Surge in battery nickel use is more bad news for cobalt price

Battery metals tracker Adamas Intelligence says electric vehicle manufacturers deployed 57% more nickel in passenger EV batteries in May this year compared to 2018.

The Toronto-based research company, which tracks EV registrations and battery chemistries in more than 80 countries says the nickel metal equivalent used in lithium-ion batteries (primarily in the form of nickel sulphate) increased by 69% whereas the amount used in nickel metal hydride (NiMH) batteries (primarily in the form of nickel hydroxide and AB5 nickel-REE alloy) increased 26%.

The deployment of nickel also outpaced the growth of the EV market overall. In May this year, total passenger EV battery capacity deployed globally was 48% higher year-on-year according to Adamas data.

Nickel’s inroads is due to shifting chemistries of nickel-cobalt-manganese (NCM) battery cathodes.

First generation NCM111 batteries had a chemical composition of 1 part nickel, 1 part cobalt and 1 part manganese, but NCM batteries with higher nickel content (622 and 523 chemistries) are quickly becoming the standard in China, which is responsible for half the world’s electric car sales, and a much greater proportion of EV battery manufacture.

With worries about security of supply of cobalt persisting, the industry is now fast moving towards even higher nickel content with the market share of NCM811 increasing to 2% worldwide and 4% in China in May, a doubling of market share in just one month.

Adamas points out that in China the increased deployment coincided with  the launch of a number of new EV models in China using NCM811 cells from battery leader CATL.

World number one carmaker Volkswagen is spending more than $50 billion on batteries to start mass producing EVs by mid-2023 and the company announced earlier this month that from 2021 it would use the NCM811 composition.

Nickel touched $13,000 a tonne for the first time since April on Wednesday. The price is up just over 19% in 2019 as the EV boom creates additional demand and primary use of the metal today – stainless steel production – continues to grow.

Cobalt is now worth $28,000 a tonne after peaking at $95,000 little more than a year ago as miners in the Congo – responsible for two-thirds of output – ramp up production.