“We have really seen a broad surplus in the nickel market which is continuing to widen in the short term, that is likely to put further pressure on prices,” said Mr Fisher.
The biggest driver of the nickel price slump has been surging supply from Indonesia, which has grown its market share from 2 per cent in 2015 to 49 per cent of global nickel supply last year.
Indonesian nickel typically occurs in laterite geology, which was traditionally viewed as inferior to the sort of nickel sulphide geology that occurs in eastern Canada and the Western Australian goldfields because laterite geology requires more carbon intensive and acid intensive processing to extract the nickel.
Barely three years ago, the conventional wisdom was that nickel laterites would be mostly confined to supplying stainless-steel or class 2 markets, leaving nickel sulphide miners like BHP and IGO as best placed to supply class 1 nickel to battery makers.
But two processing breakthroughs in Indonesia have upended that conventional wisdom.
The first was the successful upsizing of an existing processing method called high pressure acid leaching (HPAL), where a combination of heat, pressure and acid are used to separate nickel and cobalt from other elements.
The second was achieved by the Indonesian arm of Chinese company Tsingshan, which created a new method of turning nickel pig iron [which contains less than 10 per cent nickel and is unsuitable for batteries] into nickel matte which contains closer to 50 per cent nickel and can be converted into battery grade nickel.
The Tsingshan breakthrough has effectively blurred the line between the class 1 and class 2 nickel markets, prompting miners like BHP to declare nickel markets as “structurally” changed.
“We are starting to see more overlap between the different sides of the nickel market and maybe less relevance of individual market dynamics,” said Mr Fisher.
Australian miners and politicians believe local nickel suppliers deserve a “green premium” because their nickel sulphides offer a cleaner path to battery grade nickel than Indonesia’s laterite miners.
But carmakers like Tesla are refusing to pay a premium for Australian nickel and Mr Fisher rejected the suggestion that all Indonesian nickel was “dirty”.
“Every [Indonesian] project is different, and every project is aiming at different levels of compliance. Some are doing very well and some are not doing so well,” he said