The pace at which electric vehicles are spreading around the world may change the global energy and automotive industry dynamic faster than is even expected. Russia’s Norilsk Nickel (Nornickel) is adapting to the situation and expects to become an influential player in this new market.
According to the International Energy Agency (IEA), by the end of 2016, the number of electric vehicles in the world reached two million. This is twice as many as in 2015; the increase in demand for electric cars in China has transformed the PRC into a country with the largest fleet of such cars, with the US dropping to second place. Some 400,000 electric vehicles have been sold in China in one year. That represents 40% of the total number of eco-cars sold all over the world.
The issue of environmental protection is one of the most acute in China, so the Chinese government introduced quotas for its automakers that will come into force as early as 2019: The share of electric cars (including hybrids) sales must be no less than eight percent of the total sales volume. In the future, the quota will grow to 12%. In September 2017, Xin Gobin, China’s deputy minister of Industry and Informatization, said that a plan was being developed for a complete transition from internal combustion engines to electric drives. However, this is still only a bill. The issue is to be discussed with the automakers Beed and Geekly, and the specific deadlines for implementation are yet to be announced.
China and the US are followed by Norway, where the market share of electric vehicles is 29%. In the rest of Europe, demand is growing, too: May 2017 saw a 48% increase in electric vehicle sales compared to May 2016, according to Clean Technika.
The share of electric vehicles in the world as of May 2017 was 1.4%, and this is only the beginning. According to Electric Vehicle Outlook’s 2017 forecast from Bloomberg New Energy Finance, by 2040, 54% of all cars sold will be electric vehicles, and the share of light electric vehicles will reach 33% worldwide.
This is easy to believe, given the fact that Volvo has plans to sell only electric cars from 2019, or the statement by French Energy and Environment Minister Nicolas Ulo that starting in 2040, the sale of gasoline and diesel cars will be banned in the country.
In Russia, the number of electric cars is less than 0.01 of a percent of its entire car fleet – as of 1 January 2017, 920 ecocars have been registered in the country. Many of them are concept cars with a range of about 200 kilometers in summer and 100 kilometers in winter.
A rapid growth of the electric vehicles market should not be expected in the near future, but global trends have a clear influence, at least on the Russian metal industry.
The automotive industry needs copper, nickel, cobalt, palladium, and platinum, that is, the main ‘basket of metals’ produced by Norilsk Nickel. In particular, 60-70 kg of nickel is required to produce a single Tesla car. The consumption of nickel in the battery industry in the first half of 2017 increased significantly, primarily due to a 38% increase in the production of electric and hybrid cars, as well as the introduction of more nickel-capacious technological solutions for the production of cathode material for batteries. The company expects the growth of nickel consumption to continue in the second half of the year because of the production of batteries.
The hybridization of engines pushes up the price of palladium. In the first six months of 2017, its value increased by 45%, reaching $792 per ounce. The total world consumption of palladium will likely reach 10.8 million ounces in 2017. In the medium term, the share of diesel cars on the market will decrease, and the tightening of environmental standards in Europe, the United States, and China will also have an impact on the process.
The Russian metals giant Norilsk Nickel is striving to expand its presence in the market of raw materials for batteries. The company has every reason to do this: It is one of the world’s largest producers of nickel and competes with Japan’s Sumitomo Metal Mining Co., Ltd. for fifth place in the world in cobalt production (5,000 tons per year), and also produces 40% total palladium in the world.
Today, Norilsk Nickel is actively preparing for an electric car boom. According to the company’s statistics, in 2016, primary nickel consumption in battery production increased by 20% to 15,000 tons and in 10 years, the demand for nickel in the electric vehicles market will grow to 300,000 tons.
Thus, for Norilsk Nickel, the electric cars market will become the second most important market after stainless steel. What further helps Norilsk Nickel is the fact that batteries use high-grade nickel, which compares favorably to the low-grade nickel that is mainly manufactured in Indonesia. As for the demand for cobalt, at the moment, it stands at 100,000 tons, with 60% of the world’s reserves of this metal located in DR Congo, where political instability remains high.
Vigorous dealings to enter the market are already underway; in June 2017, Norilsk Nickel signed a memorandum with the German BASF Corporation (supplier of cathode material in Asian and US markets) regarding possible supplies of raw materials for the production of components for lithium-ion batteries in Europe.
The Norilsk Nickel refinery in Harjavalta, Finland, intends to supply nickel and cobalt to BASF at market value. BASF, in turn, will invest up to €400 million to build a facility of cathode materials in Europe that will have the largest production capacity in the industry.
Both giants will benefit from the deal. According to Kenneth Lane, president of BASF’s global Catalysts Division, the cooperation with Norilsk Nickel and the construction of new BASF production facilities in Europe will create a reliable supply chain and enable BASF to expand its production of battery materials globally.
“The expansion of cooperation with BASF will allow Norilsk Nickel to strengthen its position as a global leader in the production of nickel and offer customers better quality products in a form more convenient for them,” says Sergei Batekhin, senior vice president and head of the Sales, Commerce, and Logistics unit at Norilsk Nickel.
