LONDON: The United States government should invest in nickel refining capacity in coordination with its allies, according to the Biden Administration's 100-day review of critical supply chains.
"If there are opportunities for the US to target one part of the battery supply chain, this would likely be the most critical to provide short- and medium-term supply chain stability," the report said.
It's an unexpected priority. Nickel isn't on the US list of critical minerals. Although the country depends on imports, 68percent of supplies come from what the report calls "allied nations" such as Canada, Australia, Norway and Finland.
But the Department of Energy (DOE) has identified Class 1 nickel, the type best suited to lithium-ion batteries, as both key vulnerability and key opportunity.
The emphasis on nickel doesn't mean the White House is complacent about other critical battery materials such as lithium and cobalt but it says a lot about how the administration is thinking about the problem.
The United States is import-dependent across the spectrum of battery metals with large parts of the supply chain captured by China, a problematic international trading partner.
However, the nature of the dependency differs by mineral, starting in the ground.
The United States, for example, "has lithium resources and domestic corporations well-versed in recovery and refinement globally", according to the report.
The ambition, therefore, is to stimulate more domestic mining and, even more importantly, domestic processing through a potential mix of purchasing guarantees, federal funding and research and development into enhanced recovery technology. China's investments in this section of the supply chain "has made them the world's leader despite limited domestic lithium supply", the report notes.
When it comes to nickel, however, the only active US mine - Eagle in Michigan - is due to retire in 2025 and domestic deposits are small and low grade.
There is no domestic nickel processing capacity outside a limited amount of by-product salt production.
Yet this particular battery metal is the one likely to experience the most significant demand increase over the coming years, the report says, with "market indications that there could be a large shortage of Class 1 nickel in the next 3-7 years".
Indeed, with nickel content rising in battery cathode design, not having enough of the right kind of nickel "poses a supply chain risk for battery manufacturing globally, not just in the United States".
Nickel demand is rising because automakers are trying to reduce their usage of cobalt, a metal that is overshadowed by a supply-chain reliance on the Democratic Republic of Congo (DRC) and its artisanal workforce.
The Department of Energy wants to help them with a commitment to "a multi-year initiative to address the scientific and engineering issues with reducing and eliminating the cobalt in EV batteries".
Research is already taking place into new materials such as silicon and lithium metal anodes with progress to date "very good", the report says.