A Tale of Two Metals Will Determine the Future of Energy

The world’s biggest miner BHP Group Ltd. grew powerful by building dominant positions in producing the minerals of the future. That makes the challenges it’s facing with two key clean-tech ingredients a sobering lesson for the energy transition.

Nickel and copper have long been recognized as vital components of a decarbonized economy. The former helps to cram energy into the lithium-ion batteries used in electric vehicles and grid-scale power storage cells. The latter is used almost everywhere electricity flows — from wires, motors and turbines to heat exchangers and transformers.

Annual nickel supplies need to grow from about 3.4 million tons currently to more than 5 million tons in 2030 to keep the world on a path to net zero, according to the International Energy Agency. Copper must go from 25 million tons to 35 million tons. Ideally, we should be seeing supply of both metals expanding at a rapid clip, with the emphasis most strongly on copper, where miners produce about 10 metric tons for every ton of nickel.

Out of Charge

The scenario that’s playing out is close to the opposite. Chinese companies refining battery-grade nickel from the red soil of eastern Indonesia are flooding the market, sending prices down about 40% over the past 12 months and pushing about half of global production into losses. While copper prices have fallen about 7.7% over the same period, almost every mine is churning out profits. That’s still not sufficient to induce more production to come onstream, however. Fitch Ratings Inc. estimates that supply will be falling 1.2 million tons short of demand by 2029.