Why Vanadium and Nickel?

Energy storage

As economies in both the developed and developing world move to lower carbon, renewable energy generation, the demand for energy storage options is rapidly increasing globally. In the US alone, the capacity of energy storage has been growing at around 50% per annum for the last five years. This explosion in the storage industry is driving demand for battery metals including vanadium and nickel. 

Established market

The vast bulk of vanadium today is used in the production of steel, with more than 90% of global vanadium supply consumed by Chinese steel mills. Vanadium plays an important role in steel production, serving to strengthen steel alloys used in construction, machinery, aerospace and aviation.

Steel production has grown steadily over the past few decades, and with that has come increased demand for vanadium. In addition, new rules and regulations requiring use of higher strength steel in construction and other markets, has led to higher utilisation of vanadium in steel production.

This was particularly the case in China, where the tragic Sichuan earthquake in 2008 led to new standards for the minimum strength of steel used in construction from 2011. The standards were further increased in 2018.

In addition to use in steel, vanadium also is used in various chemical applications as well as in batteries – in particular vanadium redox batteries, which could potentially revolutionise large scale energy storage.

China, Russia and South Africa account for almost all global vanadium production, which totalled around 80,000 tonnes in 2018. Most vanadium is produced as a byproduct of magnetite or uranium processing, with the world’s largest mines historically being in South Africa’s Bushveld region.

According to the US Geological Survey, global resources of vanadium exceeds 63 million tons, making it one of the most abundant minerals on earth. Nevertheless, according to some forecasts, demand for vanadium is expected to double over the next decade and use in batteries is forecast to grow substantially.

Vanadium redox flow battery (VFRB)

VRFB are rechargeable flow batteries that are used mainly in large scale industrial applications. These batteries have a number of unique features, including that they are infinitely rechargeable, have no capacity loss over time, are not flammable and can easily be scaled for large applications.

According to metals research firm Roskill, that vanadium demand in VFRB markets could rise to 31,000 tonnes by 2025, which would amount to a very sizable increase in demand.

Forecast deployment of vanadium redox flow batteries.
Source: BNEF

Nickel

The long term outlook for the nickel market remains very favourable due primarily to continued demand for stainless steel, but also because of anticipated strong growth in nickel utilisation in batteries – in particular in electric vehicles.

Nickel is a vital component in batteries, most commonly in nickel cadmium batteries, but more recently in lithium ion batteries which are used in a vast array of applications, from power tools and cameras to televisions and mobile phones, and importantly – electric vehicles.

Nickel plays an important role in batteries because it allows higher energy density and greater storage capacity, and recent innovations in battery technology are increasing the utilisation of nickel in each battery.

According to the International Energy Agency, electric car deployment has been growing rapidly over the past ten years, with the global stock of electric passenger cars passing 5 million in 2018, an increase of 63% from the previous year. Around 45% of electric cars on the road in 2018 were in China – a total of 2.3 million – compared to 39% in 2017. Europe accounted for 24% of the global fleet, and the United States 22%.

According to the IEA, global electric car sales are forecast to reach 23 million by 2030 and the stock will exceed 130 million vehicles (excluding two/three-wheelers). This will in turn lead to a dramatic increase in demand for nickel.

According to research firm Fastmarkets, 500,000 tonnes of refined nickel will be used annually in lithium-ion (Li-ion) batteries for EVs by 2025, up from 100,000 tonnes in 2018, and that estimate may increase as the new format nickel-cobalt-manganese (NCM) 8-1-1 battery, which uses a higher proportion of nickel, becomes more widely adopted.

Stainless steel
Use of nickel in stainless steel accounts for approximately 70% of total demand and China accounts for approximately 50% of that sum. China’s stainless steel output increased by 9.4% year on year to 29 million tonnes in 2019 and while growth is forecast to slow, it is expected to continue to rise in 2020.

China’s Antaike recently estimated that the global nickel market would continue to be in deficit in 2020, although the amount of the deficit would reduce to around 20,000 tonnes.