The nickel market is shifting quickly, largely because demand for battery-grade nickel, particularly for electric vehicles (EVs), is on the rise. As the push for cleaner energy increases, supply chains are feeling the strain to deliver both the right quality and enough supply. A mix of new trends and familiar challenges is now shaping what’s next for this essential industry.1-5
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An Overview of the Nickel Market
Nickel is crucial for a low-carbon future and achieving the United Nations Sustainable Development Goals (SDGs) due to its vital role in clean energy technologies. It has gained attention from the European Union (EU), China, and the United States of America (USA) due to its distinct chemical and physical properties.
Nickel is commonly used in stainless steel and lithium-ion batteries for EVs and energy storage. From 2000 to 2022, global nickel consumption reached 62 Mt, 40 Mt from mining and 22 Mt from recycling, indicating growing demand.1
Despite having over 350 Mt of nickel resources, with 130 Mt economically and technologically viable, supply chain risks persist due to geopolitical instability and reliance on key regions.
Indonesia and the Philippines produced 60% of global nickel in 2023 but face natural disasters and policy uncertainties. Other resource-rich countries such as Australia and Brazil face barriers like environmental rules, high costs, and poor infrastructure.
Although technology development may boost reserves, the nickel supply chain remains emission-intensive, with complex approvals and sustainability concerns slowing project development and threatening long-term supply stability.1
The Key Trends in the Nickel Market
Nickel demand has surged due to its use in battery cathodes. From 2019 to 2023, total nickel consumption rose by 32%, with battery sector demand rising over 200%, increasing its share from 5% to 15%.
Although stainless steel remains dominant in the market, battery demand with stricter purity needs is reshaping supply chains. By 2050, over 50% of nickel could be used in batteries.
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In a net-zero emissions scenario, aligned with limiting global warming to 1.5 °C, total nickel demand could double to 6,702 kt per year by 2040, with EV demand growing tenfold.2
Battery cathode active materials (CAM) depend on high-purity chemical precursors. For nickel-containing chemistries, this includes nickel sulfate.
Geologically, nickel occurs in laterite and sulfide ore types. Historically, nickel sulfate was produced from two intermediates: nickel matte and refined nickel, derived through sulfide smelting. Nickel matte containing 50% nickel comes from sulfide ore processing and can be refined into 99.8% pure nickel briquettes/powders for stainless steel/battery-grade sulfate. However, high-grade sulfide resources are depleting, with few new discoveries.2
Recent advances have enabled the use of nickel laterite deposits, especially in Indonesia, to produce intermediates for nickel sulfate. Rotary kiln electric furnaces (RKEFs) convert laterites into low-grade products such as nickel pig iron (NPI) and ferronickel (FeNi). Since 2021, Chinese-owned Tsingshan and others have begun converting NPI and FeNi into nickel matte, enabling sulfate production similar to sulfide-derived methods.2
Nickel sulfate production is increasingly relying on mixed precipitates from high-pressure acid leaching (HPAL) of low-grade laterite ores, known as laterite leaching (LL).
HPAL produces mixed hydroxide/sulfide precipitates (MHP/MSP), with MHP output exceeding 250 kt in 2023 and projected to grow to 600 kt by 2027, driven mainly by rapid development in Indonesia. Though HPAL technology has existed since 1959, like in Moa Bay, Cuba, its complexity and high capital costs (over $100,000 per ton) have limited its adoption.2
Recent projects outside Indonesia, including Goro, Ravensthorpe, Ambatovy, and Ramu, are facing long ramp-ups and high costs. However, Indonesia’s HPAL projects supported by Chinese investment and expertise now achieve costs below $35,000 per ton. For instance, the Obi Islands project (PT Halmahera Persada Lygend) ramped up in just 12 months using a flowsheet similar to the Chinese-owned Ramu plant. Strategic siting in Morowali and Weda Bay industrial parks further reduces costs.2
In 2019, most nickel sulfate was produced via matte and mixed precipitate intermediates, 20% was from scrap, and 20% was refined metal dissolution. In 2023, class 1 nickel dissolution was limited due to increasing intermediate production and the higher refined metal feedstock cost. Nickel sulfate production exceeded 500 kt and surpassed demand in that year.2
The shift from cobalt-rich batteries has increased demand for high-nickel chemistries, with nickel cobalt aluminum (NCA) and nickel manganese cobalt (NMC) batteries containing 80% and 60–80% nickel, and newer NMC types nearing 90%.
Nickel improves energy density and lowers costs, extending EV range. Most lithium-ion (Li-ion) batteries now rely on nickel, which is also used in energy storage systems for renewables. Global cathode material producers are ramping up NMC output.
Nickel’s value also drives Li-ion battery recycling for reuse in new batteries.3,4 Indonesia, home to the world's largest nickel reserves, is prioritizing the development of its nickel supply chain. Future growth in nickel sulfate production will largely come from processing Indonesian laterites into matte or mixed hydroxide precipitate.2
Nickel Market Challenges
Nickel demand could be significantly reduced if nickel-free lithium iron phosphate (LFP) batteries continue gaining market share.
In 2022, NMC batteries led with a 60% market share, followed by LFP at under 30%, and NCA at around 8%.
LFP’s growth, its highest in a decade, is driven by Chinese original equipment manufacturers. About 95% of LFP batteries for electric light-duty vehicles were used in made-in-China vehicles, with BYD accounting for 50% and Tesla 15%.
Tesla’s LFP use rose from 20% in 2021 to 30% in 2022, mostly from Chinese manufacturing. However, LFP uses iron and phosphorus, offering lower energy density than NMC.4,5
The nickel supply chain is increasingly concentrated in Indonesia and China, raising supply disruption risks. Over 70% of nickel sulfate is produced in China, which relies on intermediates from Indonesia. Around 93% of matte and 63% of MHP imported by China in 2023 came from Indonesia.
Chinese companies dominate Indonesian nickel production. In 2023, they produced 84% of the country's battery-grade nickel, a share expected to fall but remain above 50% in the coming decade. By controlling nickel sulfate production and lateritic ore processing, China holds a strong position in the supply chain.
Diversifying will require building end-to-end capacity—mining, refining, and battery components—outside China. Despite growing Western investment in Indonesia and elsewhere, reliance on Chinese materials will likely continue due to long setup times for new facilities.2
Future Indonesian nickel supply comes from laterites, using carbon- and coal-intensive processes. The laterite smelting and sulfidation (LSS) pathway emits significant SO₂ and is more energy-intensive than leaching, potentially giving EVs with nickel batteries a higher social cost than combustion vehicles.
HPAL processing also generates 1.4–1.6 tons of fine waste per ton of nickel. While dry stacking is proposed for waste management, it is costly and risky in wet climates.
Rapid supply growth from Indonesia has lowered nickel prices from $48,000/t in March 2022 to $16,000/t in March 2024, forcing closures of higher-cost projects such as IGO, BHP, and First Quantum projects in Western Australia.2
Conclusion
The global nickel market is facing a fundamental moment. Demand is climbing fast—fueled largely by the boom in electric vehicles and the broader shift toward clean energy—but the supply side is looking increasingly fragile and concentrated.
Indonesia now dominates laterite-based production, while China controls most of the refining and nickel sulfate output. At the same time, new technologies, such as the growing use of LFP batteries, could start to limit nickel’s role in future battery designs.
Balancing sustainability, supply security, and cost-effectiveness will be critical. Better processing of tech, a more diversified supply chain, and stronger environmental standards are needed if nickel is going to stay relevant in a low-carbon future.
The direction this market takes will depend on innovation and investment, as well as how well the industry can respond to shifting market pressures and growing environmental expectations.
References and Further Reading
- Su, C., Geng, Y., Van Ewijk, S., Borrion, A., & Zhang, C. (2025). Uncovering the evolution of the global Nickel cycle and trade networks. Resources, Conservation and Recycling, 215, 108164. DOI: 10.1016/j.resconrec.2025.108164, https://www.sciencedirect.com/science/article/abs/pii/S0921344925000436
- Bhuwalka, K., & Olivetti, E. Nickel Market Dynamics and the Security of the Battery Supply Chain. [Online] Available at https://www.strausscenter.org/wp-content/uploads/Nickel_Memo_Bhuwalka_Olivetti-Google-Docs.pdf (Accessed on 27 July 2025)
- Nickel in batteries [Online] Available at https://nickelinstitute.org/en/nickel-applications/nickel-in-batteries/ (Accessed on 27 July 2025)
- Nickel for the energy transition [Online] Available at https://www.energy-transitions.org/wp-content/uploads/2023/07/ETC_Materials_Factsheet_nickel.pdf (Accessed on 27 July 2025)
- Trends in batteries [Online] Available at https://www.iea.org/reports/global-ev-outlook-2023/trends-in-batteries (Accessed on 27 July 2025)
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