EV Makers Confront 'Nickel Pickle'.

 

"In the electric-vehicle business, the quandary is known as the nickel pickle.

To make batteries for EVs, companies need to mine and refine large amounts of nickel. The process of getting the mineral out of the ground and turning it into battery-ready substances, though, is particularly environmentally unfriendly. Reaching the nickel means cutting down swaths of rainforest. Refining it is a carbon-intensive process that involves extreme heat and high pressure, producing waste slurry that's hard to dispose of.

The nickel issue reflects a larger contradiction within the EV industry: Though electric vehicles are designed to be less damaging to the environment in the long term than conventional cars, the process of building them carries substantial environmental harm.

The challenge is playing out across Indonesia's mineral-rich islands, by far the world's largest source of nickel. These deposits aren't deep underground but lie close to the surface, under stretches of overlapping forests. Getting to the nickel is easy and inexpensive, but only after the forests are cleared.

One Indonesian mine, known as Hengjaya, obtained permits five years ago to expand its operations into a forested area nearly three times the size of New York City's Central Park. The mine's Australian owner, Nickel Industries, said that rainforest clearing in 2021 caused greenhouse gas emissions equivalent to 56,000 tons of carbon dioxide. That's roughly equal to driving 12,000 conventional cars for a year, according to calculations by The Wall Street Journalbased on U.S. Environmental Protection Agency data.

Nickel Industries says that forestland it cleared had previously been degraded by illegal logging, which is why the Indonesian government allowed mining there. The company says it works hard to rehabilitate land, including planting over two million trees, and notes that its efforts have received environmental stewardship awards from Indonesia's government.

"Unfortunately, land clearing is required for all open-cast mining processes, including our operations," said the firm's sustainability manager, Muchtazar, who, like many Indonesians goes by one name. The negative impact is offset, he said, by nickel's use in environmentally friendly batteries.

Tesla said in an April report that EVs cause more emissions during the manufacturing phase than conventional vehicles, due in part to the process of extracting and refining minerals. The company said it takes less than two years of driving for an EV's total emissions to fall below that of a comparable internal combustion engine vehicle, however.

Nickel is responsible for more than a third of the carbon emissions generated from making a common type of battery cell -- more than any other mineral or production process -- the report said.

Before 2018, most of the nickel used in EVs was the type generally found in non-equatorial countries, including Canada and Russia. The sulfide nickel found there is generally of a higher grade and easier to process than other varieties. The mines, often located deep underground, are expensive and time-consuming to develop.

Auto executives worried about having enough nickel to meet rapidly growing demand for EVs. They had moved away from cobalt, another battery component, after human-rights groups and journalists reported on widespread child labor in cobalt operations and dangerous conditions faced by miners in the Democratic Republic of Congo. Automakers tweaked their batteries to reduce cobalt by adding more nickel.

Tesla Chief Executive Elon Musk said in a 2020 earnings call: "Any mining companies out there, please mine more nickel, OK?" Nickel prices soared on growing demand.

By then, Chinese companies had begun working to unlock an expansive, albeit tricky, source.

Millions of years ago, tectonic plates converged in what is now eastern Indonesia, lifting the ocean's mineral-rich seafloor to the surface and creating today's nickel bounty. The region is covered in rainforest, filled with flora especially adapted to the nickel-rich soil.

Many of the creatures here don't live anywhere else, like the maleo, a pink-breasted bird that buries its eggs underground, where they are heated by geothermal energy, and the anoa, the world's smallest wild cattle species.

But the laterite nickel found here wasn't particularly suitable for EVs. Chinese companies focused on a process that turns that type of nickel into materials for EV batteries, known as high-pressure acid leach, or HPAL. The technique had been around for decades, but had proved glitchy.

If Chinese scientists and engineers could develop facilities at scale, they could power the shift to electric vehicles.

That was the pitch China's Lygend Resources and Technology made to Indonesian miner Harita Group in 2018, when the two companies discussed setting up what would become Indonesia's first HPAL facility. Investments such as these were encouraged by an Indonesian policy that in 2020 banned the export of raw nickel and required companies to process domestically.

By 2021, at least two other Chinese companies had announced plans to construct billion-dollar nickel facilities, and more were drawing up proposals. The projects ramped up quickly.

Indonesia produced around half of all nickel used in EV batteries made last year, up from somewhere between zero and 5% in 2017, according to CRU, a London-based firm specializing in commodities business intelligence. That's expected to exceed 80% by 2027, CRU says.

The nickel rush has created pressing new environmental concerns. The HPAL process involves dousing nickel ore in sulfuric acid and heating it to more than 400 degrees Fahrenheit at enormous pressures. Producing nickel this way is nearly twice as carbon-intensive as mining and processing sulfide nickel found in Canada and Russia. Another way of processing laterite ore that often uses coal-powered furnaces is six times as carbon-intensive, according to the International Energy Agency.

Companies also face questions about how to get rid of the processing waste. It is difficult to safely sequester in tropical countries because frequent earthquakes and heavy rains destabilize soil, which can cause waste dams to collapse. A 2018 Indonesian law allowed companies to obtain permits to discard mineral processing waste into the ocean.

Environmentalists campaigned against the practice, which they said could pollute eastern Indonesia's seas. A Maritime and Investment Affairs Ministry official, Septian Hario Seto, said authorities hadn't approved any requests for deep-sea tailings disposal for HPAL plants and wouldn't do so, as the contents of the waste didn't meet criteria for being dumped into the ocean.

Indonesia's government says it is committed to enforcing environmental law and prosecutes companies it alleges have illegally mined in forests. Earlier this year, officials told nickel-industry executives to facilitate building military and police posts near their operations to ensure better oversight, according to an official presentation seen by the Journal.

China's domination of Indonesian nickel processing poses risks for Western electric-vehicle companies at a time of fraying relations between Washington and Beijing. Last year, the U.S. government declared nickel a critical mineral whose supply is vulnerable to disruption, with very limited nickel production operations in the U.S.

In March, Ford Motor announced that it was investing in a nickel-processing operation on Indonesia's nickel-rich Sulawesi island. The company said the investment will help it hit its target of producing approximately two million electric vehicles in 2026.

A Chinese company is at the center of that operation. For years, the the Indonesian unit of Brazilian miner Vale worked with Japan's Sumitomo Metal Mining to develop the project. But the partnership hit snags. Sumitomo withdrew last year, and Vale signed an agreement withZhejiang Huayou Cobalt, a Chinese firm, to develop a nickel HPAL facilitythat Vale sayswill be larger than any that exist today.

A Sumitomo spokesman said the venture was scrapped because of differences in scheduling. A Vale spokeswoman said the company partnered with Zhejiang Huayou because that project was larger.

"This framework gives Ford direct control to source the nickel we need -- in one of the industry's lowest-cost ways -- and allows us to ensure the nickel is mined in line with our company's sustainability targets" said Lisa Drake, a senior Ford executive.

French miner Eramet is also in the early stages of developing a nickel facility alongside German chemical giant BASF. It isn't seeking a Chinese partner, but its model takes advantage of "what has been unlocked by the Chinese engineering companies," said Geoff Streeton, Eramet's chief development officer. The ore for its potential plant will be sourced from a mine in which a Chinese company holds the largest stake.

Clearing land in order to mine is inevitable, said Mr. Streeton. "Our intent is to rehabilitate back to a biodiverse outcome," he said." [1]

1. EV Makers Confront 'Nickel Pickle'. Emont, Jon. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 05 June 2023: A.1.