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Nornickel targets higher nickel supply to European battery market from Finland's Harjavalta refinery

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Nornickel targets higher nickel supply to European battery market from Finland's Harjavalta refinery

Highlights

Expand Harjavalta to 100,000 mt/year by 2026 from current 65,000 mt/year

2021-30 capex rose to $35 billion to also increase concentration, smelting capacity

Nickel market to move into modest surplus in 2022

Major nickel, copper and platinum group metals producer Norilsk Nickel is aiming to become a larger player in the European battery value chain as it expands its Harjavalta nickel refiner in Finland to 100,000 mt/year by 2026, according to the company's Capital Markets Day webcast held Nov. 29.

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Sergey Dubovitskiy, Nornickel's senior vice president, strategy, strategic projects, logistics & procurement, said the company was targeting substantial market share in the battery segment through supply agreements and deeper integration into the European battery value chain.

"We're taking a closer look at integration opportunities with key battery materials players in Europe, and this is definitely an area for strategic consideration for the next strategic cycle," Dubovitskiy said in his presentation.

The Harjavalta refinery has a capacity of 65,000 mt/year, which Nornickel is expanding to 75,000 mt/year in 2023 and then to 100,000 mt/year by 2026 as part of the second phase expansion plans to meet growing demand in Europe for batteries for electric vehicles.

Nornickel is also aiming to meet additional demand for nickel-based lithium-ion batteries, which are rising in popularity because of the need for higher EV power capacity and range.

"The development of Harjavalta becomes a crucial element in our market strategy in the responsible sourcing for emerging European battery materials segment," Dubovitskiy said.

Battery value chain evolving

He added that the European value chain for batteries and EVs was evolving, with the industry exploring the right sourcing models, market structures, integration formats, efficient feedstock forms and geographical distribution of different value chain segments.

"Potential clusters are emerging in northern Europe and particularly Finland, so we can say Nornickel is uniquely positioned, with ... a vast resource base and proven operational model, one of the lowest carbon footprints in the industry, an expanded facility in Finland, and with all these factors it has all the potential to become a supplier and partner of choice," Dubovitskiy said.

Nornickel is also planning to expand its copper refining capacities at Kola to 150,000 mt/year, with the additional nickel and copper refining capacities due to support its long-term strategic ambitions for metal production to 2030 and beyond of 25%-35% growth in nickel volumes and 25%-35% in copper.

The refinery upgrades will be funded using the producer's updated long-term capex program for 2021-30, which it increased by $6 billion to $35 billion.

In addition, it is also almost doubling its concentration capacity from 19 million mt/year to 36 million mt/year by 2027, with the Phase 3 Talnakh concentrator upgrade and the construction of a new Norilsk concentrator, and will increase smelting capacities by over 25% from 4.6 million m/year to 5.8 million mt/year with the construction of a third furnace at the Nadezhda smelter and continuous converting unit at the copper smelter.

Nickel to move into surplus in 2022

Anton Berlin, Nornickel's vice president, sales & distribution, gave market update for the Capital Markets Day, saying that while the nickel market had been in deficit in 2021, it as expected to move to a modest surplus in 2022.

He said while stainless steel continued to be the largest source of nickel demand, recovering 18% in 2021, the battery sector was "more exciting," and, while it was currently the third-largest demand sector, it was due to grow to second place in the coming years.

The battery sector was also the largest source of incremental demand for class 1 nickel.

On the supply side, Berlin said that over 500,000 mt of new supply was expected to hit the market, although these were mostly due to be low grade and have a high carbon footprint.

"It does help to satisfy demand currently, but looking at the development of the market, it is really focusing on batteries as the source of growth, and this is the exact opposite of what that sector will require," Berlin said. "Battery production requires high purity nickel and low carbon footprint as part of the climate change solution."

He added that the 2022 surplus was expected to be led by low-grade nickel rather than class 1 production.