Lithium battery nickel industry report - who can replace russia's nickel mine

Nickel is the key material for the preparation of ternary cathodes, and the development of high-nickel ternary materials is inseparable from the promotion of high-nickel ternary precursors. We have learned about high-nickel ternary precursor companies in China from Top 5 high-nickel ternary precursor companies , let’s take a look at which nickel ore suppliers are available and who can replace Russia’s nickel ore export status.

What is the prospect of the Philippine nickel industry

SWOT analysis of Philippine nickel ore exports

Advantages: The output of nickel ore is second in the world; nickel ore can be directly exported (compared with Indonesia). It is close to China.

Disadvantages: The reserves of nickel ore are limited, and the grade is on a downward trend.

Opportunities: In April 2021, the Philippines lifted the ban on new mining agreements enacted in 2012, opening the door to investment in new mining projects.

The Philippine presidential election is imminent, and the current candidate with high voice, Marcos Jr., supports the development of the mining industry. If elected, he may further introduce preferential policies for the mining industry.

China is the largest importer of Philippine nickel ore, and Chinese nickel demand continues to grow.

Threat: Indonesia is the biggest competitor of the Philippines in Southeast Asia. If Indonesia can relax its nickel ore export policy, it may have a certain impact on the export of the Philippines. Attention should be paid to the new Philippine President’s China policy; if a large amount of Russian nickel flows into China, it will affect the export of nickel from the Philippines to China. Influences from other countries, including New Caledonia and Australia.

The grade of nickel ore producer Philippines is declining

The Philippines is the second largest nickel producer in the world. In 2021, the production of nickel mines in the Philippines is expected to be 370,000 tons, accounting for 14% of the world’s total.
Compared with Indonesia, the world’s number one (with an output of about 1 million tons, accounting for 36% of the world’s total output), and the world’s third-largest Russia (about 250,000 tons, accounting for 9% of the world’s total output).
According to the data, there are currently about 30 nickel mines in operation in the country.

However, the Philippines has limited nickel ore reserves, accounting for only 5% of the world’s nickel ore reserves, ranking fifth. In 2021, the reserve-to-production ratio of the Philippines will be only 13, far lower than the global average of 35, ranking last among the major nickel producing countries (Canada: 15; the United States: 19; Indonesia: 21; China: 23; Russia: 30; Australia: 131; Brazil: 160).

Heavy mining will also cause a drop in nickel ore grades. In 2019, SR Languyan Mining Corp, a major high-grade nickel ore producer in the Philippines, said it would close its mines in Tawi-Tawi province in the southern Philippines due to the near depletion of resources. According to statistics, in recent years, most of the nickel ore exported from the Philippines to China is of medium and low grade, and the export volume of high-grade nickel ore has declined.

Nickel ore is divided into two types: laterite nickel ore and sulfide nickel ore. The nickel ore produced in China is mainly nickel sulfide ore, while the imported nickel ore from the Philippines and Indonesia is mainly laterite nickel ore. Nickel sulfide ore has low smelting cost, but few resources and high mining cost, mostly located in high-latitude countries.

The laterite nickel ore is rich in resources and easy to mine, but it is difficult to extract and separate, and it is mostly located in tropical countries near the equator.
At present, laterite nickel ore accounts for 60% of global terrestrial nickel resources and 70% of global nickel ore production.

Mining policy is expected to usher in new opportunities

In the past decade, the Philippine government has imposed stricter controls on its mining industry due to environmental concerns. In particular, the tough measures of current President Duterte have made the Philippines’ nickel mine production unsatisfactory in recent years.

At present, the Philippine economy has been severely hit by the epidemic, and with Duterte’s term ending this year, we believe that the new president may deregulate the Philippine mining industry to stimulate local economic development.

The current mining regulation in the Philippines is the Philippine Mining Act of 1995 (Republic Act No. 7942). According to regulations, all mine resources in the Philippines are owned by the state, and any exploration, development, utilization and mineral processing activities are subject to government supervision and control. In 2012, then-President Benigno Aquino III signed Executive Order 79, a decree halting the issuance of mining licenses.

The current Philippine President Rodrigo Duterte has a tougher attitude towards the mining industry. When he was still a presidential candidate, he repeatedly warned the Philippine mining industry to “either abide by stricter environmental regulations or close the mines.”
Duterte was elected president of the Philippines in June 2016. As soon as he took office, he appointed Gina Lopez, a staunch environmentalist, as the secretary of the Philippine Department of Environment and Natural Resources, and immediately started an environmental review of 41 mines in the Philippines.

Since then, during the review period, a number of mines in the Philippines have ceased production. Finally, in February 2017, Lopez announced the closure of 23 mines, mostly nickel mines, and five other mines were ordered to suspend operations.

Therefore, in 2016, the production of nickel in the Philippines declined significantly, down 37% year-on-year compared with 2015, and the growth rate in the following years was not fast.

But recently, the policy of the Philippine nickel mining industry is ushering in a turning point. The Philippine government said the new mining project could bring the country as much as $2 billion in annual export earnings over the next five years.

In fact, after Gina Lopez resigned as environment minister in May 2017, the new minister Roy Cimatu relaxed a lot on the mining industry and resumed the operation of some mines one after another.

In April 2021, the Philippines lifted the nine-year ban on new mining agreements, opening the door to investment in its new mining projects, in an effort to stimulate the virus-hit economy (2020 Philippine GDP data fell 9.57% year-on-year).

What are the representative nickel companies in the Philippines

Nickel Asia SWOT analysis

Advantages: The largest nickel ore producer in the Philippines, with output accounting for about 40%-50% of the Philippines; its five mining areas are relatively scattered, which can reduce the seasonal impact of the rainy season; it has a stake in two Japanese Sumitomo hydrometallurgy projects.

Disadvantage: Nickel ore grade is low.

Opportunity: Exploration and development work is underway at the Dinapigue mine.

Threats: Products are mainly sold to China and Japan, or face overseas manufacturers such as Indonesia, Russia, New Caledonia, etc. to take a share.

About half of Nickel Asia’s raw ore production is exported to China

ckel Asia (NIKL.PS) is the largest nickel producer in the Philippines and owns five nickel mines, Rio Tuba, Taganito, Cagdianao, Hinatuan and Dinapigue. Among them, Dinapigue is still undergoing exploration and development work and has no output yet.

In addition, the company also holds 10% stakes in two smelters of Japan’s Sumitomo Metal Mining in the Philippines, Coral Bay (CBNC) and Taganito HPAL (THPAL). However, Nickel Asia nickel mines are of low grade. The average grade of five nickel mines’ current reserves is only 0.81% in wet tonnes, compared to 1.14% at Global Ferronickel.

Nickel Asia’s products include two categories of nickel ore and ferronickel. The company’s laterite nickel ore is divided into two categories according to the iron content. Less than 20% is Saprolite, more than 20% is Limonite, and Saprolite has a higher nickel grade.

Among Saprolite raw nickel ore, high-grade nickel ore is mainly sold to Pacific Metals in Japan (mainly engaged in the production and sales of ferronickel); medium-grade nickel raw ore is mainly sold to China and Japan. Limonite raw nickel ore can be divided into two categories: high iron content and low nickel grade. The former is mainly sold to China, and the latter is smelted in a smelter held by the company. In 2020, about 55% of the company’s nickel raw ore will be sold overseas, mainly to China, and the rest will be smelted in the country.

Production: In 2020, Nickel Asia mined a total of 16.04 million wet tons of nickel (7.52 million wet tons of Saprolite and 8.52 million wet tons of Limonite).

Based on its moisture content of about 30%-35% and its average grade, we estimate that it will contribute about 40%-50% of the Philippines’ nickel production in 2020.

Reserves and resources: As of the end of 2020, Nickel Asia has total nickel reserves of 290 million wet tons@0.81%Ni, proven/indicated resources of 370 million wet tons@0.82%Ni, and inferred resources of 110 million wet tons@0.79%Ni.

Global Ferronickel SWOT analysis

Advantages: The second largest nickel ore producer in the Philippines, with production accounting for about 10%-20% of the Philippines; smelter resources are deployed in China.

Disadvantages: Currently operating mines are concentrated in the Surigao area, and the rainy season is from November to March of the following year, which has a great impact on mining work.

Opportunities: The Cagdianao mine currently under development is only partially developed, and the reserves are expected to further increase; the associate company SPNVI owns the operation right of the Palawan Brookes Point mine, which has not yet been put into production, but can complement the Cagdianao mine in the rainy season.

Threat: All products are sold to China, or face competition from manufacturers in other countries such as Indonesia, Russia, and New Caledonia.

Global Ferronickel – the second largest nickel producer in the Philippines

Global Ferronickel Holdings (FNI.PS) is the second largest nickel ore producer in the Philippines. The company’s core business is the mining of its subsidiary Platinum Group Metals Corporation (PGMC) in the Cagdianao nickel mine in the Philippines (FNI holds a 99.98% stake in PGMC).

PGMC acquired the 4,376-hectare right to operate the Cagdianao mine (MPSA) in 2006, began mining work in 2007, and in 2016 acquired an additional 843 hectares of operation rights adjacent to the mine and extended the MPSA for 25 years. The current MPSA will be Expires in 2042.

PGMC has a total of 7 divisions in the Cagdianao mine, of which Nos. 2, 3 and 4 are being mined, No. 1 will enter the development stage from the exploration stage (exploration) in the first half of 2021, and the remaining No. 5, 6 and 7 are still in progress. exploration work.

59.45 million WMT Measured and indicated: 73.1 million DMT Inferred: 19.9 million DMT PGMC Nickel ore sales and reserves over the years, million wet tons.

Production: In 2020, PGMC’s nickel mine production is about 5.16 million wet tons, accounting for about 10%-20% of the Philippines. All of FNI’s raw nickel ore is sold to China, and its customers include Baosteel Group, Tsingshan Holdings, and Baiyin Nonferrous Metals.

In 2020, the company sold about 5.63 million wet tons of raw nickel ore, including 3.831 million wet tons of low-grade raw ore and 1.794 million wet tons of medium-grade raw ore.

Reserves and resources: As of the end of 2020, PGMC’s nickel ore reserves reached 59.45 million wet tons @1.14%Ni. In terms of resources, its proven/indicated resources are about 110 million wet tons @1.1%Ni, and the estimated resources are about 30 million wet tons.

Will the Philippines’ status be threatened

Will the Philippines’ status as the number one exporter of Chinese nickel ore be threatened?

Indonesia – the world’s largest supplier of nickel ore

Indonesia is the world’s largest supplier of nickel ore, and its nickel ore field has the advantages of abundant resources and high grades. Indonesia consists of more than 10,000 islands and has a typical equatorial maritime climate. Its core nickel ore is mainly located on Sulawesi Island, and other distribution areas include Halmahera Island, Obi Islands, West Papua Peninsula, etc.

According to data, in 2021, Indonesia’s nickel production and reserves will reach 1 million and 21 million tons, respectively, ranking first in the world, accounting for 36% and 22%, respectively. From 2015 to 2021, the production of nickel mines in Indonesia will increase from 130,000 tons to 1 million tons, with a CAGR of up to 40%.

Reserves also increased from 4.5 million tons to 21 million tons, with a CAGR of nearly 30%. In addition, according to the statistics of the Ministry of Energy and Mineral Resources (MODI) of Indonesia, nearly half of the laterite nickel ore resources in Indonesia have a grade higher than 1.7%, which has a relatively obvious grade advantage.

Russia – a big country of nickel sulfide

In 2021, Russia’s nickel mine production and reserves will be 250,000 and 7.5 million tons respectively, ranking third and fourth in the world. The nickel ore resources in Russia are all nickel sulfide ore, and the nickel sulfide resources and output are the first in the world.

Russian company MMC Norilsk Nickel PJSC (Nornickel for short) is Russia’s largest mining company, producing nickel, copper, palladium and platinum, as well as gold, coal and numerous by-products. Nornickel’s nickel production ranks first in the world, contributing almost all of Russia’s nickel smelting output, and has two major mining areas in Russia, Kola and Taimyr.

As of the end of 2020, the two major mining areas have a total nickel reserve of 740 million MT@0.88%Ni and a total resource of 2.59 billion MT@0.70%Ni. The nickel output in 2020 will reach 236,000 tons, accounting for 83% of Russia’s total output and 10% of global output. 9.4%.

In addition, Nornickel also owns a 50% stake in the Nkomati mine in South Africa, which will produce about 12,000 tons of nickel in 2020.

Canada is expected to replace part of Russian nickel

Canada is another major nickel sulfide paradise besides Russia, and its nickel ore is of high grade, attracting industry giants such as Vale and Glencore to invest.

According to data, in 2021, Canada’s nickel production and reserves will be 130,000 and 2 million tons, ranking sixth and seventh in the world, accounting for 4.7% and 2.1%, respectively.

As the world’s second largest nickel ore producer, Vale has three mining areas in Canada, Surdbury (Ontario), Thompson (Manitoba) and Voisey’s Bay. The three mining areas will mine nickel ore of 5.5 million MT@1.50%Ni in 2020, accounting for Vale’s 39% of full-year nickel production and about 60% of Canada’s total nickel production in 2020.

However, Vale Canada’s Sudbury and Thompson mines have been operating since 1885 and 1961, respectively, and their reserves, grades and production have continued to decline. In 2015, Vale produced nearly 180,000 tons of nickel, and by 2020 it has fallen to less than 100,000 tons.

In order to increase production, Canada plans to transfer its relatively new Voisey’s Bay mine from the current open-pit mining to the underground mining stage, and the annual output is expected to increase from the current 35,000 tons of nickel to 45,000 tons.

In terms of reserves, as of the end of 2020, Sudbury and Voisey’s Bay had a total of 79.6 million MT@1.59%Ni. The Thompson mine has not disclosed reserves data due to years of losses, but it is still in operation.

Currently, Vale Canada has smelters in Surdbury and Voisey’s Bay. The main smelting product is electrolytic nickel, which can be sold directly to North America by truck or to Europe and Asia by water.

Stainless steel manufacturing is currently the main downstream demand for nickel

Stainless steel is currently the main downstream demand for nickel

From the perspective of downstream fields, stainless steel is currently the largest application of nickel, accounting for more than 70%, and the global stainless steel demand shows a steady growth trend.

Downstream applications of stainless steel include metal products, tubing, shipping, power, and more. According to the metal composition, the mainstream stainless steels in the market can be divided into 200 series, 300 series and 400 series.

The nickel content of the 300 series is the highest, reaching 8%-10%, the nickel content of the 200 series is about 1%-5%, and the nickel content of the 400 series is the lowest, less than 1%. Nickel is an excellent corrosion-resistant material that enhances the rust and corrosion resistance of stainless steel.

According to the Stainless Steel Branch of the China Special Steel Enterprises Association, in 2021, the 300 series will account for the highest proportion of China’s crude stainless steel production, reaching 49%.

China is the world’s major stainless steel producer, producing 60% of the world’s stainless steel in 2020. Tsingshan Group is the largest stainless steel company in China.
In 2020, Tsingshan Group’s stainless steel crude steel output reached 10.8 million tons, with a market share of 36% in China and a global market share of 21%; Next is Taigang Stainless, with a market share of 14% in China and 8% in the world.

The future increase in nickel demand will mainly come from power batteries

We believe that the demand for nickel in the future will be mainly driven by new energy vehicles. In the medium and long term, the demand for high-nickel ternary lithium-nickel is forecasted, from 2018 to 2030 (ton) batteries will remain the main choice for passenger car power batteries due to their energy density advantages, especially for mid-to-high-end models. The lithium iron phosphate battery is expected to mainly occupy the low-end market due to its cost advantage.

Nickel sulfate is an important part of new energy vehicle batteries. It is estimated that the demand for battery nickel will increase from 110,000 tons in 2018 to over 1.5 million tons in 2030, with a CAGR of over 22%.

According to the content of nickel sulfate, it can be divided into electroplating grade and battery grade. Battery grade nickel sulfate is one of the main raw materials for ternary precursors, which are the key materials for the preparation of ternary cathodes.

Ternary lithium vs lithium iron phosphate: The biggest advantage of ternary lithium battery is its high energy density, which can improve battery capacity and vehicle endurance, but its cost is relatively higher, and its safety in high temperature environments is questionable. The advantages of lithium iron phosphate batteries are low cost and good thermal stability.

The energy density of the ternary battery system of the CATL is 160-206Wh/kg, and the lithium iron phosphate battery is 100-160Wh/kg. Before 2017, lithium iron phosphate had a slightly better market share due to its low cost.

However, in 2017, the state adjusted the subsidy policy for new energy vehicles, and for the first time included battery energy density as a subsidy reference indicator, and ternary lithium batteries with high energy density began to gradually dominate the market. However, since 2021, benefiting from the decline of the subsidy policy and technological iteration, the installed capacity of lithium iron phosphate has begun to accelerate again, and it will overtake ternary materials from July 2021.

In the same year, the number and scale of China’s lithium iron phosphate expansion announcements were significantly higher than those of ternary materials. January 2022, The installed capacity of lithium iron phosphate battery and ternary material battery is 8874 and 7300 MWh respectively.

Looking forward to the future, the thermal stability of ternary lithium batteries is expected to be solved through the improvement of technology maturity. And with the further improvement of the energy density of ternary lithium batteries, the performance improvement space of lithium iron phosphate is relatively limited.

Ternary lithium batteries are expected to narrow the gap with lithium iron phosphate batteries in terms of system cost. Therefore, we believe that in the future in the mid-to-high-end passenger car market, the advantages of high-nickel ternary lithium batteries are still relatively obvious. If you are interested in learning about China’s high nickel ternary cathode material companies, you can refer to Top 5 NCM811 high nickel ternary cathode material companies.