As the U.S. Geological Survey (USGS) prepares to update its list of critical minerals—a rundown of 35 minerals deemed critical to the economic and national security of the United States—industry and analysts are quietly anticipating that nickel will be part of the updated list.
Released in May 2018, the list defined a critical mineral as one that is essential to U.S. economic and national security; from a supply chain that is vulnerable to disruption; and serves an essential function in the manufacturing of a product, the absence of which would have significant consequences for the U.S. economy or national security.
Yet while the United States has a nickel import reliance that is as high as some of the other minerals on the list, its import sources—allied nations, most notably Finland, Australia, Canada, and Norway—make up the majority of its imports. These four countries account for 68 percent of U.S. nickel imports.
However, much has changed since 2018. Governments worldwide are making bigger environmental commitments to reduce emissions, with vehicle electrification as a core policy. Moreover, the ongoing supply chain disruptions that were sparked by the COVID-19 crisis has had the Biden administration looking for ways to shore up supply chains for industries it considers crucial to future American economic prosperity—with batteries and electric vehicles (EVs) among those industries.
In the administration’s sweeping 100-day supply chain review, minerals vital for EV battery production—particularly lithium, cobalt, and nickel—are singled out as especially vulnerable. In the report, Class 1 nickel is considered a primary supply chain vulnerability, and lists a series of recommendations to secure the nation’s nickel supply.
The administration’s review also notes the potential for a major shortfall in the next 3-7 years. Minimal resources here at home mean the United States cannot meet domestic demand. The United States holds just 0.124 percent of the world’s nickel reserves, and represents just 0.52 percent of global production. As a result, the country had a 47 percent net reliance on nickel imports as of 2019—a number that has likely grown with increased demand.
But while it is a vital mineral for EV battery production, the majority of nickel demand currently comes from the stainless steel sector and demand from that industry for nickel has been “phenomenal” so far in 2021, according to Bank of America. In an August research note, the bank forecast a deficit of 41,000 metric tons this year, adding that miners must “produce more Class 1 and perhaps less Class 2 nickel to make sure the metal will not turn into a constraint to the EV industry.”
EV automakers are keen to source more nickel. On a July 2020 post-earnings call, Tesla CEO Elon Musk said, “Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way.”
Yet amid the calls for greater production, the world’s largest producer is restricting exports. To promote its nickel processing sector, Indonesia has banned exports of the mineral. While the Indonesian government recently lifted the ban on other unprocessed ores, the ban on nickel remained firmly in place as the country seeks to develop its EV supply chain.
Adding nickel to the critical minerals list would ensure a stronger government focus on securing supply. The Biden administration’s 100-day review contains a variety of recommendations, from supporting nickel recovery from recycling and unconventional sources to investing in nickel processing with allies.
Gaining government recognition as a critical mineral could act as a spur not just for current allied import partners, but also for developing a secure EV and battery supply chain that works in our national interest.