Nickel price slumps as global production soarsFirst Quantum Minerals Ltd. started production at what is set to turn into Africa’s biggest nickel mine, furthering Zambia’s aim of becoming a key supplier of battery metals for the electric vehicle revolution. The mine is expected to ramp up annual production to 32,000 tons of nickel over the next two years, according to First Quantum’s project manager Axel Kttgen. That would make Zambia the continent’s largest producer of the metal used in manufacturing batteries for EVs, the company said. "Nickel set to flood the LME, turning metal squeeze into glut"
That dynamic is set to shift as a result of new plants in China and Indonesia to convert intermediate forms of nickel into metal that can be delivered on the LME, the first of which was approved by the exchange this week. The plants could add as much as 200,000 tons of nickel capacity by the end of next year, according to Macquarie. That could boost LME-deliverable supplies by 35% compared to 2022 levels. A mining boom in Indonesia has caused a slump prices for those intermediate products. Nickel pig iron and ferronickel have been trading at around half the level of the LME price per ton of nickel, “something that is unprecedented in the history of the nickel market,” the Macquarie strategists including Jim Lennon wrote.
Now new plants are coming into production that will be able to convert those intermediates into LME-deliverable nickel metal. Led by Chinese companies like Tsingshan Holding Group Co., the largest nickel producer that was at the center of last year’s short squeeze, they will reduce China’s need to import nickel metal to close to zero by 2024, Macquarie said.