Nickel

Material criticality in context

Nickel's criticality has relatively little to do with geological scarcity. The metal is abundant, known reserves have generally increased over recent decades, and improvements in exploration and processing technology have steadily expanded the pool of economically recoverable resources.¹⁰⁸ While nickel possesses valuable properties—including a high melting point, the ability to alloy easily with other metals, and high electrical conductivity—it is also more substitutable than several of the other materials examined in this study.¹⁰⁹ Its criticality therefore arises from the structure and concentration of its supply chain and the balance between its different applications.

Nickel is supplied in different product forms, each with its own specifications and end markets. Battery-grade nickel sulphate is a high-purity chemical product used principally in the manufacture of lithium-ion batteries. Class I nickel, generally refined metal with a nickel content of at least approximately 99.8%, is used in high-performance alloys, electroplating, foundry products and battery-material production. Class II products, especially ferronickel and nickel pig iron, are used mainly as feedstocks for stainless-steel production, which then goes into a wide range of applications, including transport, buildings, infrastructure and industrial equipment.¹¹⁰ These material streams require different ore qualities, follow different processing routes, command different prices, and are not readily interchangeable.^{111 112 113 114} As a result, an apparently balanced global nickel market can coexist with genuine shortages of battery-grade material. Nickel used for stainless steel production cannot simply be redirected to battery manufacture when demand increases.

Supply concentration adds a second dimension to nickel’s criticality. Extraction is concentrated in a small number of producing countries, with one accounting for the majority of recent production growth and projected future expansion. This concentration creates exposure to supply risks, trade restrictions, and institutional shifts capable of reshaping the global market, as recent experience has demonstrated.¹¹⁵ Refining introduces an additional layer of supply concentration. Although the largest producing country hosts nearly half of global refining capacity, much of that capacity is owned by a small group of foreign companies based largely in another country. Geographic concentration and ownership concentration therefore reinforce one another without necessarily occurring in the same place.^{116 117 118} Looking ahead, refining capacity is projected to become even more concentrated, with just three countries expected to account for almost 80% of global refining by 2030.¹¹⁹ Nickel's supply-chain vulnerability therefore depends not only on where the material is produced, but also on where it is processed and who controls that processing. Nickel demonstrates how criticality can arise even where physical resources are abundant if access to supply is strongly concentrated.

The environmental and social dimensions of nickel production further reinforce these vulnerabilities. Laterite processing—the dominant production route in the fastest-growing producing region—is among the most carbon-intensive routes to producing any major metal because of its reliance on energy-intensive smelting, predominantly powered by coal.^{120 121} Nickel extraction and processing are also concentrated in biodiverse tropical regions, where mining contributes to forest clearance, habitat loss, and long-term ecosystem degradation, with documented impacts on local communities including loss of access to farming, fishing and hunting grounds, and conflicts over land rights.^{122 123 124} These environmental and social considerations increasingly influence supply itself, as reputational risks and governance concerns have already delayed or prevented new projects.¹²⁵ Social licence to operate has therefore become an important dimension of nickel’s long-term supply resilience.

Material flows and application structure

The Sankey diagram maps how nickel moves from refined metal through its material streams into applications and final end uses, as of 2020. It is interactive: selecting any material stream or application highlights the flows connected to it. This is a conceptual visual showing the approximate distribution of nickel across material streams, applications, and end-uses. The diagram illustrates the defining feature of the nickel system: refined nickel separates early into higher-purity Class I material and lower-purity Class II products destined primarily for stainless steel production. Because these two streams require different processing routes and are not readily interchangeable, they serve distinct end uses and respond differently to changing demand patterns.