Nickel
Feature Articles
Matte Attack
April 2021
Tsingshan's announcement in March that it would supply Huayou Cobalt and CNGR Advanced Material with nickel matte has grabbed the attention of the nickel market and industry.

As the major nickel producer in the Asian region, when Tsingshan makes a move, the market notices. The supply deals represent further growth in nickel production and the company’s ambition to expand its nickel supply into the burgeoning new energy/battery materials sector focused on supplying electric vehicle (EV) battery producers. To date, Tsingshan’s nickel capacity growth in Indonesia had largely been built up to feed its stainless-steel mills.

The announced deals, 60kt to Huayou and 40kt to CGNR, are to be supplied over a year from October 2021. They also represent the first major battery metal supply deals made after Tsingshan started trial production of nickel matte from its own ferronickel feed, produced at the company’s Rotary Kiln-Electric Furnaces (RKEF) in Morowali Industrial Park (IMIP). The company’s matte product contains more than 75% nickel content.

 

 

The move is representative of a shifting focus within the nickel industry. Globally, and in China in particular, companies are increasing their focus on EV’s. China represents the largest market for EV’s as promotion of greener vehicles picks up in an effort to reduce air pollution.

 

Nickels Ain’t Nickels

The rise in nickel demand from the battery sector has been reflected in increasing demand for nickel matte products. These typically have a relatively high nickel content compared to the lower grade ferronickel and nickel pig iron (NPI). The volumetric majority of nickel processing has focussed on producing NPI and ferronickel for input into stainless steel production. These contain relatively low nickel contents, typically below 15%.

The iron, which makes up the majority of the remaining content, is a bonus in steel production. As the world’s largest stainless-steel producer, Tsingshan’s development focus has been on producing this lower quality nickel with Rotary Kiln-Electric Furnace (RKEF) capacity to feed its own mills.

Nickel matte has often been produced using sulfide ores in an integrated process where raw ore is fed and, upon reaching nickel’s reduction point, sulfur is added, making a nickel-iron sulfide. The iron is oxidised and removed as slag, and the sulfur is then removed from the remaining nickel sulfide leaving a high-grade nickel product—up to 75% nickel.

Tsingshan’s nickel operations have a distinct Indonesia focus after the raw ore export ban forced a shift in business strategy from processing Indonesian ore in China to processing domestically in Indonesia. Indonesian nickel ore is predominately in a lateritic form. This requires high temperature roasting to drive off moisture and chemically bound water before reduction in electric furnaces to produce ferronickel, which then needs to be further processed to produce the higher-grade nickel matte.

It is worth noting, utilising ferronickel to produce nickel matte is not an entirely novel process. Eramet converted a proportion of its ferronickel product to nickel matte at Doniambo in New Caledonia but has long since ended the practice. Further, other producers, namely Vale, are already producing nickel matte using Indonesian laterite ores but utilise an integrated RKEF process to directly produce nickel matt from the laterite ore feed.

Looking to leverage off its large existing ferronickel production capacity, Tsingshan developed a process whereby ferronickel is essentially taken back to its reduction point and the sulfur is added to form nickel-iron sulfide for the iron to be then converted to an oxide for removal and conversion of remaining nickel to a matte product.

Commercialising the process demonstrates Tsingshan’s capability to supply matte suitable for input into nickel sulphate plants. Expansion of matte production capacity is possible as the company looks to continue expanding its existing nickel operations and diversify its customer base beyond the stainless-steel sector.

 

 

Tsingshan already has interests targeting the battery-grade nickel chemicals—predominately its involvement in a number of high-pressure acid leach (HPAL) projects. This, in some ways, is considered a more conventional way to produce battery material nickel feed from lateritic nickel ores. However, the history of HPAL developments is plagued by delays, cost over runs and failure to meet anticipated production rates.

HPAL developments are considered more likely to be targeted specifically at the battery material sector with their greater product flexibility as a hydrometallurgical circuit—and avoiding the ‘double processing’ Tsingshan will initially employ. Production of mixed-hydrate precipitates from HPALs also come with credit from cobalt by-products, which won’t be available in matte produced from ferronickel.

The ferronickel to matte process does however avoid the issue of the significant tailings created by HPAL processes. With the Indonesian Government recently banning Deep Sea Tailings Placement (DSTP), tailings management will represent an increased cost to HPAL production. The treatment of waste from hydrometallurgical processes typically require large areas and/or significant dewatering capacity. Management of slag/solid waste, such as those typically associated with pyrometallurgical process ae more easily managed.

The announced supply deals are expected to be met by processing ferronickel. As single year deals, the method could be a stopgap until Tsingshan’s HPAL interests are up and running as opposed to a regular feature of the market, though the option for continuance will remain.

 

Market Reaction

The supply deals rocked nickel markets with nickel prices declining nearly 9% in one day following the announcement. This effectively ended the steady rise seen over the second half of last year which had seen the nickel price top values not seen since 2014. It is worth noting the nickel market has been in surplus so the continued price march upwards was counter intuitive—the rising price has been attributed to a longer-term view (which itself is slightly unusual). Additionally, perceived nickel shortages have been more focussed on the higher-grade battery sector nickel products.

Full commercialisation of Tsingshan’s nickel matte and embedding of the product as a major feed to battery sulphate plants will see a degree of melding between traditional nickel processing paths. This may impact the conventional pricing mechanisms for a range of nickel products and increase the competition for material between the stainless steel and growing battery materials sectors.

 

Is Nickel Matte the Future?

Tsingshan has announced it plans to expand its Indonesian investments to 600kt of nickel equivalent this year, 850kt next year and 1.1Mt in 2023. By utilising ferronickel as a feedstock Tsingshan will retain an ability to adjust its production split between NPI and nickel matte based on market demand and prices.

They also appear to be looking to expand its footprint further in the sector, potentially downstream. Further, at the start of the year the company signed a CNY5.5bn (US$850m) deal with Xuzhou Construction Machinery Group to invest in a new energy vehicle project.

It is unknown if nickel matte will be taken up as a preferred input into nickel sulphate plants which currently appear to prefer intermediaries such as mixed precipitates, nickel powders, briquettes and recycled material. Lacking cobalt by-product credits, higher impurities and potential higher emissions in an increasingly low-carbon world, Tsingshan’s nickel matte may be up against it—though it has now been established as an option.

Concern has been raised in some quarters regarding the expected higher greenhouse gas (GHG) intensity of the Tsingshan process given the matte production is a two-stage process with energy intensive pyrometallurgical sulfur addition, following the already energy intensive pyrometallurgical NPI/ferronickel production from RKEF and adding the burden of additional SO2 emissions.

The nickel production hubs at both Morowali and Weda Bay are reliant on coal generated power, making them already comparatively CO2 intense products. There is potential that European and US consumers may avoid products containing nickel with a significantly larger GHG footprint as expected from Tsingshan’s production. Tesla has repeatedly indicated it is looking for ‘responsible’ nickel. Chinese producers are likely to have less qualms.

 

 

Additionally, to date, the huge rise in finished nickel production from Indonesia has been driven by demand from steel mills, not the battery sector. While nickel applications in the battery materials sector are expected to see significant growth, it is off a very low volumetric base compared to demand from stainless-steel and alloying applications, which are also forecast to grow. The comparatively low-grade nickel products suitable for addition to produce stainless steel will see demand sustained for NPI and ferronickel.

Both Tsingshan and compatriot Delong have installed significant RKEF capacity in the country to process Indonesian ore which had been withdrawn from the seaborne market. While initially shipping the majority of ferronickel produced to China, they are increasingly installing stainless steel production capacity at the ferronickel hubs—with some encouragement from the government. Nickel matte production in Indonesia will simply provide a new avenue for the apparently ever-expanding ferronickel production occurring in Indonesia.