Key Challenges for Western Nickel Producers

Nickel’s taking a beating and the majors are blinking. Latest data shows mined nickel production from the top five producers dropped 21% in Q1. That’s a big cut and this is across the board. IGO was down 36%, Lundin Mining Corporation off 30%, Glencore down 21%. Even PT Merdeka Battery Materials Tbk in Indonesia saw a US$79M drop in quarterly nickel revenue. Tough quarter for the sector. It’s all pointing to the same story, oversupply, price pressure, and producers finally starting to react. We’ve known for at least 12 months the price wasn’t sustainable, but now you’re seeing it hit production decisions. Indonesia’s policy response is also coming into play, with more scrutiny on lower-grade material and a re-think of incentives. But here’s something interesting Vale’s the outlier. They increased production by nearly 30% a reminder that integrated, low-cost producers with scale and diversified exposure can ride this out a lot better than most. So where does that leave juniors and mid-tiers? Honestly, if you’re not producing high-grade battery-grade sulphides or have a clean path to downstream integration, this market’s going to be brutal. But for the right assets, it also sets the stage for consolidation, partnerships, and maybe a few bargains if you’ve got the balance sheet to play the long game. #nickel #mining #commodities #criticalminerals #batterytech #EVsupplychain #miningstrategy #downcyclethinking #juniorminers #explorationmatters Sources: S&P Global Market Intelligence: https://lnkd.in/gJfV7EqX Also worth a read: Reuters: https://lnkd.in/gq33e_nc Financial Times: https://lnkd.in/gWSuKjxU Mining.com: https://lnkd.in/ghpUNxaf Bloomberg: https://lnkd.in/g53HJKpM

The West wants to build more mines, while China produces metals There is no shortage of discussion about critical materials, government-supported mining projects, and accelerated permitting. But in many of them, the core issue seems to be missing. China’s dominance in critical materials is not an accident. It is the result of a deliberate, decades-long strategy to control the bottlenecks of the supply chain: the refining and processing stages that turn raw minerals into usable industrial inputs. While Western economies focused on mining exploration, financial efficiency, and shareholder return, China built the infrastructure, logistics, and policy ecosystem needed to own the middle of the value chain and to become independent from the West. In the West, the prevailing approach has been market-driven and fragmented. Innovation is scattered, entrepreneurial, and reactive, more focused on testing what can be sold than on delivering what national or regional economies strategically need. Industrial policy remains largely supply-oriented: stimulate mining investment, streamline permitting, and rely on the market to do the rest. This model does not work when the competitor plays a state-coordinated, long-horizon game. The result is visible today. Even as Western countries push to open new lithium, nickel, and copper mines, the refined products still flow back through China because refining capacity and pricing are overwhelmingly controlled there. Breaking this chain requires a complete value chain strategy, not just a raw materials strategy. That means: 🔹 Building physical refining and processing plants in the West, supported by predictable policy and financing mechanisms. 🔹 Guaranteeing demand and price stability for domestic refiners, because negative TCRC (treatment and refining charge) economics make these assets unviable under pure market logic. 🔹 Recognizing refining capacity as a national security asset, not just a business opportunity. Existing installations must be protected from the volatility of access to energy and water. Mines, smelters, and refineries are highly dependent on both; if these supplies remain fully exposed to market pricing and scarcity cycles, the system stays fragile. 🔹 Shifting from a "feed the funnel" mindset (which focuses on more mining) to the debottlenecking of critical commodities delivery. Strategic independence comes from owning and stabilizing every step between resource and refined product. In short, China built a long-term system, while the West persists in a short-term market. Until that difference is politically understood and acted upon, the dependency will persist, no matter how many new mines are opened.

BHP has invested $3 billion in its Western Australian nickel operations since 2020 with the ambition of becoming an environmentally responsible supplier of nickel sulphate for electric vehicle batteries. It has just announced the whole division is being placed on care and maintenance due to low prices caused by Indonesia's surging output. Some Indonesian nickel is clean and green but much of ticks all the wrong ESG boxes. What BHP and other Western producers of battery metals need is a "green" premium but it doesn't exist and even defining "green" nickel is a big problem. In search of the elusive green nickel premium: https://lnkd.in/d6EAUtxq