Why Nickel Is a Common Yet Critical Industrial Metal
Some metals are rather important in industrial society, but are often forgotten. One example is nickel, a relatively abundant and cheap metal, whose use for 5-cent coins (actually 75% copper and 25% nickel) has also contributed to the idea of it being a relatively cheap and unimportant resource.
However, nickel is a key element in the production of several key materials, including stainless steel, aerospace alloys, chemical catalysts, and high-performance batteries. These applications make nickel a strategic metal whose importance and demand are rising. As demand grows due to green energy and high-tech applications, investors might want to pay more attention to a metal that will be more in demand than ever in the coming decades.
What Is Nickel? Overview of Its Origins and Properties
The Origins of Nickel
Nickel is the fifth-most common element on Earth, making it hardly a rare resource, at least in theory. This abundance comes from its relative abundance in the solar system at large, with iron-nickel meteorites being some of the most common.
In practice, most of the Earth’s nickel is located in the planet’s core, of which 1/5th is made of nickel. So it is a lot rarer in the surface crust that can be accessed, at 85 parts per million, or 0.0085% of the crust.
It also tends to be relatively diffuse in the surface rock layers, making concentrated deposits that are economically viable to exploit even rarer.
Nickel is principally produced from 2 types of metallic ores, laterites and sulfide nickel ores.
Source: FTM Machinery
This is a metal that has been mined for at least 2,000 years (with meteoric nickel-iron alloy even older), and its name comes from the Saxon term “Kupfernickel” or Devils’ Copper, because it looks like copper ore but copper cannot be recovered from it, and crude refining techniques got miners sick (that specific type of nickel ore contained arsenide).
The Characteristics of Nickel
Nickel appears as a silvery metal and is a pure element (number 28 in the periodic table).
Source: Cohen USA
Nickel is not technically resistant to corrosion, but exposure to air creates a thin layer of nickel oxide that prevents further oxidation deeper in the metal, making it quite corrosion-resistant in practice. Nickel also tends to be more corrosion-resistant than any other metal it is alloyed with.
Nickel is one of four elements (with iron, cobalt, and gadolinium) that are ferromagnetic at about room temperature. As a result, it is used in some forms of magnets, alnico magnets, formed of aluminum, nickel, and cobalt (AlNiCo), which are of magnetic strength higher than iron-based magnets, but weaker than rare earth magnets.
Nickel is non-toxic, although some people can develop an allergy to it.
The melting point of nickel is relatively high (1453 °C / 1650 °F), it alloys well with other metals (including steel), is a catalyst for chemical reactions, and can be electroplated (deposition of a thin layer using electricity).
Like many other metals, nickel is fully recyclable, making it a rather environmentally friendly resource.
Where Is Nickel Found? Global Nickel Resource Map
Nickel resources are not equally distributed: the largest nickel reserves in the world are located in Indonesia, Brazil, and Australia, followed by Russia, Canada, and China.
Source: International Nickel Group Study (INSG)
Of all these countries, it is Indonesia that has the largest resources by far, with more than Australia, Brazil, and Russia combined.
Source: International Nickel Group Study (INSG)
How Nickel Is Produced and Where It Comes From
Locations
In 2024, the total production of nickel reached 3.7 million tons. Nearly 80% of all nickel historically mined was extracted over the past three decades, reflecting the massive stainless steel production of the past decades, mostly driven by China and other Asian countries’ economic boom.
Indonesia is by far the largest producer today, with around half of global production.
Source: International Nickel Group Study (INSG)
Indonesia has also been the prime supplier of additional supply in the past years, more than doubling its production since 2020 and up 10x since 2016.
Source: International Nickel Group Study (INSG)
Almost all of Indonesia’s nickel production is located in the eastern islands of the country.
Source: International Nickel Group Study (INSG)
Nickel is expected to be abundant in deep-sea deposits, notably manganese nodules, which contain significant amounts of nickel. Future development of this technology should help make it a viable source of metal as well.
Nickel Production: Laterite vs. Sulfide Ores
Historically, nickel production came from laterites, where nickel is mixed with iron, for use in stainless steel. This is because these deposits are usually on the surface and can be mined with low-cost open-pit mines.
In contrast, sulfide nickel deposits are usually underground and more expensive to exploit.
However, battery nickel is used in the form of sulfur-nickel compounds, so sulfide nickel ores make a lot more sense for that supply chain.
Source: International Nickel Group Study (INSG)
Global Nickel Markets and Price Volatility
While today, most of the demand for nickel is coming from stainless steel, and a few other applications, a massive growth in demand is expected to come from batteries in the upcoming decades, a trend already impacting the nickel market.
By 2040, as much as 40% of nickel consumption could come from battery manufacturing.
Source: FTM Machinery
Nickel prices are known to fluctuate sometimes widely, a common feature of such commodities.
It notably spiked to all-time highs in 2008 and had another short-lived price spike in March 2022.
Source: Statista
The 2022 spike was an especially spectacular event, as nickel price almost quadrupled in just three trading days. Short inventory, big short positions by some Chinese companies, and inadequate risk management all led to this temporary price explosion, and also a suspension of trading and cancellation of trades, with the London-based LME fined $19M for it.
Since then, nickel prices have been going down, with already half of nickel producers being below production costs in 2024.
As a result, producers in non-Western countries with low energy costs are likely to be the ones grabbing market shares. This surplus of nickel on the market, mostly due to Indonesian nickel, could therefore durably push out of the market Australian, Russian, and New Caledonian (French overseas territory) nickel.
The potential collapse of nickel mining from Australia to New Caledonia comes at a time when Western governments are scrambling to secure the supply chains needed to decarbonize the global economy.
But in an ironic twist, Chinese-backed Indonesia’s coal-fired nickel output is pricing out greener metal that’s so far failed to command a market premium.
Overall, this massive production and low production costs give Indonesia a lot of control over nickel markets, making it single-handily a sort of “OPEC of nickel”.
Back in 2023, Indonesia was apparently in talks with 3 other countries to create an even stronger OPEC-like organization for nickel, but this seems to not have worked out so far.
The country has also since 2014 banned the export of raw nickel, looking to capture more of the added value in the production of the final product, with Chinese companies, led by steel giant Tsingshan Holding Group, to spend billions of dollars to set up processing plants in Indonesia.
The Main Industrial Forms and Uses of Nickel
Stainless Steel
Making up 69% of total nickel demand, stainless steel is by far the driving force in shaping demand for the metal. As a result, nickel demand and prices tend to follow closely the health of the global economy and manufacturing & building activity.
Nickel-iron alloys also exist, and are used for soft magnetic materials, such as glass-to-metal seals, and as materials with defined thermal expansion properties.
For example, Invar®, with 36% nickel content, is unique in having an almost zero coefficient of thermal expansion around room temperature.
Iron-nickel alloys with 72-83% nickel have the best soft magnetic properties and are used in transformers, inductors, magnetic amplifiers, magnetic shields, and memory storage devices.
Pure Nickel & Plating
Pure nickel is mostly used for its properties in shielding against electromagnetic interference and in transducers.
When used in electroplating, nickel is deposited in a thin layer on top of another material, usually another metal or plastic. Nickel plating creates a bright, attractive finish as well as imparting improved corrosion resistance or other functional properties.
It is commonly used for manufacturing automotive components, taps/faucets, doors & cupboard fixtures, metal furniture, appliances, and consumer electronics.
Source: International Nickel Group Study (INSG)
Other Alloys
Equally important for the global economy and industry, other alloys mixing nickel with nonferrous metals are responsible for around 12% of nickel demand.
They are overall used for the combination of good thermal resistance, high strength in high temperatures, and corrosion resistance.
Examples of such alloys include:
- Nickel-copper, resistant to saltwater, other salts, and alkaline solutions.
- Nickel-molybdenum, resistant to reducing acids.
- Nickel-chromium, with high electrical resistance and corrosion resistance.
- Nickel-titanium, with shape memory properties, makes it popular for medical devices and specialized connectors.
- Nickel-aluminum, also known as aircraft-grade aluminum.
High-Tech and Energy Applications for Nickel
Aerospace & Energy
While a small part of total consumption, due to the sheer volume of stainless steel consumed in the world, nickel is a crucial element in aerospace superalloys. Notably, it is crucial for turbine blades, discs, and other critical parts of jet engines which are exposed to highly corrosive conditions.
Nickel-base superalloys are also used in land-based combustion turbines, such as those found at electric power generation stations.
Nickel is also important in wind turbines and geothermal plants, thanks to its properties regarding corrosion resistance.
More prospectively, nickel could also be important for new generations of high-temperature superconductors, with bilayer nickelate.
Catalysts & Hydrogen
Nickel is known to be a powerful catalyst for chemical reactions where carbon-carbon bonds are formed, as well as hydrogen reactions with carbon.
This is used in a variety of reactions for the chemical industry, especially in the processing of hydrocarbons, hydrogen reactions, and desulfurization.
It is a segment where nickel could become a lot more important, in case the hydrogen economy becomes a reality. For example, nanorods of nickel could be used to replace more expensive metals of the platinum group to produce hydrogen.
For nickel to truly become a “green metal”, it will also need to be produced in a less carbon-intensive way. One option to close the loop could be a one-step direct extraction of nickel with hydrogen, replacing the traditional 3-steps Rotary Kiln-Electric Furnace method (RKEF).
Nickel could also be used in fuel cells to replace much more expensive platinum.
For catalysis, most of the time nickel will be in the form of a metal foam, to increase the contact surface and reduce the amount of metal used.
Source: CNEM
Batteries
Nickel–metal hydride batteries, as well as nickel-cadmium batteries, have been commonly used as rechargeable batteries for small devices since the 1980s.
But it is with its use in lithium-ion batteries that batteries became a more important driver of nickel demand, where nickel is used in the cathode part.
The major advantage of using nickel in batteries is that it helps deliver higher energy density and greater storage capacity at a lower cost.
This is true for high-performance EV batteries, notably Nickel Cobalt Aluminium (NCA) and Nickel Manganese Cobalt (NMC), which have only grown in importance in the past decade.
Source: Nickel Institute
As cathode materials make up 40-45% of battery costs, battery manufacturers are trying to reduce costs by removing the most expensive metals, especially cobalt.
Source: Battery Inside
However, going fully cobalt-free, high-nickel road has been challenging as cobalt contributes to the durability of the batteries.
Potentially, batteries that contain no nickel, like LFP (Lithium-Ferrum-Phosphate) could be an option, with for example half of Tesla batteries using LFP already in 2022.
It is far from over for nickel, as many models of even cheaper sodium-ion batteries, soon to enter the EVs market for mass production, often contain nickel to strike a balance between affordability (no cobalt, no lithium) and energy density (nickel-rich cathode).
The Role of Recycling in the Nickel Supply Chain
Most of the nickel produced is still in use, in large part because it is locked in long-duration items like stainless steel building structures, aircraft turbines, etc. In total, 57% of all nickel mined is still in activity.
Currently, 68% of all nickel available from consumer products in waste streams is recycled and begins a new life cycle, and another 15% is recycled through the recycling of steel.
This still leaves 17% of nickel waste ending in landfills, so there is some improvement yet before reducing the waste of a fully recyclable resource.
Source: Nickel Institute
Recycling nickel reduces the emission of nickel production by 1/3rd, helping reduce the carbon emission of the industry.
Final Thoughts: Is Nickel a Strategic Investment?
Nickel has for a long time been an industrial metal tightly linked to stainless steel and other “base” alloys whose demand closely follows the global economic and industrial activity.
It is starting to change, with the sheer volume of batteries required for electrification of transportation and the mass deployment of renewable on our power grids.
As a result, nickel demand is booming. However, this has not translated into rising prices in the past few years, due to Indonesia flooding the market, in a bid to wrestle out high-cost producers like Australian and French New Caledonia.
Investing in Nickel Mining
Vale
While Indonesia as a whole is a major nickel producer, the world’s largest nickel producer as a company is the Brazilian Vale. It is expected to produce 160,000-175,000 tons of nickel in 2025. Besides nickel, Vale is first and foremost a major iron miner, being here too the world’s largest producer, with 325-335 million tons of iron ore to be mined in 2025.
The company is also a producer of metals relevant to the energy transition like copper. While these metals might become more important in the future, for now, iron and to an extent nickel form the core of the company.
The company used to be more diversified but re-centered around iron in recent years, having divested $2B worth of various other metal mines and other commodities like palm oil.
Source: Vale
Large Real Asset Base
Vale qualifies as a medium-sized utility company aside from mining itself, operating its own railroad, trains, harbors, and ships to transport ore from extraction to delivery to customers.
It also produces a lot of its own energy, as it operates in remote regions and cannot depend on the Brazilian government to provide the required power, especially considering its massive energy requirements.
This is commonly done with hydropower, as the business of mining is not so different from hydropower construction (earthworks, digging rock with explosives, massive amounts of concrete, heavy machinery, mega construction projects, managing rain and floods, etc.).
These infrastructures are complemented by the company’s R&D centers, laboratories, hundreds of geologists, training centers, etc.
Getting Over Past Liabilities
One big risk with a massive mining company like Vale is a large accident causing massive damage.
This is what happened in 2015, with a massive disaster that occurred after a Vale-built dam collapsed. And then a similar incident in 2019.
The flooding caused Brazil’s worst environmental disaster to date, killing 19 people, and affected 39 municipalities across two states, burying them in mining waste products.
Since then, a lot of similar dams have been repaired and/or improved to avoid another catastrophe during the rainy season.
The company has also changed how it operates, having invested $2.5B in four filtration plants to create dry tailing (the crushed rock, dust, and mud) instead of wet tailing requiring dams. So in the future, iron mining activity will no longer create the sort of waste that requires dams at all.
The company is also actively repairing its image, insisting on how its mining activity created a large natural reserve financed by the company, which is a major contributor to preserving the Brazilian rainforest, while the rest of the region was turned into pasture in the past decades.
Source: Vale
Overall, Vale is now getting over its past troubles with ecological disasters and turning into one of Brazil’s most valuable assets and a central supplier of nickel and iron to the world.
It includes close ties to China in particular, a country with whom Brazil is forging deeper connections through the BRICS commercial network and in the context of mounting tariffs and tensions with the USA.