Sustainable nickel supply for battery market uncertain: Terrafame CEO

While enough nickel is expected to be produced globally to supply the stainless steel and battery application markets in the coming years, the question is whether there will be enough sustainable supply, Terrafame CEO Joni Lukkaroinen told S&P Global Commodity Insights.

Most new capacity coming online was for a nickel pig iron-based product for consumption in both markets, with some products based on NPI being further processed into nickel sulfate, he said.

"I think nickel units globally will be enough but whether there is enough sustainable nickel sulfate is another question," Lukkaroinen said.

S&P Global assessed spot battery-grade nickel sulfate with minimum 22% nickel content and maximum 100 ppb magnetic material at Yuan 46,400/mt ($6,911.55/mt) DDP China May 9, up 36.9% since the start of 2022.

One thing that was not always discussed when comparing internal combustion engine vehicles with electric vehicles was the manufacturing stage carbon footprint, which was higher for EVs than for traditional ICE vehicles, he said.

"That is very much dependent on how the raw materials are produced -- the average nickel is roughly 5g/km driven over the lifecycle during manufacturing stage if you look at various nickel products," Lukkaroinen said.

The carbon footprint could be even higher, he said, such as with the NPI route, which was around five to 10 times higher, meaning 35-50g/km driven, which would result in an EV having a higher carbon footprint than a corresponding diesel engine when the average European electricity grid is used to charge vehicles.

"It's a challenge -- there will be enough nickel units, but whether there is enough sustainable units, that's a tricky question," Lukkaroinen said.

Ramping up

The Finnish state-owned miner and battery chemical producer is currently ramping up its battery chemical plant, which started in July 2021.

The plant will take some months to reach full capacity of 170,000 mt/year of nickel sulfate, which is enough for around 1 million EVs/year, and 7,400 mt/year of cobalt sulfate, enough for around 300,000 EVs/year, assuming nickel cobalt manganese (NCM) 81 battery technology was in use, Lukkaroinen said.

"In the first quarter, over one-third of our turnover was coming from battery chemicals, so we are at continuous production, but far away from full speed, which will still take some months," he said.

Terrafame is aiming for 80% of its turnover to come from chemicals, Lukkaroinen said.

The company signed an agreement with Renault Group in October 2021 to supply the automaker with low-carbon, fully traceable nickel sulfate for EV batteries.

The two companies signed a memorandum of understanding that secures a significant annual supply of nickel sulfate, representing up to 15 GWh of annual capacity, they said at the time.

Lukkaroinen said the MOU was still valid and would eventually be finalized. It was not just a commercial agreement between two parties, but a large joint effort to build a European chain all the way from Terrafame's refinery to Renault's EV manufacturing plants.

"There are sustainability topics and practicalities and many steps between us and EVs, so we will announce in due time when it is ready, but we said already we don't expect to immediately come with that, but I hope it won't be too long," he said.

In terms of supply discussions with other parties, he said there was big interest in Europe, as well as South Korea and Japan,

"Four years ago, when we decided to invest into further processing of our intermediate product into battery grade nickel sulfate and cobalt sulfate, we thought we'd be discussing with cathode material producers, as they are the ones who will receive the product, but OEMS in general are clearly more active now in securing raw materials," Lukkaroinen said.