A Second Wind
March 2019
Nickel has had it rough in recent years, with many producers shuttering operations as prices almost quartered during 2008 from their peak of US$22/lb in 2007 and then, after a recovery to US$12/lb several years later, fell sharply to US$8/lb—and then again to US$4/lb after a brief rally.

With prices stabilising, and even looking towards a sharp resurgence in the medium term as electric vehicle and battery demand is forecast to grow, producers are beginning to explore the possibility of opening new nickel capacity. While AME’s base case holds no certain new sites and few expansions over the short term, there are several potential nickel projects worth exploring.

The bulk of new capacity and expansions are likely to take place in Indonesia and China, with Brazil and Australia considering some potential contributions. New projects in recent years have come almost exclusively from Indonesia, which added 115kt of finished capacity in 2018 alone.




Indonesia is may well see the largest series of capacity increases over the short term, particularly as the previously-competitive Phillipines has halted open-pit mining and prevented additional nickel projects from being undertaken. The biggest potential contributions include 132kt from Delong’s Virtue Dragon Stage 2 expansion and 25ktpa from Norilsk’s US$350m Kola expansion.

The second stage of Delong’s Virtue Dragon, reaching a total of at least 200Ktpa production capacity, will see Delong challenge Tsingshan for primacy in the Indonesian NPI market when it comes online within the next two years. The first stage of the project began production in 2016, and Delong has undertaken expansions with the stated intent of becoming the largest nickel smelter in Indonesia.

In 2021, Royal Nickel’s Dumont is expected to come online, adding 200kt of annual mined nickel capacity and 50kt of finished capacity that will increase over the mine’s first five years of operation. Higher-grade ore will be fed to the on-site mill, with lower grades being stockpiled on-site.



China holds a significant amount of potential future capacity. In large part, this comes from Jinchuan Group’s Guangxi-located nickel-cobalt plant, from which increased production is expected to be seen in 2020. While details on Jinchuan’s existing and future operations can sometimes be murky, the group has concrete plans to add at least 30Ktpa—and potentially far more, up to around 100ktpa—of nickel capacity to its already-existing operations in the area.

Other potential capacity additions in China add up to another 20Mtpa over the next couple of years, largely from Baosteel Group’s Desheng RKEF and Xinxinze Alloy Smelting’s Huade Zinxinze project, both of which are expected to begin producing in 2019.




While Australia’s future in nickel is somewhat uncertain, several projects are looking promising. Clean TeQ’s Sunrise could add 19ktpa of nickel in nickel sulphate from 2021, depending on decisions to be made in the first half of 2019.

BHP is developing a US$43.2m, 100ktpa nickel sulphate plant at the Kwinana nickel refinery in Western Australia. A Stage 2 expansion to 200ktpa of nickel sulphate is being considered. First production from stage 1 is expected in April 2019. BHP also plans to debottleneck the nickel refinery to 90ktpa from its current 72ktpa capacity.

Dundas Mining announced a restart of its Avebury mine in January, gearing up to directly supply the nickel-battery industry after previously being placed on care and maintenance during the 2009 price crash.