Nickel production has always been relatively expensive. In all the excitement of the China commodity boom up to 2014, nickel projects suffered from very high capital intensities—the project capital cost divided by the nameplate contained nickel capacity.
These costs were then compounded by ramp-up issues that have seen many large-scale projects fail to ever reach nameplate capacity, driving up their realised capital intensity. Subsequently, part of the legacy of these projects is that few large projects were approved. The exception has been new RKEF process capacity for producing low grade NPI in China and then Indonesia. With forecast demand growth expected to be boosted by the rise of electric vehicle batteries—and the quality of finished nickel products required—is the accepted capital intensity going to rise?
Horses
for Courses
The viability of nickel
projects can be slightly confused due to the range of products produced and the
vast array of processing routes to get there. Nickel products for producing
stainless steel do not have the same requirements as nickel to feed a nickel
sulphate process. Additionally, the nickel ore type being process will also
impact the capital costs of the processing plant. A higher capital intensity
can be tolerated if they are producing a higher quality/more value-added
product—a key consideration as producers increasingly look to supply the
battery sector.