EV demand driving long-term nickel, cobalt outlook, Sherritt says

The demand for nickel and cobalt as battery materials for electric vehicles (EV) will keep their long-term bullish fundamentals intact, according to Canadian miner Sherritt International.

Over the past six months, numerous carmakers and governments have announced plans for significant investments to expand EV production capacity to meet growing demand, the company said.
Sherritt produces nickel plus cobalt by-product in Moa, Cuba, and Fort Saskatchewan, Canada.
“In 2020, more than 3.2 million EVs were sold despite the [Covid-19] pandemic. Industry observers estimate that the number of EVs sold in 2021 will grow by approximately 70%,” Sherritt said in its first-quarter production results on Wednesday April 28.
“As a result of Class 1 nickel’s unique properties, it remains the dominant metal in cathode chemistries being adopted by automakers,” the company added.
Nickel prices have pulled back from a multi-year high in February of $19,722 per tonne, a level last seen in September 2014.
The market closed above $17,000 per tonne for the first time since March 3 at $17,410 per tonne on April 28.
According to Sherritt, the pullback was principally driven by the announcement in early March by Tsingshan, a stainless steel producer based in China, that it plans to supply 100,000 tonnes of a nickel intermediate product amenable for use in EV batteries, starting in October 2021.
The initial supposition was that this development would address the shortfall in nickel supply needed for the surge in demand for EVs expected in the coming years, Sherritt said.
But since then, questions have been raised about Tsingshan’s process, Sherritt said.
These include the increased amount of carbon emissions its pyro-metallurgical process will create, the capital spend required to refine nickel matte to a purer form, and the reduced recoverability of by-product metals, which would increase production costs and reduce by-product credits.
Cobalt
Similarly, the Canadian company said, the outlook for cobalt over the long term remained bullish because demand from the EV sector in China alone was expected to grow annually by 26% until 2025.
Cobalt prices have risen this year, Sherritt said, on reports that consumers in China have started to stockpile inventory to take advantage of weak prices, in anticipation of stronger demand from accelerated growth of EV demand.
Fastmarkets’ latest price assessment for cobalt, standard grade, in-whs Rotterdam, was $20.50-22.00 per lb on April 29. This compared with $15.20-15.65 per lb a year earlier.
Sherritt reported first-quarter finished nickel production of 4,188 tonnes, up by 9% from the 3,836 tonnes produced in the first quarter of 2020. Finished cobalt production in the period was 477 tonnes, up by 19% year-on-year from 400 tonnes.
The company expected lower second-quarter finished nickel and cobalt production due to the annual maintenance shutdown of the refinery in Fort Saskatchewan.
This year’s shutdown will be a full-facility procedure, including all of the refinery and utility plants, which occurs once every six years. It will therefore continue for around 11 days instead of the usual five days, and has already been factored into the company’s production guidance for the year, the company said.
Sherritt expected to produce 32,000-34,000 tonnes of finished nickel and 3,300-3,600 tonnes of finished cobalt in 2021.

Andrea Hotter

ahotter@fastmarkets.com

Published

Andrea Hotter

April 29, 2021

18:08 GMT

New York