Continuous strike at Vale's Canadian Nickel Mine aggravates the tightening of Battery material supply

A strike in (Vale), a Canadian nickel mine owned by Vale, the global mining leader, has triggered a nearly two-year high in North American nickel prices, and nickel inventories on the London Stock Exchange (LME) have fallen to their lowest level in more than a year, straining the supply of the battery raw material.

(Sudbury) in Sudbury, Canada is one of the major producers of nickel mines in the world. Nickel ore is a metal raw material for aviation, electronics and nuclear industry. As a result of the strike campaign launched by the United Steelworkers Local 6500 union, its production work has stalled since June 1 this year.

Colin Hamilton, an analyst at BMO Capital Markets, said that since the beginning of 2021, the nickel (battery-grade) metal business has been facing challenges, and the supply of materials for end customers may be more limited than expected.

As a key component of rechargeable batteries for new energy vehicles, battery-grade nickel helps to increase the energy density of batteries and allows manufacturers to reduce the use of cobalt. Cobalt is more expensive to extract than nickel and the supply chain is opaque.

According to foreign media forecasts, the battery-grade nickel market will be in a tight supply in the next two to three years, and the normal supply will not resume until 2024 at the earliest.

Adrian Gardner, chief analyst of the nickel market at Wood Mackenzie, said the strike was not the main reason for the rise in nickel prices, but it would be the main driver of the continued rise in nickel prices in North America.

He also pointed out that Vale is not optimistic about the solution to the strike, and the union has twice rejected the salary proposal proposed by the management this year. The labor dispute is likely to last for months before the two sides reach an agreement. Vale had a year-long strike between 2009 and 2010.