The world is currently undergoing a green energy transition and batteries are playing a key role in this journey. As crucial components in various modern technologies, rechargeable batteries are powering everything from smartphones and laptops to electric vehicles (EVs) and energy storage systems.
Among the battery types, lithium-ion batteries are the most popular and widely used ones. A key ingredient of these batteries is nickel (Ni), the fifth-most common element on our planet.
It is not only found extensively in the Earth’s crust and core, but is also a common element in meteorites, along with iron. Occurring naturally in soil and water, nickel is an essential nutrient for plants.
Nickel boasts many outstanding physical and chemical properties, which make it essential in hundreds of thousands of products. These include a high melting point of 1453°C, resistance to corrosion and oxidation, high malleability, recyclability, and magnetic properties at room temperature.
It also alloys readily, most specifically, with chromium and other metals to produce stainless and heat-resistant steels.
Used in 1.97 million tons of stainless steel and 210 kilotons of non-ferrous alloys every year, nickel has become a highly strategic and hard-to-replace element. These applications enhance product longevity and engine efficiency, respectively, thereby contributing to sustainability.
While stainless steel accounts for the most (65%) of nickel use cases, batteries are the second-biggest use case at 16%.
Nickel is utilized in batteries to deliver higher energy density and greater storage capacity at a lower cost. With EV manufacturing and adoption on the rise and energy storage systems becoming more crucial than ever to balance energy demand and supply, the demand for nickel is on an upward trajectory.
Number-wise, 70% of nickel’s current global annual production, or 3 million tons, is to be directed to the stainless-steel sector, while another 3 million tons of Ni is expected to be required just for battery production by 2040. This additional Ni will be fueled by the decarbonization of the transport sector through the use of Ni-based battery electrodes in EVs.
As a result of this, the global demand for nickel will double to 6 million tons per year.
Nickel Deposits Rich in Quantity, Complex in Quality
Being a relatively abundant metal, nickel is found everywhere in the environment. However, only in trace amounts. Ever present in soil, a higher concentration of nickel can be found in several mineral ores, including oxides, sulfides, and silicates.
Globally, nickel resources are estimated to be about 350 million tons, with major nickel deposits found in Australia, Indonesia, South Africa, Russia, and Canada. These five nations together hold more than 50% of the world’s nickel resources.
While almost 80% of the nickel mined has been in the last thirty years, the element’s reserves have still grown. This is because of increased exploration by mining companies, better knowledge of new deposits in remote areas, and improved technologies enabling more nickel to be processed, especially lower-grade nickel ores.
When it comes to nickel production, 60% depends on high-grade sulfide ores with 1.5–4 wt% Ni content. The rest is provided by low-quality ore variants like laterites, which have an average Ni content of 1.5 wt%. These are further divided into two variants: saprolite and limonite.
Interestingly, nickel reserves on land are distributed inversely, which means 60% of the total Ni available in nature is found in laterites. Only 40% of Ni is found in sulfide ore deposits, where it primarily exists in the form of discrete binary and ternary nickel-rich minerals like NiS, Ni2FeS4, and (Co,Ni)3S4.
What makes sulfide minerals a preferable option is their chemical simplicity. This enables efficient separation of gangue (commercially worthless material surrounding or closely mixed with the desirable mineral) impurities from nickel-bearing compounds using traditional methods like froth flotation.
Of course, the problem is that Ni sulfides reserves are finite and declining, thus unable to meet the fast-growing global nickel demand. This creates a need to produce nickel sustainably from low-grade but abundant laterites.
In these deposits, nickel isn’t found as discrete minerals; rather, it is dissolved within complex magnesium silicates or iron oxides. This includes magnesium (Mg)-silicates (namely, saprolites) like (Mg,Fe,Ni)3Si2O5(OH)4 and (Mg,Fe,Ni)3Si4O10(OH)2.4H2O. It also partially replaces iron (Fe) in limonite, such as goethite (Fe,Ni)OOH.
The complexity of low-grade nickel ores, both in terms of chemicals and minerals, limits the efficient and sustainable extraction of nickel for downstream green technologies.
To overcome this fundamental problem, researchers from the Max Planck Institute for Sustainable Materials (MPI-SusMat) have created a novel technique, which is carbon-free and energy-saving, to extract nickel for stainless steel, batteries, and magnets.
Environmental Costs of Conventional Nickel Production
While nickel plays a crucial role in battery manufacturing, the production of this element isn’t really environmentally friendly, as is the case with most metal extraction and processing.
In the case of nickel, its negative impact on the environment includes air pollution, water pollution, soil erosion, land degradation, deforestation, toxic waste, biodiversity loss, and more. Nickel production is also an energy-intensive process, which contributes to greenhouse gas (GHG) emissions.
Conventional nickel production actually emits around 20 tons of CO2 per ton of nickel. In 2019, nickel mining was responsible for around 120 million metric tons of carbon dioxide equivalent (CO2e) worldwide.
According to the study from MPI-SusMat, the industry’s overall footprint is about 20-27 tons of CO2e for every ton of nickel, which is over 10 times that of steel, at 2.3 tons of CO2e per ton. Thus, nickel is a highly environmentally harmful metal to mine.
CO2 emissions are the major driver of climate change, and if the nickel production industry wishes to combat it and become climate-neutral, its carbon emissions must be reduced drastically.
Interestingly, the worldwide efforts to reduce carbon emissions involve the electrification trend, where fossil fuel usage is being replaced with electricity. However, this shift is heavily reliant on nickel, which significantly reduces the impact of the initiatives and raises concerns about transferring the environmental burden to metallurgy. According to the study’s first author, Ubaid Manzoor, a PhD researcher at MPI-SusMat:
“If we continue producing nickel in the conventional way and use it for electrification, we are just shifting the problem rather than solving it.”
So, with their new way to produce nickel, researchers are offering a sustainable pathway to remove the metal from ores where hydrogen plasma is replacing carbon, hence making the process CO2-free, which also saves energy and time. Notably, it uses low-grade nickel ores, which have been overlooked due to their complexity.
Currently, the industrial processing of such ores, namely Ni-laterite, is dictated by the crystallographic structure of Ni-hosting phases and the Ni and Fe content in the ore.
Limonite ores with their low Ni and MgO content (<4 wt% Mg) are usually processed through high-pressure acid leaching (HPAL) to recover Ni and cobalt (Co), when present. The energy demand for this is pretty massive, ranging between 230 -570 GJ per ton of Ni, which significantly surpasses the 22 GJ per ton required for steel.
Against this concerning backdrop, the study’s approach promises a promising departure from conventional industrial techniques. By replacing carbon (C) and sulfur (S) based reducing agents with hydrogen, the study minimizes direct CO2 and sulfur dioxide (SO2) emissions.
It also bypasses the use of harmful acids like sulfuric acid (H2SO4) in HPAL and eliminates the need for costly pre- and post-treatments.
A One-Step Hydrogen-Powered Nickel Processing Revolution
The research, supported by the Advanced Grant of the European Research Council, has been published in the journal Nature. It details the new process for nickel extraction1.
Their completely different approach is a smelting reduction process of an entire dried ore charge in a single metallurgical step using hydrogen plasma.
This process integrates calcination, smelting, and refining into one step. All of these operations happen at the same time and in one furnace. This enabled the team to directly tap into high-grade ferronickel, a metallic material composed of iron and nickel and used as an alloying agent, from the dried ore charge in a single step.
With ‘single step,’ the researchers are referring to the production of refined ferronickel from dried ore feed in a single metallurgical process as compared to the RKEF route. RKEF, or Rotary Kiln-Electric Furnace, is a way to produce ferronickel from laterite nickel ores. It involves three stages: calcination of the dried ore, which is then smelted in an electric arc furnace (EAF), and lastly, refining to reduce impurities to acceptable levels.
In contrast, the Hydrogen Plasma Smelting Reduction (HPSR) process covers all of this in one step.
With their approach, the researchers produced high-grade, refined ferronickel alloys at fast reduction kinetics. The alloy contains minimal impurities thanks to thermodynamic control of the furnace’s atmosphere, which enabled it to selectively reduce nickel. Having silicon (Si) below 0.08 wt.%, calcium (Ca) under 0.09 wt.%, and phosphorus (P) almost 0.00 wt.% allowed for the removal of further refining.
“By using hydrogen plasma and controlling the thermodynamic processes inside the electric arc furnace, we are able to break down the complex structure of the minerals in low-grade nickel ores into simpler ionic species – even without using catalysts.”
– Corresponding author Professor Isnaldi Souza Filho, head of the group “Sustainable Synthesis of Materials” at MPI-SusMat
Operable completely on renewable energy, the new process presented replaces carbon-based fuels and reductants with renewable electricity and hydrogen. This way, it offers up to 18% energy savings and as much as 84% reduction in CO2 emissions.
Experimental evidence from the study supports one-step HPSR as a sustainable alternative for metal production from both oxides and silicates, expanding feedstock options to low-cost, low-grade minerals.
Overall, this sustainable approach enables the beneficial use of nickel in sustainable energy technologies while mitigating the environmental harm caused by its production. The same process can also be applied to yet another key battery element, cobalt.
Notably, the upscaling of the process for industrial applications is possible, which is the next step for the team. This will require implementing short arcs with high currents, employing gas injection, or integrating an external electromagnetic stirring device underneath the furnace. This will make sure that the unreduced melt continuously reaches the reaction interface, as it is only here that the nickel ores’ reduction into simpler ionic species happens.
This can be done through well-established industrial methods, which allow the new method to be integrated into existing processes.
Investing in Green Nickel
Tesla (TSLA -1.4%) is one of the major names driving the push for cleaner nickel sourcing. With electric vehicles depending heavily on nickel-rich batteries, the company began securing supply from producers that focus on lower emissions and better mining standards, like BHP’s (BHP +0.46%) operations in Australia.
And when Tesla chooses greener nickel, it influences how the rest of the industry thinks about sourcing, which is why it plays such a central role in this space.
Tesla (TSLA -1.4%)
During the company’s Q2 2020 Earnings Call, Musk urged miners to invest in “environmentally-friendly nickel mining at high volume” in preparation for the increase in EV production over the next few years.
In 2022, it entered into an agreement with the metals company Talon (TSX:TLO) to supply it with nickel from its high-grade Tamarack Project in Minnesota. The partnership has been “for the responsible production of battery materials directly from the mine to the battery cathode,” said Talon CEO Henri van Rooyen at the time, noting that the company has the “lowest embedded CO2 footprint in the industry.”
Meanwhile, Tesla praised Talon’s innovative approach to the discovery, development, and production of battery materials, which includes permanently storing carbon and exploring novel material extractions.
The same year, Tesla also signed a long-term contract with Vale to supply it with low-carbon nickel from its Canadian operations.
Even before these, Tesla joined hands with $127.7 bln market cap Australia-based BHP Group, which is involved in low-carbon nickel production for EVs, to improve battery supply chain resilience and reduce carbon emissions.
Late last year, BHP started the construction of off-grid mining solar and battery energy storage systems to power its Nickel West Mount Kit and Leinster operation, which will supply the element to Tesla.
The Project is “BHP’s first off-grid large-scale renewable energy project across our global operations and, significantly, will remove the equivalent of up to 23,000 combustion engine cars from the road every year, supporting our greenhouse gas reduction targets,” said BHP Nickel West Asset President Jessica Farrell.
When it comes to Tesla’s market performance, its shares are currently trading at $340.20, still down almost 14% this year so far, after making a recovery from the $217.80 low put in last month. This recovery has TSLA shares now slowly making their way to the nearly $484 all-time high (ATH) it hit in December 2024.
Now, Tesla’s market cap is finally above $1 trillion ($1.2 trillion to be exact) while its EPS (TTM) is 1.82 and the P/E (TTM) is 191.36.
Meanwhile, financial results for the first quarter of 2025 show a decline of 9% in revenue from a year earlier to $21.3 billion. A hefty 20% drop was recorded in its automotive revenue to $14 billion, while revenue from credits increased 37.7% to $595 million, and energy generation and storage revenue jumped a strong 67% to $2.73 billion.
Moreover, a drop was seen in net income to $409 million, or 12 cents a share while operating income went down to $400 million, resulting in a 2.1% operating margin.
Besides sales incentives and lower average selling prices, the decline has been attributed to the need to update lines at its factories to start making refreshed versions of the Model Y SUV.
During this period, Tesla produced just over 362,000 vehicles and delivered slightly more than 336,000 vehicles. “While the changeover of Model Y lines across all four of our factories led to the loss of several weeks of production in Q1, the ramp of the New Model Y continues to go well,” noted the company in its press release.
Tesla also deployed 10.4 GWh of energy storage products in Q1 2025. The company has noted that the growth in AI infrastructure is “creating an outsized opportunity” for this segment to stabilize the grid.
In its shareholder deck, the automaker cautioned investors of “uncertainty” in the markets due to rapidly evolving trade policy that adversely impacts coasts and supply chain. The “dynamic,” and “changing political sentiment” are expected by Tesla to have an impact on demand for its products in the near-term.
Amidst this, Tesla is facing competition from China’s lower-cost competitors in the EV market and Alphabet’s (GOOG -0.85%) Waymo in the robotaxi sector.
Conclusion
Nickel is a foundation of the clean energy transition, but its traditional extraction methods harm the environment and undermine the very goals it helps to achieve.
Against this backdrop, innovations like hydrogen plasma smelting offer a promising pathway to decarbonize nickel production. This green nickel production approach from MPI-SusMat also opens the door to a more sustainable electrification of the transport sector. Not to mention, the nickel alloy created from low-grade ore can be used directly in stainless steel production, and after more refinement, as an electrode material in batteries. Even the waste (slag) produced during the process can provide a valuable resource to the construction industry.
So, the new, sustainable nickel production process offers significant potential for scaling and advancing EVs and grid storage, promising a greener future!
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Studies Referenced:
1. Manzoor, U., Mujica Roncery, L., Raabe, D., & Souza Filho, I. R. (2025). Sustainable nickel enabled by hydrogen-based reduction. Nature, 641(8062), 365–373. https://doi.org/10.1038/s41586-025-08901-7