Please mine more nickel, okay?” Elon Musk urged, with a nervous chuckle, responding to a question about constraints to making electric batteries.
Blame the tumbling price of nickel, which by February had fallen below $16,000 a tonne on the London Metal Exchange, almost half its level a year earlier. That decline tipped half the world’s production of the commodity into the red, BHP calculates. Demand has proved less reliable. China last year appeared to use less nickel for steelmaking, which tends to account for around two-thirds of worldwide consumption. Production of electric-vehicle batteries, which scoop up a tenth of global output at best, is also hard to predict. Ford Motor, General Motors and other major carmakers have slowed their electric-vehicle plans.
One of the problems worsening that crisis was a shortage of the metal in the bourse’s warehouses; the LME only trades and warehouses Class 1 nickel, which at the time did not include Indonesia’s innovation. Miners want the LME to take responsibility for the green premium by creating a separate contract for low-carbon nickel. Yet even if the exchange could define the parameters, the idea runs counter to a lesson of the 2022 squeeze: the nickel contract needed more liquidity.