KUALA LUMPUR (Oct 13): Worldwide demand for high-grade nickel, an essential component of electric vehicle (EV) batteries, will outweigh supply by 2024.

According to Norway-based independent energy research and business intelligence company Rystad Energy, although global supply will continue its steady year-on-year climb, rising demand spurred in part by the energy transition will lead to a shortage in less than two years.

The firm said global nickel demand is forecast to climb to 3.4 million tonnes in 2024 from 2.5 million tonnes this year.

Rystad’s analysis of existing mines, projects and development plans estimated that global nickel supply will fall short of demand in 2024, with production of 3.2 million tonnes.

It said the gap between global supply and demand will then widen quickly to a deficit of 560,000 tonnes by 2026.

Rystad said that nickel is an essential component of the batteries used by many automakers, and a supply shortage could cause numerous headaches and ripples across Western car manufacturing.

It said that in addition, the deficit is likely to encourage automakers to assess alternative battery chemistries, as well as search for previously untapped nickel deposits.

Rystad global energy metals expert and senior vice-president James Ley said the potential nickel shortage could encourage industry leaders to look at previously unattractive sources of nickel, including deposits in Indonesia.

“However, the process of extracting nickel from these deposits has inherent risks and challenges, including environmental, social and governance (ESG) concerns.

“The shortage has no other obvious solutions in sight that won't tarnish carmakers with several unattractive ESG issues.

“Therefore, we expect Western EV manufacturers to explore alternative battery options as the nickel procurement problem becomes increasingly difficult," Ley said.