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The Race To Secure North American Nickel Supply

January 30, 2024
x min read

Nickel is well known as a critical metal for electrification. But finding nickel supply within North America is becoming a race between some of the world’s largest companies.

What’s happening:

  • Multiple large battery manufacturers and automakers have recently been pursuing nickel that is sustainably and ethically mined within North America for supply agreements
  • As a critical input for electric vehicle batteries and lithium-ion batteries as a whole, North American based nickel offtake agreements have become increasingly scarce

Why it matters:

  • Nickel is used as the basis for lithium-ion batteries and is also an exceptionally difficult metal to mine, often taking many years to go from initial discovery to extraction
  • The United States Inflation Reduction Act tax credits for electric vehicle purchases require that minerals be sourced domestically or from free trade allies such as Canada or Australia
  • The easiest way for automakers and battery manufacturers to meet the requirements laid out in the Inflation Reduction Act is simply to source their minerals domestically
  • The majority of the world’s nickel supply comes out of Indonesia, the Philippines, Russia and China which causes both ethical and political concerns for many large manufacturers of lithium-ion batteries
  • With a push towards sustainability and net zero emissions, many large companies are now looking to secure supply agreements with companies that are mining nickel within North America

Who is making moves:

  • Talon Metals (TSX: TLO) has been notably been awarded funding from both the United States Department of Energy and The United States Department of Defense for their flagship nickel Tamarack property located in Minnesota
  • Samsung SDI, who is one of the world’s largest lithium-ion battery manufacturers, recently made a strategic investment in Canada Nickel (TSXV: CNC)

Going deeper:

  • Talon Metals also has a notable offtake agreement to supply electric vehicle automaker Tesla (NASDAQ: TSLA) with nickel for their batteries

By the numbers:

  • Approximately 50% of the world’s nickel production each year comes from Indonesia, the Philippines and Russia
  • North America represents approximately just 5% of the total nickel production globally each year
  • Talon Metals received $114M USD from the United States Department of Energy for a battery minerals processing facility to be built in North Dakota and $20M USD from the Department of Defense to explore their for high grade nickel in Minnesota or Michigan
  • Tesla has committed to purchasing 75,000 metric tonnes of nickel concentrate from Talon Metals under a 6 year agreement

The intrigue:

  • As part of Tesla and Talon’s supply agreement, the two companies will share in any profits which are derived from the by products extracted from nickel concentrate, such as iron or cobalt

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