EU JRC releases Roskill study on demand and supply security of nickel for EV batteries; risk of shortages
The European Commission’s Joint Research Centre (JRC) has released a report by Roskill that analyzes the EU’s nickel requirements for EV batteries within the context of the global market over a twenty-year forecast horizon to 2040. Against this demand backdrop, Roskill critically assessed the EU’s internal supply capabilities and identified the risk of future shortages.
The expected requirements for additional nickel are “seismic” for the market and there are multiple challenges to ensuring long-term supply security, according to the report’s authors.
For the report, eight Roskill nickel market, lithium-ion battery supply-chain and automotive sector experts analyzed the European Union’s i) ability to source and captively provide its own nickel units internally; and ii) strategic approach to establishing a nickel circular economy for EV batteries.
The report concluded that the availability of suitable feedstock rather than processing capacity is the biggest bottleneck in the nickel sulfate supply chain and is the cause of the market potentially going into a structural deficit post-2027. The Roskill authors suggested that the lowest risk approach would be a combination of domestic and foreign sourcing.
Nickel sulfate is a refined chemical product produced from a variety of intermediate (green), finished nickel products (silver), as well as from secondary material (yellow), with the primary feedstock sources mainly originated from sulphide and laterite nickel ores (red) and secondary sources from end-of-life (EOL) batteries and plating scraps (orange). Nickel sulfate is used directly in the production of Li-ion precursors (blue) and plating (blue). It is also used to produce nickel hydroxide and other nickel compounds used in NiMH (blue) and NiCd (blue) batteries, and other applications (blue). End use of nickel sulfate is wide, with automotive and portable electronics being some of the main applications (brown). Source: Roskill
Owing to a lack of development-ready nickel deposits within the EU27, increasing access to new primary nickel supply in future is likely needing to be sourced internationally. This increases the need for directing investment focus towards a domestic battery recycling industry to fill the gap where new supply of feedstock for producing nickel sulfate is not able to be developed internally or sourced externally, the authors said.
Investment in both new primary supply and recycling is required to de-risk future supply security. To cover EU27 nickel demand from EV sales around €4.4 billion and €7.5 billion worth of investment is estimated to be required by 2030 and 2040, respectively.
Main findings from the report include:
Automotive electrification is expected to represent the single-largest growth sector for nickel demand over the next twenty years. Within this sector alone, Roskill forecasts global demand to increase by 2.6Mt Ni to 2040, up from only 92kt Ni in 2020. Within the EU27, Roskill forecasts nickel demand from the automotive sector to increase by 543kt Ni, from 17kt Ni in 2020, under a base case scenario. Underpinning this growth is the expectation for EU27 OEMs to increasingly utilize high-nickel cathode chemistries from the mid-to-late 2020s and throughout the 2030s.
Demand for nickel from batteries requires a high-purity chemical product (nickel sulfate), which can only be produced from suitable feedstock forms (such as Class I nickel and intermediates). Post-2030 there is limited visibility on new projects able to supply Class I and intermediate nickel products.
By this stage, nickel units available for recycling from end-of-life (EOL) batteries are likely to become a growing source of raw materials to produce nickel sulfate. There are two tiers of this market balance that need to be considered.
On an end-use basis (EV sales) in the EU27, Roskill forecasts that the EU27 has the ability to meet internal demand until 2024/25 before deficits emerge.
On a first-use basis (precursor/cathode maker), although demand is much lower, supply security of nickel is still a concern. Should a sizeable EOL recycling industry not be established, we expect a supply deficit to form in 2027 and then remain over the rest of the outlook period.
The Roskill analysts identified three key headline areas for policy to address: demand deflation, supply security, and research and development.