Is the green premium a mirage? Nickel miners see scant rewards for less-polluting mines

While the electrification push is resulting in a ramp up of critical mineral production, Skarn Associates CEO Mark Fellows warned that to meet the rush, carbon intensity is rising at some mines.

Skarn is a consultancy that helps miners quantify energy intensity, GHG emissions and water use across supply chains. Fellows spoke to Kitco Mining in early March at PDAC 2024 in Toronto, Canada.

With electric vehicle demand jumping this decade due to shifting consumer preferences and government incentives, there’s been a ‘gold rush’ in the critical mineral space.

“There are some really substantial increases in production happening,” said Fellows, adding that there’s an inherent tension between production growth and the resulting higher carbon intensity.

Fellows noted the increased output of nickel in Southeast Asia, which is pushing the carbon intensity curve upwards.

“In the case of nickel, the production growth over the last couple of years has been very strong in Indonesia, where Chinese companies have financed a whole load of pyrometallurgical ferro-nickel production capacity, all of it powered by coal-fired power stations,” said Fellows. “All of that new capacity coming online in Indonesia has effectively pushed the curve upwards.”

Fellows noted that large, diversified miners in Australia are shuttering nickel mines. They are not able to charge a premium for cleaner nickel.

“I’m sure the major diversified miners would love to establish a premium for green nickel, but
so far the market has not gone along with that,” said Fellows. “The nickel market is in
many respects already dysfunctional, and it remains the case that low cost production wins out.”

He also noted the long supply chains for hard rock lithium mines in Africa and North America. The material has to be shipped to China to be refined, which adds to lithium’s carbon intensity.

“There’s a real danger that we will actually contribute to the problem rather than improve the situation,” said Fellows. “It’s fine to build an electric vehicle, but if the nickel or the graphite or the cobalt that’s going into that battery is sourced from inherently high-carbon operations…it’s not really a net gain. Low-cost production wins out.”

Coverage is sponsored by UEC (Uranium Energy Corp.), URC (Uranium Royalty Corp.) and GoldMining.

0:00 – Scope 1 and scope 2 emissions achievements in mining
3:11 – Miners missing net-zero commitments
8:34 – No market reward for net carbon reductions
12:00 – Nickel sulphide being priced out of markets by dirtier nickel

__________________________________________________________________

Kitco Mining is dedicated to reporting on the mining industry. Our mandate is to be the top resource for all mining information and news, offering a clear perspective on where the industry is going through breaking news coverage, mining trends, and in-depth reporting, presented with precious, rare earth, base metals, and industry stock prices.

Get important precious and base metal updates while on the go with the Kitco Gold LIVE! app – https://applications.kitco.com

Stay connected with us
Twitter – https://twitter.com/KitcoMining
Instagram – https://www.instagram.com/kitcomining
LinkedIn – https://www.linkedin.com/company/kitco-mining
Facebook – https://www.facebook.com/KitcoMining

Connect with the Kitco Mining anchors
Michael McCrae – https://twitter.com/michaelmccrae
Paul Harris – https://twitter.com/paulharrisgold

For more in-depth mining coverage, visit us here – https://www.kitco.com/mining

Disclaimer: Videos are not trading advice, and the views expressed may not reflect those of Kitco Metals Inc.