Mining the future of energy metals.
A developing demand story for commodities.
Economic and technological development is closely linked to the availability of efficient and high energy content sources.
In 2016 the world consumed a total of .. kw/h, of which ...Fossil fuels (oil, gas and coal) accounted for 71% (....kw/h) of total world energy consumption, comparatively, renewables (wind (..%), solar (..%) and hydro) accounted for 21% or ..... kw/h and nuclear energy supplied 6% or ... kw/h of total energy consumption worldwide... read more.
Although societies dependence on fossil fuels is apparent there is a developing trend towards increased electrification of large sectors of the economy - such as mobility.
Technological advances in the space of Energy generation and storage systems, EV's, Smart Grids etc. are instrumental in the transition towards a new energy economy. When cost per kw/h of new energy systems reaches cost parity - or better - a natural demand will emerge.
In this blog I focus on the underlying group of energy metals, and specifically Nickel. A beautifull, versatile metal with an interesting role in the battery revolution.
Nickel’s role in the battery revolution
The evolution of batteries for electric vehicles is a key issue when we talk about the revolution of the global automotive market.
In fact, the spreading of electric cars requires better battery performances which are strictly connected to the material the batteries are made of.
Although lithium and cobalt are widely used for battery production, there is also another material that can guarantee optimum performance for battery module: nickel.
To date, nickel is the most important metal by mass in lithium-ion battery cathodes, but the possibility of increasing its percentage in the overall composition of a battery opens up new scenarios for the future of the electric car industry.
Nickel’s role on EVs market
As already mentioned, nickel is one of the most important metals – in term of mass – in the battery cathodes used by electric vehicle manufacturers.
Nowadays, nickel makes up 33.3% of the battery, but its concentration will increase in the future because it can greatly increase energy density.
For this reason the goal of automotive industry is to bring nickel to 80% of the mass in NCA and NMC cathodes, used by companies as Chevy and Tesla.
Tesla, in particular, is working on new battery materials, with the intention to launch on the market cells called in “Nickel-Graphite”, in which cathode is nickel and anode is graphite and silicon oxide.
This means that the evolution of battery composition will probably require a greater amount of nickel.
Growth of the nickel market
The growth of the nickel market will therefore be directly proportional to the electric vehicle penetration, even if it’s already predicted to double by 2020.
Electric cars currently account for about 1% of total car market sales, which translates into the demand for around 70,000 tonnes of nickel (3% of total market).
If sales increase, nickel demand will increase.
If the EVs market experienced an increase of only 10%, nickel demand could reach 400,000 tonnes.
Could the global nickel supply satisfy this demand?
This question becomes even more complex, especially if we consider that most of the nickel in the global supply is not suitable for the production of batteries.
This material comes from two different types of deposits: nickel laterites (62.4% of current production) and nickel sulfides (37.5% of current production).
Market interest will grow for nickel sulfide deposits, nickel sulfate is used as cathode material for lithium-ion batteries.
At the moment this represents less than 10% of total supply, a small percentage compared to the large nickel demand from the EVs market.
Industry leaders are trying to find a solution: mining giant BHP Billiton, for example, announced the investment of $43.2 million for the construction of the world’s biggest nickel sulfate plant (Australia).
We can’t predict whether these initiatives will meet the global nickel demand, but these are certainly a clear sign of an increase demand in the electric vehicle market.
Nickel price development
Energy metals
Europe is at the forefront of the energy transition. Not surprising given the dependancy on Energy Imports and the relative old Energy transport infrastructure.
The energy transition is the movement from fossil fuels to renewables as the primary source for energy generation. What determines the start and endpoint of an energy transition? This is not an easy question to answer since many energy systems are in a constant state of flux, albeit very slowly in many cases. In terms of national primary energy use, Smil (2010) argues that the time when a new energy source captures five percent of total energy demand is a reasonable benchmark for the start of a transition.
In 2015, the world consumed 146,000 terrawatt-hours (TWh) of primary energy of which 62% carbon fuels and 32% renewables (hydro, wind, nuclear, solar and bio mass).
- Up to the industrial revolution (18th century), mankind's use of energy relied only on muscular and biomass sources. Most work was provided by manual labor and animals, while the biomass (mainly firewood) provided for heating and cooking energy needs. Other sources of energy, such as windmills and watermills, were present but their overall contribution was marginal and very specific (e.g. milling flour).
- By the mid 19th century, the industrial revolution brought a major shift in energy sources with the usage of coal, mainly for steam engines, but increasingly for power plants.
- As the 20th century began, the major reliance was on coal, but a gradual shift towards higher energy content sources like oil began. This second major shift saw the introduction of internal combustion engines and of oil-powered ships.
- In the late 20th century, preeminence of petroleum products as the main provider of energy reached a high level of dependence in the world economy. As its level of technical expertise increased, more efficient sources of fossil fuels were tapped, such as natural gas, and an entirely new form of energy, nuclear fission, became available. Renewable sources of energy, such as hydroelectric, wind and solar started to be tapped, but remained marginal sources.
- The 21st century will be characterized by major shifts in energy sources with a gradual obsolescence of fossil fuels, like coal and oil, for more efficient fossil fuels such as natural gas. There may also be a substantial 'clean coal' technology potential (the term is more of an oxymoron). Advances in biotechnologies, underline the growing potential of biomass derived fuels while wind and solar energy will also account for a notable share of energy sources. Nuclear energy, particularly if nuclear fusion becomes commercially possible, may also play a significant role, but this remains speculative. A new transition is likely to be the usage of hydrogen, mainly for fuel cells powering vehicles, small energy generators and portable devices.
Investing in exploration and mining.
Worth the thought.