BASF targets cathode supply security with Norilsk nickel & cobalt negotiations

Chemicals and cathodes giant BASF announced that it has entered into exclusive negotiations with Russian nickel behemoth Norilsk Nickel for the supply of nickel and cobalt for the next generation of battery cathode materials, to be produced in Europe.

In a press release dated 27th June, the world’s leading chemical company highlighted their intention to spend up to €400m ($456m) in the “first step” to building “industry-leading” cathode production facilities in Europe.

Norilsk is the world’s second largest producer of nickel (second only to Vale) as well as a major producer of cobalt from its Harjavalta metal refinery in Finland. Importantly, the statement also outlines that Norilsk will provide a secure supply of nickel and cobalt feedstock from the company’s Russian mines at “market prices”.

The move clearly highlights both company’s intentions to ensure a strong foothold in the ever-expanding energy storage market. Of the 16 battery megafactories being tracked by Benchmark Mineral Intelligence only LG Chem’s plant in Wroclaw, Poland is to be located in Europe, however further developments are expected in the region as leading auto companies seek to increase their EV fleets.

By pairing with Norilsk, BASF have shown that security of supply is a top concern as they seek to expand their cathode market share.

Supply chain expansions

The reason downstream companies are making this step is the anticipated growth in lithium–ion battery demand. Benchmark expects lithium-ion battery production to increase by around 100 GWh by as early as 2020.

With such rapid growth, the supply chains on the speciality chemicals that go into lithium-ion cells are under immense strain. For example, in 2016 demand for cobalt from the lithium-ion battery industry was 48,000 tonnes.

By 2020 we expect this to grow by over 50%. Beyond 2020 the expansion is expected to accelerate as more moderately priced EVs hit the market and adoption rates increase.

Given the outlook for EVs among Europe’s leading auto manufacturers, the partnership can be seen as a strategic way of BASF positioning itself to benefit from this growth.

An interesting aspect of the cooperation, however, is BASF’s choice of partner.

Norilsk’s nickel advantage

In 2016, Norilsk produced 235,000 tonnes of nickel and 5,500 tonnes of cobalt.

Whilst the nickel market is large – approximately 2 million tonnes in 2016 compared to cobalt at 93,000 tonnes – it is important to point out that not all nickel can be used for…

 

….The full story will be published in the Q2 Benchmark Quarterly Review available with Benchmark | Membership, to become a Benchmark Member today contact Ben Ash for more details.

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