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Chinas electric vehicle battery supply chain dominance enhanced with nickel production innovation

There has been further buoyancy in the battery market after an executive order from US President Joe Biden two weeks ago for a probe into the diversification of American supply chains of vehicle batteries, semiconductors, rare earth and pharmaceuticals.

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Nio enhances production efficiency amid rising orders for its electric-powered SUVs

Nio enhances production efficiency amid rising orders for its electric-powered SUVs

Tsingshan’s Australian partner in Indonesia, Nickel Mines, said the success in turning nickel pig iron into nickel matte through the “rotary kiln electric furnace (RKEF)” method was evidence of market leading innovation.

“The potential for RKEFs to produce a nickel matte for use in the rapidly growing battery supply chain has long been spoken about, so it comes as no surprise to us that Tsingshan is now set to establish this as a commercially viable option,” Nickel Mines’ managing director Justin Werner said.

Tsingshan said it has the capability to supply the high-grade nickel matte on a regular basis. The product can be converted into battery-grade nickel sulphate, which is a crucial raw material for the production of nickel-bearing lithium-ion batteries used in electric vehicles.

The boom in the industry has led to a sharp demand rally, not just for nickel, but for all metals used in electric vehicle batteries, including lithium and rare earths.
The electric vehicle market outlook remains good, but Tsingshan’s new technology means more raw material choices for nickel sulphate producers to choose fromSally Zhang
Tsingshan’s new technology could potentially be a game-changer to the battery supply chain by lifting the battery-grade nickel supply, said Sally Zhang, an analyst with Shanghai-based pricing and research group Fastmarkets.

“The electric vehicle market outlook remains good, but Tsingshan’s new technology means more raw material choices for nickel sulphate producers to choose from,” Zhang said she was told by a Chinese nickel sulphate producer.

This is, added Zhang, welcome news for the Chinese new energy vehicle sector, which enjoyed record sales last year.

Sales in 2021 are expected to continue to rise to 1.8 million units after 1.37 million units were sold last year, the China Association of Automobile Manufacturers said in January.

The strength in non-Chinese electric vehicle markets around the world is also showing no signs of slowing.

When the world is under pressure to eliminate [greenhouse house gas] emissions, it appears that Tsingshan has gone in the opposite directionJustin Cochrane

In the same week, Tesla said it had become an industrial and advisory adviser to the French overseas territory of New Caledonia, which is one of the largest nickel miners in the world.

But some are not optimistic about Tsingshan’s new offering, particularly regarding the uncertainty surrounding its supply and its longevity, given the environmental consequences of its production.

Canadian battery metals asset investor Nickel 28 said the elevated level of greenhouse house gas emissions in converting nickel matte from nickel pig iron would turn away prospective buyers, particularly those from North America and Europe.

“When the world is under pressure to eliminate [greenhouse house gas] emissions, it appears that Tsingshan has gone in the opposite direction. I’m not sure how this can be acceptable to Western original equipment manufacturers, and especially the likes of Elon Musk and Tesla who are publicly committed to carbon neutrality in their products,” Nickel 28 chief executive Justin Cochrane said.

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Inside Chinese electric vehicle maker Xpeng's factory in Zhaoqing city

Inside Chinese electric vehicle maker Xpeng's factory in Zhaoqing city

In China, some battery markets also remained cautious, Fastmarkets’ Zhang added.

“The nickel [futures] market is responding very fast to the news, but there are still lots of uncertainties, such as costs. Is it a more competitive price against other raw materials? Also how many producers will upgrade their production lines to use matte for [nickel sulphate] production?” a battery producer told Zhang.

Critical materials supply chain research house Roskill agreed with both issues, but said even if the supply was not viable in the long-term, Tsingshan could at least provide a reprieve to global nickel shortage concerns.

“This development could offer nickel sulphate producers a new feedstock option, diversifying the raw material choices and thus easing feedstock tightness for the battery industry, at least in the short-term,” Roskill analysts Jack Anderson, Ying Lu and Olivier Masson said.

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