CRU: Nornickel to Help Fill Class 1 Supply Gap, but More Investment Needed
9 July 2019
Nickel pig iron has dominated growth in the supply side of the nickel market in recent years. This year global NPI production is forecast to rise to 927kt equal to 39% of global production driven by rising output in both China and Indonesia.
Class 1 nickel is used in both the stainless and non-stainless sectors but this growth in NPI has curtailed the usage of class 1 in stainless. Nonetheless, given our demand growth forecast from the battery sector, chiefly driven by electrification in automotive markets, there is a growing need for additional class 1 units in the medium-to-longer term.
Over the past few years, CRU has invested a large amount of time and resources into developing in-house long-term modelling capabilities for the automotive sector. This work has been undertaken not only to support our analysis of traditional automotive commodities like steel and aluminium, but also to shed light on the development and growth of the nascent electric vehicle (EV) sector and to better understand the resultant long-term impact for a wide range of commodities including cobalt, lithium, nickel, graphite and PGMs.
In our latest Battery market outlook, we forecast nickel demand in batteries to rise to over 1.1M tonnes by 2030. As the chart shows, after assuming for the minimum requirement for class 1 nickel from stainless there is a large gap opening for new class 1 units.
Nornickel class 1 production to grow as demand booms
One of the leading producers of class 1 nickel is Nornickel (formerly known as Norilsk nickel) which is positioned to grow production at a time when demand from the EV sector will accelerate. CRU recently visited some of Nornickel's production assets forming part of the Polar complex. The visit enables us to get a clearer picture on some of the planned investments the company is looking to make and how these will influence the supply side of the market as demand for class 1 material undergoes a period of pronounced change.
The immediate growth option the company is pursuing is the development of the South Cluster and an increase in its Talnakh concentrator capacity. The South Cluster mining project is expected to be commissioned in 2021-2022 and will eventually produce 9M tpy of ore by 2027. The cost of the project is estimated at RUB45bn ($670M). The project will be a large producer of PGM.
Read the full story: https://www.crugroup.com/knowledge-and-insights/insights/2019/nornickel-to-help-fill-class-1-supply-gap-but-more-investment-needed/
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