President Biden’s clean energy agenda is racing toward another stumbling block — dwindling nickel imports — from Russia’s invasion of Ukraine and tough sanctions on Moscow.
The latest setback on the clean energy front is with electric vehicles thanks to an expected scarcity of nickel, which is used to make batteries for electric cars. Russia was the third-largest nickel mine producer last year and the largest nickel exporter, producing nearly 14 times the amount the U.S. does, according to the U.S. Geological Survey.
With the U.S. and its European allies revoking Russia’s most-favored-nation trade status, America’s electric vehicle industry is bracing for higher costs to import nickel and other minerals and metals of which Russia is a large producer.
The Ukraine invasion has already created a volatile nickel market and drove up prices.
The London Metal Exchange halted nickel trading last week when prices more than doubled to rise above the $100,000 mark. Trades before the halt were canceled. After the weeklong pause, nickel trades will resume Wednesday.
Morgan Stanley analyst Adam Jonas warned that higher nickel prices could mean a $1,000 increase to produce the average electric vehicle. Global energy research company Rystad Energy based in Norway forecasted in October that nickel demand worldwide would outpace supply by 2024. S&P Global Market Intelligence forecasts noted the rise in demand for nickel and singled out the impact on electric vehicle batteries which require high-purity Class 1 nickel. Russia mines more than 20% of the world’s Class 1 nickel.
Elon Musk, the co-founder and CEO of Tesla, said last year that nickel was his “biggest concern” for producing batteries, and it was the reason they were working to transition away from the metal.
“Nickel is our biggest concern for scaling lithium-ion cell production,” Mr. Musk tweeted. “That’s why we are shifting standard range cars to an iron cathode. Plenty of iron (and lithium)!”
Indeed, a Bank of America research report last year anticipated the electric vehicle industry to be out of batteries by as early as 2025.
Although the U.S. imports most of its nickel from Canada, America is the world’s third-largest importer of the metal. Commodity markets are also global, making it difficult for any country to insulate itself from price volatility involving large metal and mineral producers like Russia.
The Biden administration unveiled new government and business spending on the mineral supply chain, which it said would lessen the nation’s dependence on China. Nickel was among the materials that the administration said would be targeted to help increase clean energy products like electric vehicles, batteries, solar panels and wind turbines.
In 2020, Russia exported roughly $3 billion worth of nickel, according to the United Nations database on international trade. In January, the U.S. imported more than $230 million worth of nickel, though less than $2 million of nickel came from Russia.
• Ramsey Touchberry can be reached at rtouchberry@washingtontimes.com.
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