Column: Electric dreams turn into a nightmare for battery metals
A sector that was once racing to build new supply has been closing mines and deferring projects as low prices bite into the cost curve.
Market analyst Roskill rang the alarm bell on existing chromium, manganese and nickel supply risks and China’s reliance on imports of these three critical steel and EV-battery raw materials.
Roskill’s analysis was presented at the International Ferroalloys and Mineral Products Summit that took place in Tianjin, China.
According to the firm, its in-house chromium, manganese and nickel ore databases and forecasting show that China has become the largest importer of these metals due to the growth of the country’s alloy industry together with its burgeoning steel output.
“The net import reliance (portion of imports required to meet demand from alloy output) for the past six years on chromium, nickel and manganese ore are calculated at 100%, 83% and 68%, respectively,” Roskill’s analysis shows. “China’s net import reliance(%) of chromium and nickel are both much higher than manganese ore, however, the import reliance on manganese has been increasing rapidly in recent years as domestic ore supply dwindles.”
Luckily for China, figures shared during the summit by the International Manganese Institute show that, in 2021, global manganese ore production is expected to increase by 7.6Mt, reflecting a post-pandemic recovery and additional supply from new projects in Australia, South Africa and Brazil. In 2022, global ore output is expected to increase further by 5.5Mt.
But when it comes to chromium and nickel ores, there is not much choice, as China is highly reliant on one or two sources.
As an example of the criticality of supply risk, Roskill underscored a recent development in the nickel ore market, related to Indonesia’s decision to impose an export ban. Since the country has been a major source of nickel ores for nickel pig iron producers in China, the ban has dried up supply and left plants lacking feedstock.
For chromium ore, on the other hand, the market researcher said it is important to pay attention to South Africa’s proposed export tax, which would be added to chromite to support the country’s struggling ferrochrome industry.
South Africa is the major import source for China and the country accounts for the vast majority of supply, and even though there have been no clear announcements on the export tax implementation, Roskill believes that Chinese ferrochrome producers could be faced with accounting for the impacts of such a tax, as substitution opportunities are limited compared to the scale of South African supply.
