Nickel’s Potential in the Clean Energy Boom Despite Falling Prices

In the push for energy transition and increasing net zero commitments, demand for clean energy technologies intensified, driving up the need for critical minerals. Among these, nickel prices stand to benefit as one of the key elements used in batteries for electric vehicles (EVs).

In the first quarter of 2024, primary nickel producers significantly increased their output, leading to an oversupplied market, while mined nickel producers reduced their supply. According to S&P Global Market Intelligence data, the top five primary nickel producers produced 130,930 metric tons, marking an 11.7% year-over-year increase.

Primary nickel includes refined nickel for electric vehicle batteries and nickel pig iron and ferronickel for steelmaking. Notably, PT Merdeka Copper Gold and Nickel Industries, both operating in Indonesia, saw the largest year-over-year increases.

Merdeka Copper Gold’s output surged by 123.1% to 20,900 metric tons, and Nickel Industries’ production rose by 22.4% to 25,472 metric tons.

The rapid expansion in Indonesia’s nickel industry has contributed to market oversupply, leading to nickel price declines. The London Metal Exchange (LME) cash price for nickel was $17,790.40 per metric ton on June 7, a 42.5% drop from the 2023 high.

The primary nickel surplus, driven by increased supply from Indonesia and China, has limited the upside for prices, with some producers announcing plans to close operations or reduce output.

Nickel’s role in the global energy transition is significant, with increasing demand for clean energy technologies driving the need for resources such as nickel. Balancing increased nickel production with sustainable practices will be essential as the world shifts towards cleaner energy solutions.