Demand for battery-grade nickel is expected to surge, tripling by 2030, according to Benchmark Mineral Intelligence. This growth will largely be due to mid- and high-performance electric vehicles (EVs) in Western markets.
A senior nickel analyst at Benchmark, Jorge Uzcategui, particularly noted that:
“China will see growth too, but it won’t match the pace in ex-China regions.”
Despite lithium iron phosphate (LFP) batteries dominating the Chinese market, nickel-based chemistries are set to hold a significant share globally. Their superior performance and limited LFP supply chains outside China support this trend.
EV Sales Stall, Nickel Demand Slows
Battery nickel demand has faced setbacks in 2024 due to slower-than-expected EV sales in Western markets. Inflation and high interest rates have made EVs less competitive compared to internal combustion engine (ICE) vehicles.
This slowdown has pushed automakers to delay or revise their EV targets in Europe and North America. It has also led to gigafactory project cancellations, reducing North America’s 2030 battery supply forecast by 3% and Europe’s by 10%, according to Benchmark’s data.
China, however, has seen record EV sales, with almost 1.2 million units sold in October alone. But most of these vehicles use LFP batteries, limiting the impact on nickel demand.
Additionally, battery producers are leaning toward mid-nickel NCM chemistries. These offer better thermal stability and reduce the risk of overheating, making them more attractive amid low cobalt and manganese prices.
Nickel Poised for a Comeback
Despite current challenges, the long-term outlook for battery nickel remains strong. Although weak demand and expanded supply have pulled nickel prices to their lowest levels since 2020, demand for battery-grade nickel is projected to grow 27% year-on-year in 2024.
Looking ahead, nickel-based chemistries are expected to dominate, capturing 85% of battery cell production capacity outside China by 2030. High-nickel chemistries will play a growing role as EV technology advances.
- Benchmark forecasts that over 50% of nickel demand growth by 2030 will come from batteries. By the end of the decade, battery nickel demand could hit 1.5 million tonnes annually.
Price Rollercoaster: Will Oversupply Keep Nickel Down?
With the projected growing demand for nickel, how about the metal’s prices?
In the third quarter of 2024, nickel prices started on a downward trend. After reaching a high of $21,615 per metric ton in May, the price fell to $17,357 by July 1. In August, nickel prices hovered between $16,150 and $16,500 before climbing to $17,136 on August 27.
However, in early September, prices dropped again, reaching a low of $15,741 on September 10. This was close to the year’s lowest price of $15,668, recorded in February. Despite this, prices surged in late September, peaking at $17,698 on October 1.
Oversupply from Indonesia
The main issue for nickel prices has been oversupply, especially from Indonesia. The country increased its mined nickel production by 99,000 metric tons in Q3. By the end of 2024, Indonesia is expected to increase production to 2.4 million metric tons, making up 57% of global output.
Indonesia has capitalized on its 2020 nickel ore export ban, drawing billions in foreign investment for its mining and EV supply chains. This strategic move has bolstered Indonesia’s dominance in the nickel market.
According to Adrian Gardner, principal analyst at Wood Mackenzie, Indonesia is set to account for 60-65% of global nickel mine production, solidifying its role as a key player in the industry. Gardner further noted that:
“We have seen on several occasions that, when Indonesia stopped or restarted ore exports and threatened to stop nickel pig iron and intermediate product exports, there was a reaction in nickel prices. The government sets the rules, and the rules are the tools.”
S&P Global Market Intelligence reveals a dramatic surge in Indonesia’s nickel ore imports from the Philippines. From January to August 2024, imports skyrocketed to 5.3 million metric tons, a massive leap from just 53,904 metric tons during the same period in 2023.
Although Indonesia dominates production, its quota system has made it difficult for Chinese smelters to secure a steady supply. This forced them to cut output temporarily. To keep up, Indonesian refiners turned to imports from the Philippines, the world’s second-largest nickel producer.
Despite relying heavily on China’s investment, Indonesia is looking to diversify its partnerships, particularly with Western countries. However, a new trade deal with China includes a $1.42 billion agreement between China’s GEM and Indonesia’s PT Vale to build a plant for processing battery-grade nickel.
Another major project involves China’s Huayou Cobalt, Ford, and PT Vale. They plan to invest $2.7 billion in a facility that will produce nickel for EV batteries.
More recently, China launched a $1.4 trillion debt swap to address its financial challenges and promote economic growth. It also plans to lower the deed tax for homebuyers to further stimulate the economy.
Challenges and Opportunities in Western Markets
In Canada, the government has committed C$46 billion to develop four EV battery plants. However, industry experts say this will require more raw materials than Canada can currently produce. The country may need up to 15 new mines to meet demand.
Europe faces its own challenges with the new Carbon Border Adjustment Mechanism (CBAM), which taxes carbon-intensive imports. Some in the steel industry argue that CBAM won’t benefit them, as it only considers direct emissions.
Meanwhile, European steelmakers are increasing their reliance on nickel pig iron imports from Indonesia. This trend has led to production cuts in Europe as they struggle to compete with cheaper imports.
Ultimately, the global race for nickel and other critical minerals intensifies as countries seek energy independence. Amid all this is an emerging key player. Alaska Energy Metals Corporation (AEMC), a Canadian mining firm, is advancing its 23,000-acre Nikolai deposit to boost domestic nickel supply.
AEMC President Greg Beischer emphasizes the importance of a sustainable U.S. supply chain. The nickel junior’s top priorities include navigating fluctuating nickel prices and securing funding to advance its Nikolai project.
The company plans to complete an economic assessment by 2025. This initiative supports U.S. efforts to develop local sources of critical minerals, reducing dependence on foreign imports and strengthening domestic supply chains.
What’s Next for Nickel Prices and Demand?
China will continue to play a major role in the nickel market, both in supply and demand. Although China’s EV sector grew 32% year-on-year in the first nine months of 2024, it hasn’t been enough to offset weak demand in other sectors.
Nickel prices are expected to face continued pressure in the coming years due to a surplus. With a 5.8% annual growth rate in supply projected through 2028, producers may struggle to restart operations as prices remain flat.
Investors should closely watch developments in China and Western markets, as they will heavily influence nickel’s future. While short-term hurdles exist, battery nickel demand is poised for long-term growth. As EV adoption rises globally, nickel’s role in the energy transition will only strengthen.
Disclosure: Owners, members, directors, and employees of carboncredits.com have/may have stock or option positions in any of the companies mentioned: AEMC.
Carboncredits.com receives compensation for this publication and has a business relationship with any company whose stock(s) is/are mentioned in this article.
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Most businesses that decide to act on their net-zero targets reach the same point of friction. Buying carbon credits has meant tracking down brokers, sitting through sales calls, and requesting a quote just to learn a price, sometimes with limited proof of what you are buying.
The earnings calls that quietly reframed climate from sustainability question to operating risk.
Three earnings calls in the last 18 months tell the story without any help from a press release.
Hershey, May 2024: cocoa price exposure compresses margin, and the company attributes part of the cost shock to West African weather. Olam, July 2024: coffee climate exposure quantified in the annual report. JBS, January 2025: supply chain climate disclosures expanded materially in response to investor pressure and regulatory expectation. None of these companies issued the announcement as climate news. They issued it as financial news. The climate-linked supply chain risk did not arrive with a sustainability framing; it arrived as a P&L line.
You are probably reading this article because you suspect the same thing is happening to your business. This piece walks through what is showing up on which earnings calls, how procurement and finance leaders are quantifying the exposure, and what serious corporates are doing about it before the regulator asks.
Where climate risk has already appeared in earnings
The pattern is consistent across resource-intensive sectors. A weather event compresses supply, the price spikes, the cost flows through the income statement, and the analyst on the call asks whether the event is anomalous or structural. Increasingly, the honest answer is the second one.
Cocoa is the cleanest example. The 2023 to 2024 West African harvest fell sharply on the back of erratic rainfall and disease. Cocoa futures more than tripled. Companies with concentrated West African sourcing absorbed the cost; companies with diversified sourcing absorbed less. The exposure was not climate as ESG topic. It was climate as cost of goods.
Coffee follows the same pattern. Brazilian and Vietnamese harvests have moved on weather more sharply across the last several seasons. Roasters with long-tenor supplier relationships and origin diversification have managed the volatility; roasters with spot-market exposure have not. Wheat, sugar, palm oil, beef: the same dynamic in different commodities, a pattern the IPCC AR6 Working Group II report projects will intensify across agricultural systems through mid-century.
What this means: climate risk is no longer a footnote in the 10-K. It is a line item the CFO has to explain on the call.
The three commodity exposures that hit margin first
For most companies with material Scope 3 exposure, three exposures dominate the near-term P&L risk.
- Concentrated single-origin sourcing in a climate-vulnerable region. If your tier-one supply for any material commodity sits in one geography, you have a concentration risk that climate amplifies. Diversification across origins is the obvious hedge, but it takes years to build and requires relationships you cannot acquire by tender.
- Supplier financial fragility under climate stress. Smallholder farmers, who supply a large share of the global cocoa, coffee, and palm oil market, do not carry the balance sheets to absorb yield shocks. When yields collapse, they exit. When they exit, your supply base shrinks, and the surviving suppliers raise prices. The risk is structural, not cyclical.
- Logistics and storage exposure to extreme weather. Hurricane disruptions to Gulf shipping, drought-driven Panama Canal restrictions, flooding in European inland waterways: each of these has moved input costs in the last three years, a pattern documented in Munich Re’s natural catastrophe data. The exposure shows up as a one-quarter event in the financial press but accumulates over time on the cost line.
TCFD and ISSB disclosure changes
The disclosure architecture has now caught up with the risk. The Task Force on Climate-related Financial Disclosures, whose recommendations are now embedded in the ISSB’s IFRS S2 climate standard, requires companies to disclose climate-related risks across physical and transition categories, with quantification where possible.
For physical risk specifically (the climate-linked supply chain risk you are reading about), the disclosure must address both acute exposures (extreme weather events) and chronic exposures (gradual changes in temperature, precipitation, and growing seasons). The disclosure must address the time horizon over which the risk is material, the parts of the value chain exposed, and the financial impact under different scenarios.
The CSRD imposes similar requirements under European law, with double materiality (both financial and impact materiality) embedded in the assessment. The practical effect: your auditors and your investor relations team now need a defensible answer to the climate-linked supply chain risk question, and the answer needs to be quantified.
What procurement and finance can do now
Three actions matter near-term.
Map your exposure. Most companies do not have a clear view of which tier-one and tier-two suppliers sit in which climate-vulnerable geographies. Without the map, you cannot quantify the risk, and without the quantification, you cannot disclose it credibly. The map is the foundation, and World Resources Institute climate risk research provides useful public tooling to start.
Diversify and deepen, in that order. Diversification across origins reduces concentration risk, but the deeper move is to invest in the resilience of the suppliers you already have. Regenerative practices, agroforestry, soil health interventions: these reduce yield volatility under climate stress and protect your input cost trajectory.
Embed the climate spend inside procurement, not outside it. Treating climate risk as a sustainability cost line subordinates it to the ESG budget. Treating it as a procurement and resilience investment puts it in the budget that matters, which is the cost-of-goods budget that the CFO defends quarterly.
Nature-based supply chain investments are the asset class designed for exactly this purpose. They sit inside the value chain, they reduce climate-linked supply risk, they generate verifiable Scope 3 reductions, and they produce the documentation an auditor and a regulator can both test.
If you are quantifying climate-linked supply chain risk in advance of the next earnings cycle or the next disclosure period, the carbon and sustainability experts at Carbon Credit Capital can help you map your exposure and structure a Dual-Value Model response that addresses reduction, resilience, and disclosure-readiness in a single program. Schedule a consultation.
More and more small and medium-sized businesses are hearing the same question from their larger customers: What is your carbon footprint? That question now travels down entire supply chains, and it arrives next to tender requirements, certification criteria, and rising customer expectations.
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