We Don’t Need Nickel From Russia

We don’t need nickel from Russia. There is a critical need for nickel and other EV battery metals worldwide, but we don’t need to get it from Russia.

In March 2022, Morgan Stanley’s Adam Jonas shared worries about Russia’s outsized role in the nickel supply chain for EVs. CNBC’s Phil LeBeau then discussed the note from Jonas. Jonas noted that Ford announced a target of 2 million EV unit sales by 2026, and that this will require a lot of EV battery metals. The question he posed was where Ford would source all of these raw materials. LeBeau pointed out that everyone in the auto industry has been talking about this issue for quite a while.

“If you listen to all of the projections that we get out there, and it seems like we get a new one every three or four weeks from a different CEO in the auto industry around the world, it’s always a greater number of EVs that they plan to build by 2025 or 2026 or maybe even by 2030, and yet the supply is just not there, and today the focus for Adam Jonas is nickel.”

In the note, Jonas wrote that this wasn’t a question of capital near term — the issue is that no amount of capital would be able to create new nickel mines by 2024. LeBeau pointed out that just last week, Ford said it plans to increase the number of EVs that it has in production on an annual basis to two million per year by 2026. “That’s a dramatic increase from the previous projection.” Where’s the nickel going to come from?

In recent weeks, the nickel market has been more than a little crazy. The price of battery-grade nickel — of which Russia supplies 20% — shot through the roof in March, doubling overnight to over $100,000 per tonne off the back of a squeeze on a massive short position held by one of China’s largest nickel producers, Tsingshan , over fears of Russian supply shocks.

CNN was the first to note that President Biden’s recent sanctions on Russian energy gave EV battery materials like nickel a free pass — while also pointing out that the International Energy Agency said earlier this year that nickel demand in EVs will need to grow 19-fold through 2040. Worryingly, the US produced just 0.7% of the world’s nickel in 2020, and is home to just one operating mine (set to close in 2025). Crucially, it is also home to no nickel processing capacity.

Tesla CEO Elon Musk sounded the alarm about nickel in 2020. In an earnings call in July 2020, he said:

“I’d just like to re-emphasize, any mining companies out there, please mine more nickel.

“Tesla will give you a giant contract for a long period of time if you mine nickel efficacy and in an environmentally sensitive way.”

But therein lies a key problem. To be sure, there are other sources outside of Russia, but sourcing nickel beneath the rainforest in Indonesia or the Philippines — the world’s two largest producers — is a pretty dirty business. Further still, China has already locked up most of this new nickel supply.

This leaves car companies in a bit of a pickle. While Tesla recently worked out a partnership with Talon Metals for nickel from its Minnesota venture that is planned to start production in 2026, the volumes for delivery will barely move the needle. And in the case of Volkswagen, which recently signed agreements with two Chinese companies for nickel sourced beneath rich rainforests in Indonesia, its claims of environmentally sourcing are clearly playing second fiddle to having actual metal in hand.

We have yet to see Ford and other automakers express interest in getting their hands dirty, which raises the question: how will they get their nickel, and can they navigate these rough roads?

The Nickel Solution Lies On The Seafloor

There’s another potential source of nickel, not as well known yet plentiful, lying at the bottom of the Pacific Ocean. See my previous interviews with The Metals Company CEO, Gerard Barron, if you missed our pieces on this option. Previously known as DeepGreen, the company is focused on literally scooping up nodules from the seafloor — in a manner that is far less environmentally impactful than other nickel mining methods.

The company isn’t Russian. It’s Canadian, eh, and it has the largest undeveloped nickel project on the planet. The company offers a true alternative to both Russian and Chinese-controlled nickel supplies.

Letter From Senator Murkowski

Senator Murkowski, a leading voice on metals in the US Senate, addressed a letter to the US Secretary of Energy, Jennifer Granholm, and touched upon a report that the DOE released to President Biden that identified risks in the high-capacity battery supply chain.

“US strategy should be focused on securing access to battery raw materials, supporting growth of domestic materials-processing base, and public-private partnerships. Collection of polymetallic nodules and subsequent processing in the US can support these objectives,” Senator Murkowski stated.

“It is not enough to rely on strategic partnerships for these minerals and while recycled materials can augment supply, they cannot meet forecast demand.”

You can read her full letter here.

Letter To The Secretary of Defense From 17 Admirals, Generals & Officers

In a separate letter written to the US Secretary of Defense, Lloyd J. Austin III, and signed by 17 admirals, generals, and officers, the focus was on securing the supply chain for critical from the bottom of the ocean.

The retired officers noted that their prior military experience meant they shared Secretary Austin’s concern for strong and secure supply lines — especially for critical minerals. The group emphasized that the national security imperative of creating sufficient mineral supplies to build future EVs and energy infrastructure such as wind turbines needs to include a robust and secure supply chain within US control.

“Given EVs wind farms require some six and nine times more critical than traditional technologies they might dissociate, focus, and defense systems rely on critical and rare earth minerals, the need for the United States to develop domestic mineral supplies is clear. ”

The group pointed out that the solution to the lack of domestic supply and processing of critical lithium-ion battery cathode materials such as nickel, cobalt, and manganese should include the responsible development of polymetallic nodules, which could help re-shore mineral supply chains. You can read that letter here.

Final Thoughts

I think the letters and The Metals Company are on to something here. Scooping up little balls of nickel — as well as cobalt, copper, and manganese — from the bottom of the ocean is a better alternative than outsourcing our mineral supplies to adversary nations such as Russia and China, and could help bring key industries to the energy transition back home.


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