings’ Gunbuster operation in the Virtue Dragon Industrial Park is also a massive ferronickel operation that was commissioned in 2022. These projects are expected to have quick ramp ups as the RKEF technology deployed are very similar.

New MHP producing HPALs include Tsingshan’s QMB, and Huayou Cobalt’s Huayue plants, also within the IMIP. Production may even be further processed into sulphates to cater for the battery sector. Nickel Industries’ Hengjaya smelter also transitioned to the production of matte instead of ferronickel to capitalise on the ballooning batteries market.



In China, finished nickel production has been affected by mandated lockdowns and energy supply issues in Shandong and Guangdong. Despite the implementation of stimulus measures, economic activities were restrained through the year due to persisting lockdowns.

Additionally, NPI plants in the Beijing, Tianjin and Hebei regions were suspended at the beginning of the year due to the government’s mandate to improve air quality for the Winter Olympics. The lack of high-grade mines in China also made it highly reliant on imported ores from the Philippines and New Caledonia.



A four-year mining ban was lifted at the end of 2021, allowing several smaller scale mines to resume production. Projects that restarted production this year include Eramen Mineral’s Sta. Cruz project, and ARC Nickel Resources’ Banaybanay operation. However, the Governor of Davao Oriental is recommending the permanent closure of Banaybanay, following heavy siltation pollution in nearby rivers.

Ipilan Mining Corporation, an affiliate of Global Ferronickel Holdings, also commenced ore production from a greenfield site at Ipilan. The site will be a DSO operation and can be mined year-round, as activities are not affected by the rainy season due to its location.



Production has remained relatively stable this year, with exports climbing to over 20kt towards the end of the year as demand for high-grade products rose. 38% of all unwrought production was exported to the US for its EV battery cathode production.



Canada has intensified the regulations on large foreign state-owned investments in its critical minerals sector. Acquisitions of Canadian businesses worth over C$1.141bn (US$0.83bn) will require an exceptional approval. This act will allow the government to better control Canadian nickel production and ensure a stronger strategic alliance with its trade allies in North America and the rest of the world.



IGO Limited has completed the full acquisition of Western Areas, adding the Cosmos and Forrestania mines to its nickel portfolio. On the other hand, production at Nova had to be suspended in December following the breakout of a fire at its captive 10MW diesel plant. IGO confirmed that no staff were injured, and that production will resume in mid-January 2023.

Oz Minerals is reconsidering BHP’s takeover bid of A$9.6bn (US$6.7bn) after rejecting an unsolicited A$8.4bn (US$5.9bn) bid in August. If successful, BHP would gain ownership of the West Musgrave project, a large-scale greenfield nickel copper deposit.

Additionally, the Avebury mine in Tasmania has been resurrected by Mallee Resources after an idle period of 13 years. While Mincor Resources has commenced mining operations at its Cassini and Northern Operations, with concentrates being toll produced at BHP’s Kambalda concentrator.


Demand Developments

Global energy transition efforts are fuelling rapid demand growth for battery-grade nickel products. However, the dominant source of demand continues to be stainless-steel and other alloys, accounting for almost 90% of total finished demand. China, the largest demand source in the world, accounted for over 57% of global demand in 2022.



Demand was slow in the first two Quarters of 2022, with stainless-steel operations in China affected by pandemic induced lockdowns. Even EV manufacturer Tesla revealed that in the March Quarter, 50% of the EVs produced used the nickel-free LFP batteries for its Model 3s. The company plans on further diversifying its portfolio of battery compositions to avoid overreliance on any one metal.

By mid-2022, deteriorating relations with Russia began restricting energy supplies flowing into Europe. Aperam’s largest stainless-steel plant in Genk, Belgium, had to be shut down as the result of soaring energy prices. Production at Charleroi also had to be scaled back. Similar problems occurred in Spain, in which Acerinox recorded a 22% reduction in quarterly production. Europe is the only region that saw a decline in demand in 2022 because of this.



Finished nickel demand continued growing in the September and December Quarters, thanks to the resumption of stainless-steel production in China, and new developments in the battery sector.

CATL, the largest lithium-ion battery manufacturer in the world, unveiled its newly developed Qilin battery in August. The integrated battery is capable of carrying up to 255Wh/kg with a high nickel composition. This battery will be mass produced in 2023 and will be launched with the Zeekr 001 and Zeekr 009 EVs.