Material Insights · Understanding the Material World

Nickel and Nickel-rich lithium-ion batteries

Nickel-rich cathodes are nickel's fastest-growing market, and the nickel feeding them increasingly comes from Indonesian laterites processed mostly in Chinese-owned plants. Growth depends on how much of the EV market stays with nickel cells rather than nickel-free LFP.

Nickel (commodity) and Nickel-rich lithium-ion batteries (energy): 5 relationships.

How they are linked

1. Cathode metal

Physical flow · Strong · Nickel to NMC cathodes

In NMC cathodes nickel is the main active metal that stores charge, so raising the nickel share raises energy per kilogram and cuts the cobalt needed.

  • 80% nickel share of the metal content in an NMC 811 cathode (8:1:1 nickel, manganese, cobalt)
  • 5% to 15% battery share of total nickel demand, 2019 to 2023

Batteries need high-purity (class 1) nickel, usually as nickel sulphate, unlike stainless steel, which can use lower-grade ferronickel and nickel pig iron. Batteries rose from about 5% to 15% of nickel demand between 2019 and 2023, yet stainless steel still takes most nickel, so batteries add growth rather than set the whole market.

Sources: K. Bhuwalka (Stanford) and E. Olivetti (MIT), UT Austin Mineral Transition memo; Cambridge Enterprise, University of Cambridge

2. Indonesian HPAL feed

Physical flow · Rising · Laterite ore to battery nickel

High-pressure acid leaching (HPAL) dissolves low-grade Indonesian laterite ore to make mixed hydroxide precipitate (MHP), an intermediate that can be refined into battery-grade nickel sulphate.

  • over 250 kt MHP produced, 2023
  • about 70 t CO2 per tonne of nickel when nickel pig iron is converted to matte, the other Indonesian route to battery feed

HPAL is an old technology, first built at Moa Bay in Cuba in 1959, but Indonesia scaled it up to feed cathode makers. It turned cheap laterite into battery feed, but the carbon intensity of Indonesian nickel, especially pig iron converted to matte, remains a question for buyers facing carbon rules.

Sources: K. Bhuwalka (Stanford) and E. Olivetti (MIT), UT Austin Mineral Transition memo

3. Concentrated supply

Shared risk · Strong · Indonesia and Chinese owners to cell makers

Nickel for NMC cathodes now depends heavily on one country's ore and one country's companies, so policy in Indonesia or China moves the whole battery chain.

  • about 2.2 Mt of 3.7 Mt Indonesia's share of world mine output, 2024 estimate
  • almost 45% of refined nickel made in Indonesia, 2024
  • 65% of world refined nickel made by Chinese-owned firms, 2024

Indonesia supplied around 90% of refined supply growth in 2024, and the top three refining countries rose from 60% to 80% of output. The same surge created a surplus that pushed prices down, so concentration has so far meant cheap nickel for cell makers, but it leaves them exposed to Indonesian export or quota decisions.

Sources: USGS; IEA

4. LFP takes share

Substitution · Rising · LFP cells replace NMC

Lithium iron phosphate cells use no nickel and cost less, so every EV that switches to LFP removes nickel demand that NMC would have created.

  • almost half LFP share of the global EV battery market, 2024

NMC keeps the lead where range and weight matter, such as premium cars and colder markets, while LFP has spread in China and in cheaper models. Forecasts of nickel demand from batteries swing widely with the assumed LFP share.

Sources: IEA

5. Price link: battery demand

Cost and price · Weak · Both ways

Nickel is a large cathode cost, but cell prices are set by many inputs and by scale, so the US battery price index barely tracks nickel month to month.

  • -0.02 monthly change correlation
  • 0.23 12-month change correlation
  • -0.31 fitted elasticity

Battery prices fell for years while nickel swung, and nickel prices fell about 10% over 2024 on Indonesian surplus. The weak link shows that nickel price risk sits mostly with cathode and precursor makers, not with final cell buyers.

Sources: Material Insights (World Bank, FRED, IMF data); USGS; IEA

For investors

Key learnings

  1. Batteries are nickel's growth market, rising from 5% to 15% of demand between 2019 and 2023, but stainless steel still sets most of the price.
  2. Indonesia made almost 45% of refined nickel in 2024 and Chinese-owned firms 65%, so supply risk for NMC makers lies mainly in the policies of two countries rather than in geology.
  3. LFP took almost half of the EV battery market in 2024, so nickel demand forecasts depend on chemistry share as much as on EV sales.

What to track

  • LME nickel price and stocks: Rising stocks and falling prices point to continued Indonesian surplus (Daily · LME)
  • Indonesian ore quota (RKAB) approvals and export rules: Tighter quotas or new levies can lift prices and margins for non-Indonesian supply (As announced · Indonesian Ministry of Energy and Mineral Resources)
  • LFP share of EV battery installations: A rising share cuts expected nickel demand from batteries (Monthly · China Automotive Battery Innovation Alliance; yearly · IEA)

For policymakers

Key learnings

  1. Nickel for NMC cells is concentrated in Indonesia's ore and Chinese-owned refining, so diversifying cell making does not by itself diversify nickel supply.
  2. Converting nickel pig iron to matte emits about 70 t of CO2 per tonne of nickel, so carbon rules on batteries can favour lower-emission sources and routes.
  3. Countries with cell ambitions but no nickel, such as India, may find LFP or sodium-ion chemistries easier to supply securely.

What to track

  • Refined nickel output by country and by owner: Shows whether supply concentration is easing or deepening (Yearly · IEA Global Critical Minerals Outlook; USGS)
  • Battery chemistry mix in domestic cell factories: Indicates how much imported nickel the battery industry will need (Yearly · industry and ministry reports)

India

India has no significant nickel mining, so any NMC cells made under its battery programme would rely on imported nickel or precursor, much of it from Chinese-owned plants in Indonesia.

Sources

  1. Price correlation, Material Insights, Material Insights (World Bank, FRED, IMF data)
  2. Nickel Market Dynamics and the Security of the Battery Supply Chain, K. Bhuwalka (Stanford) and E. Olivetti (MIT), UT Austin Mineral Transition memo (2024)
  3. High-capacity lithium-ion batteries (technology summary), Cambridge Enterprise, University of Cambridge (2025)
  4. Mineral Commodity Summaries 2025: Nickel, USGS (2025)
  5. Global Critical Minerals Outlook 2025 (extract hosted by UT Austin), IEA (2025)