FOUR years after nickel moved into surplus, owing to massive new supply from Indonesia, prospects are beginning to look up.
A deficit emerged in the nickel market during the third quarter of last year, and while analysts believe the metal will most likely maintain a slight deficit, it is nonetheless heartening news for Thakadu Battery Materials, a nickel sulphate manufacturer near Rustenburg.
Thakadu CEO Ruli Diseko says that, alongside improved nickel market prospects, geopolitical factors are giving a potential new lift to electric vehicle (EV) adoption after a period of slowing demand growth.
Thakadu, a privately owned company, produces nickel sulphate, a chemical used in EV batteries, from feedstock supplied by Sibanye-Stillwater. The terms of their relationship are confidential, but in essence Thakadu buys nickel by-product from Sibanye-Stillwater’s platinum group metals (PGM) production, through its base metals refinery, and refines it into about 30,000 tons a year of high-purity nickel sulphate.
Last month, Thakadu launched an ultra-pure version, which now accounts for all its output. Diseko says it will help Thakadu sell into Europe, which is beginning to get its act together on EV supply chains.
So three forces – an improved nickel market, better demand drivers for EVs, and supply chain factors – ought to combine to give Diseko’s Thakadu a welcome lift. The latter two are a consequence of rising geopolitical tensions, says Diseko.
He says EVs were initially sold as a way to save the environment, but buyers are now increasingly motivated by energy security. “Look what’s happening in the Middle East. We need different options,” he says in an interview.
“Europe is developing now; a lot of their battery factories are coming up. Some of the big Asian battery manufacturers have set up in Poland, Bulgaria and so on.”
While Thakadu is locked into long-term contracts for 80% of its product, the balance can be used for spot sales or to win new customers in Europe. Typically, the buyers are carmakers and battery manufacturers. “We would use that 20% to start sending product to those new guys, because they weren’t there two or three years ago,” he says.
Thakadu also has scarcity value. Diseko says it is one of the only companies outside China producing nickel sulphate of this quality. Meanwhile, mixed hydroxide precipitate (MHP), the Indonesian intermediate that Chinese refiners use to make rival nickel sulphate, is becoming more expensive. Reagent supply constraints and Indonesian rule changes that now make producers pay for the nickel in ore and for cobalt credits are pushing up costs.
That is good news for the South African government, which is keen to promote beneficiation through new minerals legislation as it feels there is scant evidence of it.
While 30,000 tons of ultra-pure nickel sulphate is hardly enough to move world markets, there is potential for expansion. Under its agreement with Sibanye-Stillwater, all the nickel by-product from the group’s base metals refinery reports to Thakadu’s plant. In June, Sibanye-Stillwater unveiled plans to spend about R20bn on its South African PGM operations.
“If they [Sibanye-Stillwater] increase their capacity utilisation, the by-product also increases,” Diseko says. “Just by virtue of them increasing throughput, we can increase our capacity utilisation and output, because our plant matches the full capacity of their PGM operations.”