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The metals of the future: how critical is nickel?
The ‘devil’s metal’ was discovered in 1751 in the cobalt mines of Hälsingland, Sweden. That was the dubious moniker bestowed on nickel by the miners who first found the ore. Why? They blamed supernatural forces for its subsequent failure to yield copper.
Nickel has a much-improved reputation today. Positioned at number 28 on the periodic table, this ductile, silvery-white metal has long been relied upon to produce alloys such as stainless steel, which accounts for about 70% of global nickel demand1. Now, it is also enabling a new era of energy innovation.
Nickel’s role in the energy transition
At Lombard Odier, we believe the electrification of our economy will increase from 20% today to 70% by 2050 as the world transitions from fossil fuels to renewables and cleaner energy sources. Nickel could play a key part in this shift. Its ability to withstand high temperatures and resist corrosion makes it indispensable in many low-carbon technologies, from solar panels and wind turbines to nuclear plants and carbon capture systems.
Nickel’s most important role, however, is expected to be in battery production. It enhances battery performance by increasing energy density, which supports higher voltages and storage capacities without compromising stability. This has led to nickel’s use in lithium-ion batteries, including in nickel-manganese-cobalt and nickel-cobalt-aluminium formulations. Crucially, nickel is generally cheaper than rival metals such as lithium and cobalt2; nickel-rich batteries can therefore reduce the cost of storing excess renewable energy production.
These batteries have helped make electric vehicles (EVs) increasingly affordable. Legislative measures are further accelerating the rise of the EV and demise of the internal combustion engine; these include the US’s substantial investment in EV infrastructure3, and EU4 and UK mandates that 100% of new cars and vans must be zero-emission by 20355. Global EV production is expected to increase from 2 million units in 2018 to 21 million units by 20306.
These trends, along with other policy measures designed to reduce carbon emissions, mean that nickel demand has long been projected to rise7. Some forecasts suggest that batteries will account for 41% of global nickel demand by 2030, up from just 7% in 20218, illustrating its critical role in building a more sustainable future.
Read also: 5 early stages energy storage solutions that could help underpin the electric economy
Nickel demand heading upwards
EVs and energy storage will make up the lion’s share of the expected growth in nickel demand in the coming 20 years, according to the International Energy Agency (IEA).9 A forecast 40-fold increase in the volumes these sectors will need by 2040 far outshines the otherwise significant tripling of demand expected from low-carbon power generation. Together, these areas could make up more than half of all nickel demand in 2040 – a big shift from today’s world, where 65% of all nickel goes into stainless steel10.
As demand heads upwards, some nickel could be doing the same itself. The low weight and high energy density of nickel-rich lithium-ion batteries are particularly well suited for drones3. The diverse applications of this high-flying technology range from automated delivery services to agriculture and law enforcement, and the drone battery market is projected to more than double by 202611.
The amount going to other sectors is also forecast to increase, but by a much smaller 15%, the IEA projects. One (far from final) frontier for nickel is space, where its plating protects satellites and its batteries power space stations. 3D-printed nickel was used to construct parts of the Mars Perseverance rover12, including an experimental device that produces oxygen from the planet’s atmosphere using a high-temperature process that rival metals would struggle to contain3. These and other extraterrestrial applications have earned nickel a reputation for reliability in extreme conditions. The metal has consequently become a go-to ingredient for high-performance alloys, the largest consumers of which are the aerospace, transportation and defence sectors. Companies see nickel blends offering advantages over steel and other mixes.
Global nickel reserves: is there enough?
If low-carbon technologies and other emerging applications are going to drive demand for nickel higher, the question is whether the mining industry can deliver – and if there is enough to go round in the long term? There are around 350 million tonnes of land-based nickel resources on Earth. The metal is mined in over 25 countries, but Indonesia, Australia, Brazil, Russia and New Caledonia collectively host over 84% of the estimated 130 million tonnes of accessible reserves. The world produced 3.6 million tonnes of nickel in 2023, around half of which came from a surge in Indonesian manufacturing.13
In the short term, this relatively sudden influx of Indonesian nickel has created a problem not of shortage, but of oversupply leading to price slumps that threaten the viability of many nickel mines. While China and Indonesia have signalled reductions in their 2024 nickel outputs to help stabilise the market, more substantial cuts may be needed to eliminate surplus and raise prices.14 Until then, governments may have to introduce measures to help nickel producers survive the slump and secure future supply – as Australia recently did by adding nickel to its list of “critical minerals”, enabling producers to access low-interest government loans and grant programmes.15
Eventually, though, balance is likely to return and demand could again surpass supply. Current geological and economic factors are primarily increasing supply of low-purity nickel for use in stainless steel16; batteries need high-purity nickel, so investments in new mines that can extract this grade will be essential.
Innovations in battery chemistry could ease the pressure on future supplies by introducing more nickel-free alternatives. Lithium iron phosphate batteries, which are already the preferred option in China due to their lower costs and higher safety standards17, could grow their market share if they can compete on energy density while avoiding challenges related to lithium prices18.
Read also: Batteries under threat: supply crunch looms for lithium
Nickel mining: environmental and ESG considerations
Despite the nickel industry’s relatively small 0.27% contribution to global greenhouse gas emissions19, decarbonising the sector is crucial for achieving carbon-neutral EVs. Coal powers over 50% of nickel production while renewables power under 20%. This is partly why EVs are actually more emissions-intensive at the start of their lives than their fossil-fuel counterparts16.
The environmental footprint of nickel mining is also substantial, impacting ecosystems, water bodies and air quality. Techniques such as open-pit and underground mining disrupt habitats, erode soils and deposit sediments in waterways that harm aquatic ecosystems. Nickel refining can also release toxic substances such as sulphur dioxide into the atmosphere, exacerbating air pollution and acid rain. And tailings – poisonous mining waste – regularly leak from their storage ponds, polluting soils and waterways.
To address these impacts, the industry is adopting stricter environmental standards and investing in technologies to tackle emissions and waste. Sustainable mining practices, including the minimisation of mines’ ecological footprints and the rehabilitation of mined areas through reforestation and biodiversity restoration, are also gaining momentum. And more recycling will reduce the need to mine nickel in the first place. There should also be a green premium for sustainably produced nickel, according to a group of leading mining companies, although the London Metal Exchange says the market needs to grow to make this viable.20
Recycled nickel: untapped potential
Nickel, like other metals, can be recycled indefinitely without losing its original properties.21 This means recycled nickel can deliver the performance of freshly mined nickel without the environmental damage. Approximately 40% of the nickel used every year comes from recycled sources22, including old consumer products. But while 68% of all the nickel in such products is recycled, around a fifth of it is still dumped in landfills23, underscoring the need for improved recycling practices as part of a wider shift toward a circular economy.
The burgeoning EV sector offers a particularly promising long-term nickel-recycling opportunity in the form of end-of-life batteries. Although there are unlikely to be enough to significantly impact supplies until around 2028, expired batteries are expected to supply 254,000 tonnes of recycled nickel by 2030. That would cover 7% of global annual demand.
Higher levels of recycling would not just reduce the impact of nickel mines on their immediate environment, it would also help minimise the carbon footprint of our overall nickel supply. Producing new nickel is usually more energy-intensive than simply recycling it, making recycled nickel a low-emission solution to rising demand that also happens to be more cost-effective.
Read also: Electric – unexpected profit pools as our economy transitions
To transition to a better future we must ultimately create a circular economy, with business models that promote the reduction, repair, re-use, re-distribution, and recycling of products. A cleaner economy will not just mitigate climate risks but create investable opportunities linked to demand for low-carbon products and infrastructure. Nickel’s pivotal role in the energy transition means it can be a part of this. But to become sustainable while continuing to increase production, the nickel industry must innovate.
1 Nickel prices may ease by year-end as supply could exceed demand - The Hindu BusinessLine
2 FOTW #1228, March 7, 2022: Cobalt is the Most Expensive Material Used in Lithium-ion Battery Cathodes | Department of Energy
3 Nickel – A Metal for the Future (elementummetals.com)
4 Fit for 55: EU reaches new milestone to make all new cars and vans zero-emission from 2035 - European Commission (europa.eu)
5 Pathway for zero emission vehicle transition by 2035 becomes law - GOV.UK (www.gov.uk)
6 deloitte-uk-battery-electric-vehicles.pdf
7 Anticipated supply and projected demand for nickel in the Net Zero Scenario, 2030 – Charts – Data & Statistics - IEA
8 Nickel and copper: building blocks for a greener future | Wood Mackenzie
9 Total nickel demand by sector and scenario, 2020-2040 – Charts – Data & Statistics - IEA
10 Nickel (Ni) – Commodity markets – Strategic report – Nornickel 2022 Annual Report
11 Drone Battery Market Growth Opportunities and Industry Trends (marketsandmarkets.com)
12 NASA's Perseverance Rover Bringing 3D-Printed Metal Parts to Mars – NASA Mars Exploration
13 Mineral Commodity Summaries 2024 (usgs.gov)
14 China, Indonesia face deeper output cuts to tackle nickel price slide | Reuters
15 Australia lists nickel as 'critical mineral' to unlock billions in support | Reuters
16 Nickel in the energy transition: why is it called the devil’s metal? | IFPEN (ifpenergiesnouvelles.com)
17 China strengthens LFP investments in 2023 but structural surplus looms | S&P Global Commodity Insights (spglobal.com)
18 Snowdon et al. (2022) ‘Nickel’s class divide’, Goldman Sachs Commodities Research
19 How to calculate GHG emissions from nickel production (nickelinstitute.org)
20 Global miners call on LME to introduce green premium for nickel (ft.com)
21 euric_metal_recycling_factsheet.pdf (europa.eu)
22 Nickel: from ‘devil’s metal’ to the holy grail - Brunel
23 Nickel recycling (nickelinstitute.org)
Important information
This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.
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