More Countries Declare Nickel as a Critical Mineral

A growing number of countries are classifying nickel as a critical or strategic mineral, sparking a worldwide effort to secure its supply. This development is leading to shifts in international trade, new policy implementations, and increased international cooperation.

The classification of nickel as a critical mineral is happening across the globe, with countries developing strategic mineral lists that include nickel. This trend has accelerated since 2022 with key developments in:

• Australia (December 2023).
• Canada (2022, updated September 2023).
• The European Commission (March 2024).
• The United States (2022 and 2023).
• Japan (2018).
• South Korea (February 2023).
• India (July 2023).
• China (2016).
• The United Kingdom (2021 and 2023).

“Nickel has been classified as a Critical or Strategic Raw Material by several countries,” said Paul White, Secretary-General of the INSG in its presentation recently at the Indonesia Critical Minerals Conference in Jakarta.

The increased importance of nickel stems from its role in traditional uses like stainless steel, as well as in new technologies, specifically in batteries for electric vehicles.

As the world transitions to renewable energy, the demand for nickel is expected to rise considerably, prompting government actions to ensure a reliable supply.

The Indonesian Ministry of Energy and Mineral Resources (ESDM) has designated 47 minerals, including nickel as critical, marking a significant step in the country’s resource management strategy.

This designation, outlined in Ministerial Decree No. 296.K/MB.01/MEM.B/2023, aims to secure raw material supply for domestic strategic industries and enhance the national economy, defense, and security.

According to United Nations Secretary-General António Guterres, “A world powered by renewables is a world hungry for critical minerals. For developing countries, critical minerals are a critical opportunity – to create jobs, diversify economies, and dramatically boost revenues. But only if they are managed properly. The race to net zero cannot trample over the poor. The renewables revolution is happening – but we must guide it towards justice”. The UN launched a Panel on Critical Energy Transition Minerals to support a fair and equitable transition that aims to ensure that countries and local communities benefit economically from these minerals while protecting the environment.

Key Factors Driving Nickel’s Critical Status:

• Economic Significance: Nickel is crucial for national economic development and industrial growth, particularly in clean energy technologies. Countries with abundant reserves seek to leverage them for economic gain and industrial development.
• Supply Risk: Nickel is vulnerable to supply disruptions due to geological scarcity, geopolitical factors, or concentrated supply chains.
• Lack of Substitutes: Nickel has limited or no viable substitutes in critical applications.
• Energy Transition: Nickel is vital for electric vehicle (EV) batteries and other clean energy technologies, driving increased demand.
• Industrial Development: Countries are using their nickel resources to become key players in the global battery industry and enhance domestic integration throughout the critical minerals and EV value chains.

National Strategies and Actions:

• National Strategies: Countries are implementing strategies to secure their nickel supply. For example, Australia has updated its list of critical minerals and created a new list of strategic materials, including nickel. Canada released a Critical Minerals Strategy in 2022, including nickel as a “prioritized” mineral on its Critical Minerals List.
• Strategic Designations: The European Commission has expanded its critical raw materials list, classifying nickel as a ‘strategic’ material. South Korea has also designated nickel as a strategic key item.
• Incentives: In the United States, nickel is included on both the United States Geological Survey and Department of Energy critical minerals lists. Minerals on the DOE list are eligible for Inflation Reduction Act (IRA) incentives.
• Trade Impacts: Indonesia, now the world’s largest nickel mining country, has increased its domestic processing and exports of refined nickel products, altering the global trade landscape. Indonesia has classified nickel as a critical mineral based on the Kepmen ESDM No 296.K/MB.01/MEM.B/2023 decree. This classification is due to nickel’s importance to strategic national industries, its value for the national economy and defense, the high risk of supply disruption, and the lack of suitable substitutes. Indonesia is also a founding member of the International Nickel Study Group (INSG).
• Downstream Processing: Indonesia has implemented export bans on raw nickel ore to promote domestic processing and refining, requiring mining companies to invest in local facilities. This has led to increased investments in the domestic nickel processing industry.
• Low Carbon Efforts: The London Metal Exchange (LME) is working with Metals Hub to discover a premium for low carbon nickel and has implemented measures to comply with UK sanctions on Russian metals. The LME is also introducing requirements for producers of LME-listed aluminum to upload verified emissions data to LMEpassport, reflecting the rising significance of sustainability in global trade.
• Market Conditions: The global primary nickel market is expected to remain in surplus in 2024. This is partly due to Indonesia’s increasing production and Chinese-backed projects. Production cuts have occurred in other parts of the world because of low prices or high costs.

Market Dynamics and Outlook

• Price Volatility: Nickel prices have fluctuated, reaching a high of 30,425 US$/t in 2022 before falling to 16,300 US$/t in 2023. The price has since risen to approximately 20,000 US$/t by the end of May 2024.
• Demand Growth: The primary use of nickel remains in the stainless steel industry, but the battery sector is rapidly gaining market share.
• Surplus Expected: The global nickel market is expected to remain in surplus in 2024.
• Key Players: Indonesia and China are playing key roles in shaping the global market. Indonesia has the largest share of new projects to produce primary nickel, and HPAL projects are increasing its importance. Indonesia’s mined production of nickel has more than doubled since 2020 and is expected to reach 1,994 thousand metric tons by the end of 2024. China is the world’s top consumer of nickel, followed by Indonesia.

In summary, the global trend of classifying nickel as a critical mineral reflects its growing importance for economies worldwide. Indonesia’s classification of nickel as a critical mineral is formalized through the Kepmen ESDM No 296.K/MB.01/MEM.B/2023 decree, reflecting its strategic importance for the nation’s economy, defense, and the energy transition. This classification supports Indonesia’s broader strategy to leverage its mineral resources for domestic industrial development.