More low-carbon nickel the plea for 2022
Critical Minerals Alliances 2022 - September 12, 2022
Last updated 9/16/2022 at 7:55am
Tesla and other automakers clamor for nickel suppliers with low CO2 footprint
Tesla CEO Elon Musk's 2020 appeal to "please mine more nickel" served as a rallying cry for mining companies with projects positioned to deliver this critical battery metal into global markets. Going into 2022, however, the electric vehicle trailblazer's words were echoing in nearly empty warehouses as the lithium-ion batteries that power EVs are demanding more nickel than global miners can supply.
This supply-demand imbalance set the stage for an unprecedented series of events that sent nickel prices rocketing more than 250% over the course of two days in March to a brief altitude above US$100,000 per metric ton, or US$45 per pound.
This prompted the London Metal Exchange to halt nickel trading for more than a week to deal with the aftermath of the largest move in the price of a metal in LME's 145-year history.
While nickel prices settled down to somewhat normal levels after LME trading resumed, the shutdown shined a spotlight on the fact that the nickel market dynamics have shifted. As a metal primarily used as an ingredient in stainless steel and other alloys, nickel markets were more like the tides being moved by the pull of demand and the gravity of supply. Battery demand, however, has created tsunamic demand that LME was not prepared to deal with.
"They are very good at markets that are growing 5% per year or a bit more than that but when you have sudden changes in demand, which for the battery supply chain is upwards of 20% CAGR (compound annual growth rate) for the next decade, it becomes challenging for the exchange structure to deal with that kind of growth rates," Benchmark Mineral Intelligence Chief Data Officer Caspar Rawles told Data Mine North.
Musk's appeal to mine more of this metal reflects a growing concern that the global transition to EVs and the lithium batteries that power them will outpace the mining sector's ability to deliver new supplies of this metal traditionally used for stainless steel and other alloys.
In a scenario where global governments and industries achieve the 2-degree Celsius temperature increase limit outlined in the 2015 Paris Agreement, the International Energy Agency estimates that the EV and low-carbon energy sectors will need as much as 3.8 million metric tons of nickel per year by 2040.
At this rate of EV and clean energy adoption, IEA forecasts that global nickel demand for all sectors will hit 6.3 million metric tons by 2040, which is well more than double the 2.7 million metric tons produced worldwide in 2021.
This explosive demand for an element vital to global EV and green energy aspirations prompted the U.S. Geological Survey to add nickel to the 2022 list of minerals and metals critical to America.
Nickel miners, however, have been able to scale up production to meet the immediate demands of the burgeoning EV revolution. This quick response, coupled with recession concerns, has weighed on the price of nickel. By mid-year, nickel had dropped to around US$10/lb, which is where it was at going into 2022.
Low-carbon Nickel West
With competition for nickel expected to be fierce over the next two decades, global automakers and battery manufacturers have been cutting deals to secure ample supplies of this increasingly critical metal – the lower the carbon dioxide footprint, the better.
These deals range from contracts with some of the largest miners on the planet to agreements with junior mining companies with aspirations to deliver their first nickel into markets in the next few years.
Tesla has agreements across this entire spectrum, including a contract to buy low-carbon nickel from BHP's expanding Nickel West project in Australia.
"BHP produces some of the lowest carbon intensity nickel in the world, and we are on the pathway to net-zero at our operations," said BHP Minerals Australia President Edgar Basto. "Sustainable, reliable production of quality nickel will be essential to meeting demand from sustainable energy producers like Tesla Inc."
Under a mid-2021 agreement, the Anglo-Australian mining giant is supplying the electric automaker with an estimated 18,000 metric tons of this battery metal from Nickel West, a Western Australia operation that mines, refines, and then produces battery-grade nickel sulfate.
In addition to the nickel supply pact, BHP and Tesla have joined in a battery sustainability partnership that uses blockchain to trace raw materials from mines to EVs; exchanges technical information on battery raw materials production; and promotes the importance of sustainability in the resources sector, including identifying partners who are most aligned with BHP and Tesla's battery supply chain values.
"This is an alliance that will promote sustainability in the mining and resources sector," said Samantha Langley, principal of business development at BHP.
BHP and Tesla are also working together to identify opportunities to lower carbon emissions in their respective operations through increased use of renewable energy paired with battery storage.
"We are at the beginning of a revolution that will transform our world," Langley added.
Toyota Motor Corp. and Panasonic Corp. have also signed an agreement to acquire nickel sulfate from BHP's Nickel West operation.
The supply of nickel sulfate from Nickel West is expected to enable Prime Planet Energy & Solutions, a joint venture between Toyota and Panasonic, to develop batteries with a low-carbon footprint that will be supplied to EV manufacturers, including Toyota.
"I am delighted that we share the same values and have taken initiatives as 'one team' towards realizing a carbon-free green society," said Prime Planet Energy & Solutions President and CEO Hiroaki Koda. "We will work towards optimizing the overlapping value chains to be more competitive and to continuously improve efficiency in our related operations."
Canadian nickel from Vale
Tesla has also secured responsibly mined and refined Canadian nickel for its North American lithium battery gigafactories.
In May, Vale confirmed that Tesla had entered into a long-term contract to buy low-carbon nickel from the Brazilian miner's mines and refineries in Canada.
Much like BHP's Nickel West operation in Australia, Vale's Voisey's Bay mine and Long Harbour refinery in Newfoundland and Labrador, Sudbury operations in Ontario, and the Thompson mine in Manitoba produce some of the lowest-carbon nickel in the world.
The low-carbon footprint of Vale's Canadian nickel operations is due to the nickel sulfide ore at these mines requiring less energy to convert to battery-grade nickel sulfate than laterite ores that are the source of much of the world's nickel, and the abundance of hydropower delivered to the mines and refineries.
The lowered CO2 emissions from these operations makes the nickel Vale is producing in Canada attractive to Tesla and other EV manufacturers that want to minimize the CO2 emissions to manufacture vehicles meant to prevent additional greenhouse gasses from entering the atmosphere.
"We are pleased to have the leading electric vehicle manufacturer Tesla among our customers," said Vale Executive Vice President of Base Metals Deshnee Naidoo. "This agreement reflects a shared commitment to sustainability and shows very clearly we are the supplier-of-choice for low-carbon and high purity nickel products essential for long-range batteries."
CO2 absorbing US mine
While expanding current operations is the quickest and most effective means of scaling up global nickel supplies to keep pace with the EVs rolling off assembly lines, the rapid development of new nickel mines will also be required to fill the more than doubling of demand forecast in the coming two decades.
During Tesla Battery Day 2020, Musk famously said, "Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way. So, hopefully, this message goes out to all mining companies – please get nickel."
Talon Metals Corp. and Rio Tinto got the message and are jointly advancing toward the development of a mine in Minnesota that not only produces nickel and copper but also turns atmospheric CO2 into rock that can be stored for geological time periods – checking off several of the environmental, social, and governance (ESG) boxes of EV manufacturers seeking sustainable sources of battery metals.
This is one of the reasons why Tesla cut a deal to purchase 165 million lb of nickel in concentrate from Tamarack over six years, once the nickel mine goes into production.
The agreement is conditional upon Talon earning a 60% interest in Tamarack from Rio Tinto. Talon, which earned a 51% interest in the project last year, can increase its ownership to 60% through the completion of a feasibility study that details the proposed mine, and by paying Rio Tinto US$10 million.
Talon has committed to making every reasonable effort to be producing nickel at Tamarack by the end of 2025. This deadline could be extended by a year before Tesla has the right to look elsewhere for nickel to go into the lithium-ion batteries powering its EVs.
In the meantime, Tesla will work with Talon to optimize nickel concentrate grades and metal recoveries. The parties have also agreed to share in any additional economics derived from byproducts such as cobalt.
"This agreement is the start of an innovative partnership between Tesla and Talon for the responsible production of battery materials directly from the mine to the battery cathode," said Talon Metals CEO Henri van Rooyen. "Talon is committed to meeting the highest standards of responsible production that is fully traceable and that has the lowest embedded CO2 footprint in the industry."
A Carbfix for Tamarack
Carbfix, an Icelandic company involved with developing the carbon-storing technology that promises to shrink the CO2 footprint at Tamarack, was recently awarded $1 million from the XPRIZE contest backed by Musk.
A global future-positive movement supported by the Musk Foundation, XPRIZE provides cash awards to individuals, teams, and organizations that compete for the best ideas to tackle global challenges.
On the environmental front, the Musk Foundation is supporting the XPRIZE for Carbon Removal, with $100 million being awarded to teams with technologies that demonstrate the viability of economically removing billions of tons of CO2 from the atmosphere.
"The ultimate goal is scalable carbon extraction technologies that are measured based on the 'fully considered cost per ton' which includes the environmental impact," Musk said at the launch of XPRIZE for Carbon Removal. "This is not a theoretical competition; we want teams that will build real systems that can make a measurable impact and scale to a gigaton level."
Carbfix was one of 15 teams that were awarded $1 million to further advance their CO2-capturing technologies as they compete for the $80 million in grand prizes to be awarded in 2025.
"We've already been applying our method of underground CO2 mineralization for 10 years," said Carbfix CEO Edda Sif Pind Aradóttir. "Presently, we are aiming for significant upscaling of our tried and tested technology, an ambition which will be greatly supported by our XPRIZE success and our excellent partnerships in those projects."
Carbfix' tried and tested technology involves dissolving atmospheric CO2 in water and then injecting this sparkling mineral water into favorable rock formations to form solid carbonate minerals – a sort of antimining process that removes an element from the atmosphere and turns it into a mineral deposit in the lithosphere.
The potential to mimic this process at Tamarack drew Tesla's attention.
"The Talon team has taken an innovative approach to the discovery, development and production of battery materials, including to permanently store carbon as part of mine operations and the investigation of the novel extraction of battery materials," said Drew Baglino, senior vice president of powertrain and energy engineering at Tesla.
The Carbfix solution has also attracted the attention of the U.S. Department of Energy, which is investing $2.2 million to study the potential of applying this technology at Tamarack.
This type of carbon-capturing technology could make the minerals produced more attractive to electric automakers.
"Responsible sourcing of battery materials has long been a focus for Tesla, and this project has the promise to accelerate the production of sustainable energy products in North America," said Baglino.
CO2 absorbing nickel in BC
Carbfix is not the only XPRIZE-winning company that is developing technologies to store CO2 at nickel mines, and Tamarack is not the only North American operation with the potential to turn CO2 to stone while also producing battery metals.
Carbin Minerals, a Canadian company founded by University of British Columbia Professor Greg Dipple, is developing a technology that directly sponges CO2 out of the atmosphere into the tailings left behind from mining nickel, cobalt, and other metals.
This idea of locking up CO2 in this waste from mines that produce metals needed for the low-carbon future is not new to Dipple, who has been working on this technology with a team at UBC for 15 years.
The professor realized that ultramafic rocks – igneous rock with a high magnesium and iron content – are among the largest CO2 storing reservoirs on Earth. The carbon-absorbing potential of these rocks, however, is limited when they are buried away from the atmosphere.
It so happens that rich stores of nickel and cobalt are also found in ultramafic rocks. The mining and grinding of these rocks to a sand-like consistency to recover the lithium-ion battery metals maximizes the carbon sequestering potential of the rocks.
Tests recently carried out by Dipple and his team at UBC indicate that Giga Metals Corp.'s Turnagain project in Northern British Columbia could one day be home to such a greenhouse gas-absorbing mine.
A 2020 preliminary economic assessment outlines plans for a mine at Turnagain that could produce 33,215 metric tons of the nickel and 1,962 metric tons of the cobalt needed for EV batteries annually for 37 years.
The tailings left behind after recovering the battery metals at Turnagain are also really good at absorbing CO2 out of the atmosphere.
An initial four-week test carried out by Dipple showed a mine at Turnagain could absorb nearly as much CO2 from the atmosphere as is expected to be emitted per metric ton of nickel if an electric mining fleet was used to do the digging and hauling.
Dipple's testing indicates that these CO2 absorption rates would be higher under actual mining scenarios.
"During periods of optimal moisture and mixing, the sequestration rates increased up to three times the long-term average," he said.
The testing also showed that only about 10% of the brucite – a magnesium hydroxide mineral in ultramafic rocks at Turnagain that is responsible for sponging atmospheric CO2 – was consumed during the one-month sequestration test, indicating that Turnagain mine tailings would absorb more of the greenhouse gas with longer exposure.
Testing by Dipple also found that FPX Nickel Corp.'s Baptiste project in central BC has the potential to absorb more CO2 from the atmosphere than would be emitted to mine the nickel mined there.
A road-accessible project only about three miles (five kilometers) from rail and about 50 miles (80 kilometers) northwest of Fort St. James, BC, Baptiste hosts 5.37 billion pounds of nickel in 2 billion metric tons of indicated resource averaging 0.122% nickel.
A 2020 PEA outlines plans for a mine that would produce an average of 99 million lb of nickel annually over 35 years.
Testing by Dipple's team shows that direct injection of flue gas into the tailings could absorb up to 7.3 to 8.4 grams of CO2 per kilogram of material.
"These new results were achieved using representative tailings material generated from the 2021 metallurgical testing pilot plant program, highlighting our interest in moving beyond idealized experimental conditions to advance the scientific understanding of carbon mineralization in a practical, real-world context," said FPX Nickel President and CEO Martin Turenne.
FPX is carrying out two larger-scale tests – a six-month experiment on roughly 2.4 metric tons of Baptiste tailings material and a one-year test on approximately 300 kilograms of tailings material, designed to better understand the longer-term carbon sequestration potential of undisturbed tailings in the project region.