nickel

With demand for critical minerals projected to increase dramatically against the backdrop of geopolitical tension and strained supply chains, the European Union has released its long-awaited action plan to “ensure the EU’s access to a secure, diversified, affordable and sustainable supply of critical raw materials.”

The Critical Raw Materials Act (CRMA) presented to lawmakers in Brussels on March 16, includes a comprehensive set of actions aimed at shoring up European critical mineral supply chains.

At the EU level, the CRMA would streamline the permitting process for raw materials projects and allow for selected “Strategic Projects” to benefit from support for access to financing and shorter permitting timelines (24 months for extraction permits and 12 months for processing and recycling permits).  The Act also requires EU member states to develop national programs for resource exploration.

An updated critical raw materials list is complemented by a list of “strategic raw materials” deemed “crucial to technologies important to Europe’s green and digital ambitions and for defense and space applications, while being subject to potential supply risks in the future.”

The Act also sets forth clear benchmarks for domestic capacities to diversify critical mineral supply by 2030:

• At least 10% of the EU’s annual consumption for extraction,
• At least 40% of the EU’s annual consumption for processing,
• At least 15% of the EU’s annual consumption for recycling,
• Not more than 65% of the Union’s annual consumption of each strategic raw material at any relevant stage of processing from a single third country.

Followers of ARPN will be interested to learn that the Act designates copper and nickel, metals ARPN has long considered indispensable for a number of reasons - not least because of their status as “gateway metals” yielding access to critical co-products – as critical raw materials.   With nickel added to the U.S. Government Critical Minerals List in 2022, copper remains the outlier – the most “critical non-Critical” as we have said in the past.

Writes Mark Burton for Bloomberg:

“Copper, one of the largest industrial-metal markets, wasn’t included in the EU’s last list of critical raw materials published in 2020. Copper’s diverse uses in manufacturing, construction and industry mean it’s widely viewed as a bellwether for global economic activity, but surging usage in electric vehicles and renewables are fueling fears of deep shortages in years to come.”

 Burton cites Glencore Plc. chief executive Gary Nagle who said that copper production would need to almost triple by 2040 if the world was to meet net zero carbon emission goals, with demand driving prices up by some 15%.

He adds:

“The nickel market, meanwhile, was rocked by an unprecedented price spike last year in the wake of the invasion of Ukraine, which threatened to throttle supplies from Russia. In future, the world will become increasingly reliant on supplies from Indonesia, where supply of the key battery metal is expanding rapidly.”

Nickel was added in the first official USGS update to the 2018 in 2022, bearing testimony to the fact that policy makers and other stakeholders increasingly acknowledge the challenges associated with providing reliable supplies of the critical minerals underpinning the “Tech Metal Era.”

The United States has yet to designate copper a critical mineral in its official government list, but an effort to correct this omission is underway with senators calling on the Secretary of the Interior to use her power to short-circuit the standard three-year review timeframe for the critical minerals list and change copper’s designation to “critical” ASAP.

In a letter to Secretary Deb Haaland in early February, U.S. Senators argued that “[b]y recognizing copper as a ‘critical mineral,’ the United States’ federal government can more effectively ensure a secure and reliable supply of domestic copper resources in the years to come at all points of the supply chain including recycling, mining, and processing. Given the enormous investment required, the time lag for new sources of supply, and projected demand, time is of the essence,” with Senator Kyrsten Sinema (Ind.-Ariz.) adding in an interview that this should be a “no brainer” because “[w]e have major gaps in both our ability to mine and process these minerals to ensure our energy security for the future, and the administration knows how important copper is to our domestic and national security.”

While European Commission President Ursula von der Leyen expressed confidence that the Act would “significantly improve the refining, processing and recycling of critical raw materials here in Europe,”observers lament that the act was “short on details and excluded important raw materials needed for the green energy transition such as zinc, silver and aluminum.” 

Comparing the CRMA to the U.S Inflation Reduction Act, which, in his view “was heavy on providing monetary firepower,” Colin Hamilton of BMO Capital Markets commented that the “the EU version has limited mention of funds but lots of policy rationale.”

The EU sees partnerships with “like-minded countries willing to strengthen global supply chains” as critical for EU strategy to succeed, and has proposed a “Critical Raw Materials Club,” a concept that was already part of U.S.-EU discussions earlier this year amidst European concerns that the U.S. Inflation Reduction Act could end up penalizing non-U.S. companies.  Against the backdrop of rising tension with China and Russia, in a joint statement earlier this month, U.S. President Biden and EU Commission President von der Leyen vowed to iron out such differences and pledged close cooperation on the critical minerals front.

The CRMA will now be discussed and voted upon by the European Parliament and the Council of the European Union before its adoption and entry into force, and ARPN will be sure to keep tabs on related developments.

When it comes to the metals and minerals underpinning the green energy transition, and specifically the EV battery revolution, much of the spotlight has fallen on lithium — and for good reason, as we will discuss in a forthcoming post.  However, as ARPN’s latest review of the “battery criticals” against the backdrop of the just-released latest iteration of the USGS Mineral Commodity Summaries (see our posts on graphite, manganese and cobalt) shows, they are equally “critical” in their own ways. The same holds true for the next battery critical in our lineup – Nickel.

While Nickel’s biggest traditional application is in alloying, particularly in the production of stainless and heat-resisting steels, it is its ability to achieve good storage capacity and higher energy density in batteries at an affordable cost that has sent the material’s star soaring in recent years.  It has also sent demand projections soaring, as nickel’s role in the EV revolution takes center stage.

At the end of 2021, nickel was only one of two new metals (the bulk of the expansion of the list from 35 to 50 minerals and metals was owed to the fact that the Rare Earths and Platinum Group Metals were now listed individually) to be added to the revised U.S. Government List of Critical Minerals. As Reuters’s Andy Home wrote at the time, while a “relatively benign supply profile kept nickel off” in the past, there are two reasons for including it on the updated list:

Pointing to the only domestic operating nickel mine in the U.S. and a single producer of nickel sulphate (which only produces Nickel as a co-product), Home said “the USGS has expanded its criticality criteria to look beyond trade dependency to domestic supply, particularly what it calls ‘single points of failure.’”

The second reason, according to Home, was “nickel’s changing usage profile from alloy in stainless steel production to chemical component in electric vehicle batteries.”  The rapid uptake of EVs as a key to the net-zero carbon transition has propelled nickel onto the critical minerals list, and has sent carmakers like Tesla and others to embark on missions to secure their own supply chains.

This push gained new urgency with Indonesia’s investment minister hinting at the possibility of Jakarta pursuing the creation of an OPEC-like cartel for nickel (and other key battery materials) last fall.  What is resource nationalism to some is supply risk to others, and that’s clearly part of the narrative around nickel.

The looming specter of battery material cartelization – first introduced earlier this year by South American Lithium producers — along with soaring demand scenarios provided fresh impetus for U.S. stakeholders to kick the buildout of domestic battery supply chains into high gear wherever possible, and efforts to this effect are currently underway.

According to USGS, in 2022, the underground Eagle Mine in Michigan – currently the only U.S. primary nickel mine in operation – “produced approximately 18,000 tons of nickel in concentrate, which was exported to smelters in Canada and overseas. Nickel in crystalline sulfate was produced as a byproduct of smelting and refining platinum-group-metal ores mined in Montana. In Missouri, a company produced nickel-copper-cobalt concentrate from historic mine tailings and was building a hydrometallurgical processing plant near the mine site.”

But with the Eagle project entering its final years, Michigan’s near-neighbor Minnesota holds promise for strengthening the U.S. domestic nickel supply chain.

The first recipients of federal funding disbursed under the 2021 infrastructure law to “supercharge” U.S. manufacturing of batteries for electric vehicles and the electric grid included the Tamarack Nickel Project in central Minnesota.  Talon Metals’ subsidiary Talon Nickel was one of 20 processing and manufacturing companies in 12 states chosen for a combined $2.8 billion award to “expand domestic manufacturing of batteries for electric vehicles and the electric grid.” 

Talon, which had previously signed a six-year agreement with Elon Musk’s Tesla under which Tesla would buy 75,000 metric tons of nickel concentrate, is looking to use part of the government grant to further its plans to construct an ore-processing facility in Mercer County, situated in the east-central region of North Dakota.

As ARPN has noted, the Tamarack project had previously been awarded  $2.2 million to fund an effort to achieve carbon capture by a process that mineralizes the carbon in rock – a process far more stable than methods that inject carbon, where it remains vulnerable to seepage and fracturing due to earthquakes. Bringing the supply chain home could not only inoculate the U.S. from trade issues on the critical minerals front but could also help reduce the industry’s — arguably large — carbon footprint.

The project is expected to start the environmental review process this year, a process that will be closely watched in particular in light of the Biden Administration’s recent decision to withdraw northeastern Minnesota’s Boundary Waters Canoe Area Wilderness from future mining – a move that could effectively kill another nickel and copper project, the proposed Twin Metals Minnesota underground mine, which has seen an ongoing legal and regulatory battle over the years.

A third proposed copper-nickel project in northeastern Minnesota — the PolyMet mine near Babbitt and Hoyt Lakes, just saw PolyMet Mining and Teck Resources finalizing a joint venture earlier this month to develop PolyMet’s copper-nickel deposit along with another larger ore body controlled by Teck. The project – a 50-50 venture, will be called NewRange Copper Nickel.

With the Tamarack and NewRange Copper Nickel projects situated in different watersheds, they are not affected by the Biden Administration’s Boundary Waters decision; however, as followers of ARPN well know, the not-in-my-backyard sentiment is a firm staple in the discourse over bolstering domestic supply chains, and brings us back to the “inherent irony” or “paradox of the green revolution” Reuters columnist Andy Home has invoked in several instances when covering critical mineral resource supply chains for the very materials underpinning the green energy transition — the paradox that “public opinion is firmly in favour of decarbonisation but not the mines and smelters needed to get there.”

As ARPN has previously pointed out – lofty goals of net carbon neutrality will not be achievable if we don’t embrace a push to secure critical mineral supply chains from “soup to nuts” to borrow a term used by Energy Secretary Jennifer Granholm.  That means “all of the above,” including domestic production and processing of metals and minerals like nickel.

After all, as we’ve noted often at ARPN, the first word in supply chain is… supply.

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