Reduced disruption to mining in Indonesia and the Philippines from the Covid-19 pandemic will drive strong growth in nickel ore production in 2022 and 2023, Fitch Solutions Country Risk and Industry Research says.
It notes that the most significant driver of this growth will be a recovery in production from these countries, where mine activity was restricted by the pandemic in the past two years.
Over the long term, Fitch Solutions forecasts global nickel mine production to grow at a rate of 4% year-on-year over 2021 to 2030, a considerable slowdown from the 6.6% year-on-year growth achieved over the previous decade, which was boosted by higher nickel prices and strong Indonesian output growth.
By 2030, the unit expects global yearly nickel production to reach 3.8-million tonnes, up from 2.6-million tonnes in 2020.
Fitch Solutions says that, in the long term, strong demand from nickel smelters supplying the electric vehicle battery industry will underpin rising nickel prices, which should, in turn, sustain steady mine production growth.
The unit notes that nickel is an increasing area of investment for major global miners. For example, it says, BHP Billiton and Fortescue Metals were engaged in a bidding war for Canadian nickel miner Noront Resources during August 2021.
Fitch Solutions highlights that the most fragile part of the global nickel mine supply pipeline is in Indonesia, where any delays to development of downstream nickel processing facilities could strand nickel ore in the country and reduce the incentive for miners to boost output.
With battery-grade Class 1 nickel to experience a major demand boost from the green transition, the main supply risk and impediment facing battery players is sufficient Class 1 supply, Fitch Solutions says.
It highlights that Indonesia mainly supplies Class 2 nickel ore.
Fitch Solutions says Australia and Indonesia will remain the world’s largest suppliers of nickel, although Australia will outpace Indonesia with its endowment of higher-grade sulphide ores.
Other areas of opportunity include Canada and Russia, which boast considerable resources of higher-quality sulphide ore.