Material Insights · Understanding the Material World

Battery cathode materials and Nickel

Nickel is a main metal in NMC and NCA cathodes, but stainless steel still takes just under 70% of primary nickel and the spread of nickel-free iron phosphate (LFP) cathodes limits battery demand. Much of the nickel for cathodes now comes from Indonesian plants, many of them Chinese-owned.

Battery cathode materials (chemical) and Nickel (commodity): 3 relationships.

How they are linked

1. Feedstock: nickel sulphate

Physical flow · Strong · Nickel to NMC and NCA cathodes

Nickel-rich cathodes are made from a precursor precipitated out of nickel sulphate solution, so they need high-purity battery-grade nickel rather than the ferronickel or nickel pig iron used in stainless steel.

  • about 40% nickel plus cobalt in dry mixed hydroxide precipitate (MHP)
  • about 20% nickel plus cobalt in MHP as shipped, about 50% moisture (derived)

Battery-grade sulphate can come from Class 1 metal or from intermediates such as MHP and matte made from laterite ore. MHP is a low-grade, wet product, so a cathode chain built on it depends on refining capacity close to the leach plants. Iron phosphate (LFP) cathodes use no nickel at all, so this link applies only to the nickel-based chemistries.

Sources: Nickel Institute

2. Demand driver, capped by LFP

Transition · Asymmetric · Cathode chemistry choices move nickel demand

Batteries are the use of nickel most tied to the energy transition, but cathode makers can switch to nickel-free LFP, so the battery pull on nickel depends on chemistry choices as much as on EV sales.

  • just under 70% share of primary nickel use in stainless steel, 2025
  • almost half LFP share of the global EV battery market, 2024

LFP's rise began when nickel and cobalt prices spiked in 2021 to 2022 and LFP held almost half the market in 2024 after prices had fallen, which shows the switch is sticky. The International Nickel Study Group reported that nickel use in EV batteries slipped slightly in 2025 even as total nickel use grew, so stainless steel still sets the bulk of demand. The cathode link matters most at the margin and for premium battery-grade supply.

Sources: Stainless Steel World; IEA

3. Indonesia and Chinese ownership

Geography and ownership · Strong · Battery nickel concentrates in Indonesia

Indonesia banned nickel ore exports from January 2020 to force processing at home, and Chinese groups such as Tsingshan own or co-own many of the resulting smelters, so cathode makers now draw much of their nickel from one country and one ownership group.

  • 2.6 of 3.9 Mt Indonesia's mine output against the world total, 2025 estimate
  • almost 45% Indonesia's share of refined nickel output, 2024
  • 65% share of refined nickel output under Chinese ownership, 2024

By 2023 Indonesia had three HPAL plants making Class 1 battery intermediates, six more under construction and ten planned, and contained nickel in MHP roughly doubled that year. This supply growth helped push prices down from their 2022 highs, and in 2025 Australian mine output fell by an estimated 54% as mines were placed on care and maintenance because of low prices.

Sources: IEA; USGS; USGS Minerals Yearbook

For investors

Key learnings

  1. Battery demand for nickel is real but contingent: each point of market share LFP gains removes nickel from the cathode mix, so EV sales alone do not forecast nickel demand.
  2. Indonesian HPAL capacity, mostly Chinese-owned, has made nickel abundant and cheap, which helps cathode makers' costs but has squeezed nickel miners elsewhere.
  3. Battery nickel needs a conversion step from MHP or matte to sulphate and precursor, and that step is concentrated in Indonesia and in Chinese-owned refining, so supply risk for cathode makers sits in processing as much as in mining.

What to track

  • LFP share of EV battery deployments: A rising share cuts nickel intensity per vehicle and weakens the battery pull on nickel (Annual · IEA Global EV Outlook; monthly industry trackers)
  • LME nickel price and MHP payables: Low payables signal surplus intermediate supply from Indonesian HPAL (Daily · LME; weekly price reporting agencies)
  • World nickel balance: A widening surplus points to further closures outside Indonesia (Twice yearly · International Nickel Study Group)

For policymakers

Key learnings

  1. Indonesia's 2020 ore export ban shows an export restriction can relocate a whole processing chain within a few years.
  2. Countries building cathode plants, including India, will depend on Indonesian or Chinese-owned nickel intermediates unless they secure other offtake or recycling.
  3. Nickel-free LFP lowers exposure to nickel supply risk, so chemistry choice in battery incentives is also a supply security choice.

What to track

  • Indonesian export and royalty rules for nickel products: Changes alter cost and availability of battery-grade intermediates (As announced · Indonesian Ministry of Energy and Mineral Resources)
  • Share of refined nickel by ownership: Higher concentration raises supply and compliance risk for importing countries (Annual · IEA Global Critical Minerals Outlook)

India

India is not a significant nickel miner or refiner, so nickel-based cathodes made in India would rely on imported sulphate or intermediates, most likely from Indonesia or Chinese-owned refiners.

Sources

  1. Nickel industry part 3: processing nickel laterites, high pressure acid leaching, Nickel Institute (2025)
  2. The world nickel market in 2025 and 2026: five years of surpluses (INSG forecast), Stainless Steel World (2025)
  3. Global Critical Minerals Outlook 2025 (extract), IEA (2025)
  4. Mineral Commodity Summaries 2026: Nickel, USGS (2026)
  5. The mineral industry of Indonesia, 2023, USGS Minerals Yearbook (2023)