LME WEEK: Lack of ESG standard creates headache for nickel players

The high number of varying sustainability standards continues to pose significant challenges and confusion for nickel producers seeking to differentiate their product or seek a premium based on ESG standards, market participants said during LME Week, which runs from Sept. 30-Oct. 5 in London.

“The certifications process for nickel is a dog’s dinner for producers,” said one Europe-based trader. “It’s a real headache for the producers because the auditing process is so expensive.” He added that the different certifications for nickel were very similar and that there should be standardization.

A lack of ESG standardization for nickel products is also creating confusion to relatively new entrants into the nickel market, such as battery recyclers, who would look to extract additional value from selling the recycled nickel they have extracted from black mass produced from battery production scrap or end-of-life batteries, one battery recycler told S&P Global Commodity Insights.

As the market adapts and nickel supply evolves, the pressure to comply with multiple sustainability standards has become a key frustration for both producers and consumers.

“I think every single standard is based on the exact same impact values,” Veronique Steukers, president designate of the Nickel Institute, said to S&P Global Commodity Insights on the sidelines of a Nickel Institute event Oct. 2. “It becomes very difficult for companies to comply with different requirements from different stakeholders, but we definitely don’t need new standards—nobody wants new standards.”

“The immediate challenge is to get companies to go through responsible sources to an assessment and an audit—and the market wants it now. Convergence would be better, at least cross-recognition is important,” Steukers added. “If you have a company having to go through five, six, seven different standards to satisfy all their different customers and stakeholders, they would use their resources for the assessment and have no resources left for [improving] the product.”

The Nickel Institute worked in collaboration with the Copper Mark company, which launched the Nickel Mark in November 2022 in order to provide a harmonized ESG assurance built on the existing standards of the established Copper Mark, allowing producers to demonstrate their performance against 32 commonly agreed ESG issues. It can be applied for nickel and all its by-products.

Despite this collaboration, the Nickel Institute is ‘standard agnostic’ and remains in favor of companies to use the most appropriate standard for their specific operation, portfolio, and value chains they serve.

“You can adapt to specific circumstances of a specific industry, [but] you cannot ask a company in Indonesia to adhere to standards that can apply to Canada, the environment is very different,” Steukers said.

Platts, part of S&P Global Commodity Insights, assessed nickel pig iron at $121/mt FOB Indonesia Oct. 4.