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Two nickel prices? China, Indonesia and the West wrangle over supply

⚡Five Second Summary:

The Inflation Reduction Act has had a profound impact on the geopolitics of the global critical minerals industry - and there are growing calls from Western nickel companies for creating two nickel prices as nickel prices drop further. 

The Companies and Countries

  • BHP - A major Aussie miner has made nickel core to its green strategy

  • Anglo American - A UK multinational that produces nickel at its Barro Alto mine in Brazil and as PGM by-product 

  • Indonesian government - Is aiming to keep nickel prices low for EV makers

  • China - Majority owns companies that drive a large amount of Indonesian nickel supply

📊The Charts:

🤔What's Happening:

  • Late last month the Indonesian government declared its intention to keep nickel prices low for the EV industry (Source)

  • But nickel prices have rallied recently after hitting multi-year lows due to oversupply concerns easing.

  • Debate has emerged around a potential split in nickel pricing for stainless steel versus EV battery applications.

  • "I do wonder whether there is a potential bifurcation [two price system] in nickel cost curves or nickel that goes into stainless steel might be very different from nickel that goes into battery applications” Duncan Webold of Anglo American was quoted as saying in February. (Source)

  • Meanwhile Jim Lennon a strategist at Macquarie has suggested the nickel price rout may end sooner than expected (Source)

  • China and Indonesia plan further output cuts beyond 100,000 tons to boost prices and reduce surplus.

  • The nickel price rout has seen a number of major Aussie nickel mines shutter, and the nickel industry successfully lobby to add nickel to the Australian critical minerals list (Source

🔢Numbers + Facts:

  • As of 2024, 65% of nickel is used in stainless steel production, while 15% is used in batteries. (Source)

  • Batteries are forecast to overtake stainless steel as a source of nickel demand in 2036. (Source)

  • 84% of Indonesia's battery nickel output will come from majority Chinese-owned producers. (Source)

  • Nickel prices rebounded to over $17,600/ton, up 8.6% this month after plunging 45% in 2023. (Source)

  • China and Indonesia have cut over 230,000 tons of potential supply so far, with  250,000+ ton cut estimated needed to balance the market according to Benchmark Mineral Intelligence.

  • 70% of oversupply is cheaper nickel pig iron (NPI) with production costs around $10,000-$12,000/ton. (Source

  • NPI is used in the production of stainless steel as opposed to EV batteries

🔮Looking Ahead:

  • To prevent financial losses, deeper nickel production cuts may be required by major producers like China and Indonesia.

  • However, the Indonesian government wants to keep prices low for EV manufacturers. 

  • Western miners may have to close further unprofitable operations if nickel prices don't increase further.

  • This may lead to further calls for a bifurcation in nickel pricing for stainless steel versus EV batteries.

📈 The Company: Kuniko (ASX: KNI)

Market Cap: $22M | Share Price: $0.25 | Industry: Mining

Kuniko (ASX: KNI) holds a portfolio of battery metals exploration assets (copper, nickel, and cobalt) in Norway with a mandate to maintain carbon neutrality in all its operations.

KNI has recently announced that it intends to focus on its nickel projects at Ertelien and the wider Ringerike area. 

KNI's nickel project at Ertelien has a historic resource of ~2.7mt at 0.83% nickel, 0.69% copper and 0.06% cobalt. KNI completed a drilling program at the nickel project with a top result of 25.1m at 1.14% nickel. KNI plans to use funds from Stellantis to devote to its Norwegian nickel and cobalt projects.

How does KNI fit into the story?

Nickel is essential in the manufacture of EV batteries and the latest rebound in the nickel price has implications for KNI’s future efforts to build a nickel mine.

The EU has deemed nickel as a critical raw material, and as a result, KNI could benefit from a bifurcated nickel market where there is a premium attached to locally sourced or high ESG standard production.

More generally, nickel production from sources outside of China and Indonesia could stand to benefit from there being two different nickel prices.

📰 Mainstream Media Coverage


“China and Indonesia are set to reduce nickel output by at least 100,000 metric tons this year as producers seek to limit losses following a slump in the price of the metal used in stainless steel manufacture and for EVs, traders and analysts said.”


“Nickel prices hit their highest level in more than two months on Thursday as investors bet that prices had reached a floor.

Three-month nickel on the London Metal Exchange rose 0.4% to $17,675 a metric ton by 1100 GMT after touching $17,830, its highest since Nov. 10, 2023.”

Australian Financial Review

“The nickel turmoil of last year may blow over more quickly than previously expected, according to Macquarie’s 44-year veteran nickel watcher Jim Lennon, as unexpectedly high Chinese demand and potentially slower Indonesian growth rebalance the market.”