Nickel Becoming Increasingly Important

The author is an analyst of NH Investment & Securities. He can be reached at j.ko@nhqv.com. -- Ed.

 

With nickel demand set to climb significantly on higher nickel content in rechargeable batteries, we believe that rechargeable battery industry players on both the demand side and the supply side will actively seek to secure supply chains for nickel. In keeping, domestic firms will likely devise various related strategies such as investment in nickel makers and/or nickel mines.

Nickel becoming increasingly important

Lithium, nickel, cobalt and manganese are all essential for rechargeable battery production. Amongst these, nickel is drawing particular attention as demand for it is expected to explode in line with growing demand for high-nickel content rechargeable batteries. In fact, nickel content in rechargeable batteries is already on the rise: The share of the US market for EV batteries containing only 33% nickel content is declining (2018: 6% → 2019: 5% → 2020: 2% (accumulated in October), whereas that for EV batteries with 60% nickel content is upping (2018: 9% → 2019: 15%→ 2020: 19%).

Of note, the higher the nickel content in rechargeable batteries, the higher the battery energy density (based on NCM)—in detail, 33% nickel content: 201Wh/kg → 60%: 228Wh/kg → 90%: 277Wh/kg.

Both supply and demand side to compete fiercely over nickel

We believe that rechargeable battery industry players on both the demand side and the supply side will actively seek to secure supply chains for nickel. To this end, Tesla has signed contracts with a number of mining companies to supply nickel, and LG Energy Solution is seeking to establish a nickel mining JV (based on media) with Indonesian mining company ANTAM.

Future nickel demand expansion is to be driven by rechargeable battery demand growth. Over 2021~2025, demand for nickel for use in rechargeable batteries is projected to increase at a CAGR of 16%, outpacing the 3% overall growth rate for nickel. That said, supply-demand conditions for Class 1 Nickel (the type of nickel used in rechargeable batteries) should be tight for a lengthy period to come. Accordingly, stable procurement of nickel will likely be a determining factor in gaining a competitive edge in the rechargeable battery industry. As part of their strategies to secure nickel, we expect related domestic firms to seek long-term procurement contracts, and to buy up equity stakes in nickel makers and/or nickel mines.
 

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