Sep 18, 2020

McKinsey: EV batteries driving demand for clean nickel

Scott Birch
3 min
McKinsey report says EV-battery manufacturers are driving demand for clean nickel
McKinsey report says industry grapples with providing Class 1 nickel in an environmentally friendly and socially conscious manner as battery demand soar...

Global demand for the metal nickel is expected to increase from 2.2 million metric tons to somewhere in the range of 3.5 million to 4.0 million metric tonnes by 2030, a report from McKinsey & Company has found.

According to the report – How Clean Can the Nickel Industry become? – 74 percent of the nickel market is still driven by the stainless-steel industry, despite growing interest in the electric vehicle battery segment, which currently only represents five to eight percent of demand.

In order to make stainless steel, both Class 1 and Class 2 nickel are used. Class 1 nickel production sees about 70 percent originating from sulfide ores, which are concentrated, smelted, and refined, and approximately 30 percent from limonite ores, which are leached commonly using high-pressure acid leaching (HPAL). Class 2 nickel is produced from saprolites and limonites, which are popular for their use in the stainless-steel industry due to their iron content and potentially low production costs.

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For the emerging EV-battery industry, however, the type of nickel – whether it is Class 1 or Class 2 – is of the utmost importance as the quality of the nickel used defines the quality and performance of the batteries.

While the stainless-steel industry can, to a certain extent, use a mix of Class 1 and Class 2, the battery industry can only use Class 1. Furthermore, following concerns about the origins of another battery raw material, cobalt, EV manufacturers and their clients are seeking to ensure that the raw materials used in their products are mined and refined in an environmentally friendly manner, with positive impacts on local communities, and with a limited carbon footprint.

Therefore, despite being abundant globally, the world’s supply of nickel suitable for batteries may not be as copious as it seems. As Original Equipment Manufacturers (OEMs) begin to define requirements in relation to the raw materials they use – quality of the nickel, environmental impacts, social concerns and geopolitical issues – the size of the pie will suddenly start to diminish and will be different for each OEM, depending on their requirements and restrictions.

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Given these uncertainties, the McKinsey & Company report states that some OEMs might prefer to decrease their dependency on nickel and turn to lithium iron phosphate batteries for certain models and geographies. 

Meanwhile, miners will be faced with the challenge of meeting technical criteria and qualifying themselves as suppliers of an increasingly differentiated range of nickel products in terms of their quality and impurities (such that nickel and its products will become less and less a commodity), while simultaneously demonstrating to the rest of the EV value chain that the nickel they produce is clean from both a social and environmental standpoint. 

Responding to this interest in clean nickel, some junior mining companies have already announced ambitious plans for CO2-neutral production to increase the value of their assets and spark investor and OEM interest. It is now up to the current operators to follow the same trend, the report concludes.

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May 15, 2021

Axora: driving safety, sustainability and efficiency

Axora
Sustainability
Digital Transformation
Decarbonisation
7 min
Discover the B2B digital solutions marketplace offering tailored support for mining companies seeking to innovate their operations

“Axora was conceived to bring collaboration and industrial digital innovation to the next level,” pledges CEO Ritz Steytler. “We spoke with the heads of innovation and the operations leaders of oil & gas and metals & mining organisations. We understand the intense pressure they face to modernise their operations. We’re focused on offering solutions to support mining companies with the three biggest challenges they face: safety, sustainability and efficiency."

Safety, Sustainability & Efficiency

"We can help with everything from discovering the right solutions to solve specific problems, to evaluating physical innovation and then supporting the end to end process for actually getting that technology to deliver business value," continues Steytler. That’s realised through our support of the procurement cycle and helping companies with the deployment and maintenance of their chosen solutions to ensure they continue to deliver value where it’s needed most.”

Axora hosts over 150 innovative solutions from sector leaders to start-ups, universities, and consultancies. Examples include machine vision technology that identifies mineral ore contaminants three times faster than the human eye, and predictive modelling for oil rigs which uses built-in sensors and AI to maximise production. Axora's proven digital solutions help to reduce wasted investment, avoid duplication and accelerate business growth.

Digitalisation

The World Economic Forum estimates digitalisation can create value to the tune of $400bn across the coming decade. However, the emergence of ‘digital mines’ isn’t just about the numbers. Digitalisation can transform mining into a far more sustainable enterprise by mitigating some of the big risks the industry faces. A digital mine can optimise operations, unleashing the power of data to understand and implement changes in the business.

With the right solutions it’s possible to effect radical changes in a process that is understood better. Solutions that have been road-tested across the oil and gas industry can deliver real benefits for mining companies, including early adopters like Glencore, explains Axora’s Mining Innovation Director Joe Carr: “Opex Group are using Machine Learning with an AI algorithm to pull in all the available sensor data to monitor a processing plant. Its solutions analyse output and look across all the pumps and motors to offer exact data on where to tweak them down. It’s cloud-based and can monitor, reduce and control operational emissions, optimise energy use and minimise environmental impact. It’s currently being used in the oil and gas industry and it's been shown to save up to 10% of power, but the driver of it was actually Co2.

“If you're running an oil platform, your power is essentially free because you're pumping it out of the ground. But in a mine the biggest power user, outside of the trucks and shovels, is the process plant. It uses around 21 kilowatt hours per tonne of processing power to run, right? Obviously, that's dependent on the plant, but it's a power-hungry situation. Diesel is not cheap, especially in remote locations. Being able to save five to 10% of your power usage for no issue in terms of production could be a big win for mining.”

Decarbonisation

Net Zero

Carr highlights there is also the real opportunity to significantly reduce Scope 1, Scope 2 and even into Scope 3 emissions where Opex Group’s solutions could be used in a smelter to go for the “low hanging fruit” and cut Co2 emissions. “It's a win-win all around, and yet it's a technology which the mining industry doesn't use today, but it exists in a parallel industry.”

To further reduce emissions, Axora is offering solutions which are involved in the scheduling and optimisation of haul truck fleets. “If your fleet is idling for even 10 minutes a cycle, that is wasted fuel,” notes Carr. “It just goes into the atmosphere. And very rarely do the drivers turn the trucks off because they don't want to be stopping and starting those big engines. The mine may be in an extreme climate so even something as basic as saving idling can contribute towards a company’s net zero targets.” The Axora platform also features a system to manage shipping and logistics. “Are you moving your material in the most effective way in terms of routing for fuel usage and speed?” asks Carr.

“Being able to program those variables in terms of Co2 tonnage produced offers new capabilities. We’re able to help our customers understand what they want to achieve. Scope 1 emissions might be the easiest to impact with the haul fleet. Scope 2 focuses on the processing plant and the downstream movement. Understanding what a mining company’s customers are using its materials for makes Scope 3 more difficult to impact – for iron ore it would be a steel melt…”

To that end, Axora offers a predictive maintenance system for aluminum smelting which Carr notes can reduce downtime by up to 20%. “Aluminum smelting tends to come from hydro which can be very clean – it’s energy intensive,” he explains. “But the same system could easily be applied to steel or copper processes where you don't want to be turning them on and off. You don't want to be running your autoclave in a gold mine with a varying sulfide input because the heat goes up and down and it messes with your recovery and you're using a lot more power to heat and cool your autoclave.”

The Axora Platform

“Challenge us and we will find it for you,” asserts Steytler when explaining how he envisages the Axora platform developing. “We aim to match a technology provider to a particular business buyer, somebody that has a real problem that needs to get solved. They can then collaborate to deploy that technology successfully.” Steytler is positioning Axora beyond the sales and procurement process. “There’s no such thing as on time and on budget with a digital transformation effort, right? It’s a difficult thing to achieve, we’re not talking about shrink-wrapped software. That’s why partnerships are extremely important and we can help facilitate those to deliver the value required.”

Reacting to Trends

Against the backdrop of record years for many mining companies – with copper and gold production and prices on the rise – what trends are the team at Axora seeing across the industry that will necessitate a response from its multi-solution platform? “Despite the uncertainties of the global pandemic, mining companies have taken a practical approach,” notes Carr. “What we’ve seen during the pandemic is that miners have realised they need to embrace the digitisation journey. The past year has proved to be a gateway with younger guys coming through the system ready for change.”

Carr highlights that with Covid, engineers couldn’t simply fly to West Africa or Chile so the door to digitsation opened. Where has he seen the biggest push? “How do we get the data we want and then what do we do with it?” he counters. “Miners have so much data that it's in Excel sheets, and it's got macros, and it's historically stored on a server somewhere that nobody's looked at for five years since it was sent out. Our clients' demands today are more around how do we do something with that data? Because we know the benefits are there. The sensor data around predictive maintenance and all these things exist, but they're having such a struggle to deal with it and deliver meaningful insights.”

However, Carr concedes it's a cyclical business. “If it comes down to buying another truck or buying a data server, what's going to get more tonnes out of the ground? But with the right data we can see what will actually benefit operations in the long term… That push towards digital has seen what we thought would take the next five years actually happen in one year because remote capabilities and enhancement to operations centres have advanced to meet demand. At Axora, we’re seeing mining companies assess solutions to improve health and safety on their sites by reducing members of the workforce exposed to risk and in harm’s way and keen to discover how they can drive efficiencies to make more tonnes for less. Ultimately, it’s part of our job to make it simple in terms of a value calculation.”

Digital Transformation

“Axora is here to accelerate digital transformation in the mining industry,” asserts Steytler. “We can simplify that process. And with investment in that transformation expected to reach $6.8trn between 2020 and 2023 as the world economy digitizes, there’s never been a better time to realise the benefits.”

Emissions AI

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