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1、The future of the nickel market:Is there a sustainable response to the growing nickel demand?Peter VaryushinHead of commodity markets researchSMM International New Energy ConferenceMay 9,2023DisclaimerThe future of the nickel market:Is there a sustainable response to the growing nickel demandThe inf
2、ormation contained herein has been prepared using information available to PJSC MMC Norilsk Nickel(“Norilsk Nickel”or“Nornickel”or“NN”)at the time of preparation of the presentation.External or other factors may have impacted on the business of Norilsk Nickel andthe content of this presentation,sinc
3、e its preparation.In addition all relevant information about Norilsk Nickel may not be included in thispresentation.No representation or warranty,expressed or implied,is made as to the accuracy,completeness or reliability of theinformation.Any forward looking information herein has been prepared on
4、the basis of a number of assumptions which may prove to be incorrect.Forward looking statements,by the nature,involve risk and uncertainty and Norilsk Nickel cautions that actual results may differ materiallyfrom those expressed or implied in such statements.Reference should be made to the most rece
5、nt Annual Report for a description of majorrisk factors.There may be other factors,both known and unknown to Norilsk Nickel,which may have an impact on its performance.Thispresentation should not be relied upon as a recommendation or forecast by Norilsk Nickel.Norilsk Nickel does not undertake an ob
6、ligation torelease any revision to the statements contained in this presentation.The information contained in this presentation shall not be deemed to be any form of commitment on the part of Norilsk Nickel in relation toany matters contained,or referred to,in this presentation.Norilsk Nickel expres
7、sly disclaims any liability whatsoever for any loss howsoeverarising from or in reliance upon the contents of this presentation.Certain market share information and other statements in this presentation regarding the industry in which Norilsk Nickel operates and theposition of Norilsk Nickel relativ
8、e to its competitors are based upon information made publicly available by other metals and miningcompanies or obtained from trade and business organizations and associations.Such information and statements have not been verified byany independent sources,and measures of the financial or operating p
9、erformance of Norilsk Nickels competitors used in evaluatingcomparative positions may have been calculated in a different manner to the corresponding measures employed by Norilsk Nickel.This presentation does not constitute or form part of any advertisement of securities,any offer or invitation to s
10、ell or issue or anysolicitation of any offer to purchase or subscribe for,any shares in Norilsk Nickel,nor shall it or any part of it nor the fact of its presentationor distribution form the basis of,or be relied on in connection with,any contract or investment decision.205000020000400006
11、000080000100000LME Nickel Market VolumeLME 3M Nickel PriceUnprecedented Nickel Price Volatility in 2022-2023 Showed the Importance of Russian SupplyThe future of the nickel market:Is there a sustainable response to the growing nickel demandSource:LMEThe LME Nickel Price Has Been Extremely VolatileMa
12、ssive short squeeze in March has fundamentally impacted the LME nickel tradingThe LME trading volumes have dropped to the multi-year lows:average daily market volume declined by-26%YoY in 2022In October 2022,the LME launched a public consultation regarding the possible ban of Russian non-ferrous met
13、als,and later decided against the banThe LME indicated that the market is very much reliant on the Russian metal and any restriction would likely undermine the market in a critical wayLME Price,USD/t NiLME Volume,kt NiResumption ofLME trading amidilliquid marketLME was forced to halt nickel trading
14、andcancel trades after pricesdoubled to$100,000/tLME launchedpublic consultationon banningRussian metalLME decidedagainst banningRussian metal365%15%8%6%5%Stainless SteelBatteriesAlloysPlatingSpecial SteelOtherNickel Demand Is Still Dominated by the Stainless Steel Sector Followed by Batteries,Alloy
15、s,Special Steel and PlatingNote:Primary nickel use is indicated for 2022Source:Company estimatesThe future of the nickel market:Is there a sustainable response to the growing nickel demandPrimaryNickelUse3.0 MtMachinery,Chemical andPetrochemical,Power Generation,Home Appliances,ConstructionElectric
16、Vehicles,Portable Electronics,Energy StorageOil and Gas,Automotive,AerospaceAutomotive,ElectronicsMachinery,Construction4Nickel in Melting Applications and Plating:Robust Increase of Demand,Long-Term Growth+1 Mt Ni by 20305Sources:Zljsteel,Eurofer,SMR,METI,TSIIA,ISSF,Company estimatesThe future of t
17、he nickel market:Is there a sustainable response to the growing nickel demand0,50,60,720212025E2030EAlloysSuperalloysSpecial SteelPlatingNickel Demand in Other Non-Stainless Sectorsex.Batteries:+3%CAGR in 2021-2030EMt Ni2,02,42,820212025E2030EChinaOther AsiaEMEAAmericaNickel Demand in Stainless:+4%C
18、AGR in 2021-2030EMt NiNickel in Batteries:Strong Long-Term Demand Growth by+1 Mt Ni by 20306The future of the nickel market:Is there a sustainable response to the growing nickel demandSources:BNEF,LMCA,BMO,Company estimatesHigh-Nickel Chemistries Are Expected to Be the Dominant Technology,but Risk o
19、f Further Development of Non-Nickel Chemistries Persists0500020222024E2026E2028E2030EBase CaseBase Case DemandExpansion of Nickel-Intensive Chemistries and Governments Electrification Targets Drive Long-Term Outlook for Nickel Demand in BatteriesNickel consumption in batteries,kt Ni0%20%4
20、0%60%80%100%202020222024E2026E2028E2030ELFPLMNOHigh NickelNCMANCANCMLMFP?Li-S?Sodium-ion?Na-ion Batteries can Compete with Li-Ion in the Budget Segment of EVs and Energy Storage Devices,Adding to the Nickel Demand7The future of the nickel market:Is there a sustainable response to the growing nickel
21、demandSodium-IonLFPNCMEnergy density140-160 Wh/kg150-180 Wh/kg240-280 Wh/kgNumber of cycles-80003000-6000Voltage2.8-3.7V3.2V4.2-4.5VNa-ion Batteries Are Comparable to LFPs in Performance at a Significantly Lower CostSodium Battery Production Could Reach 450 GWhby 2030The largest manufac
22、turers of batteries(incl.CATL,BYD)announced the launch of Na-Ion batteries productionMajor cathode material manufacturers have already started mass production of cathode materialThe PRC government has included sodium batteries into the battery industry development roadmapTechnology of production of
23、sodium batteries is similar to the traditional one and does not require significant additional investmentsSources:CIC energiGUNE,Company dataSodium batteries production growth forecast,GWh5892308536NaCuFeMnNaNiFeMnLFPNCM622354580020022202320242025Metal costs(yuan per kWh)Lithiu
24、m-ionSodium-ion2030440Nickel Grades Definitions8The future of the nickel market:Is there a sustainable response to the growing nickel demandLow-Grade Primary Nickel(Class 2 Nickel)2.0 Mt Ni paNickel-Containing Scrap1 Mt Ni paHigh-GradePrimary Nickel1.1 Mt Ni paNPI(8-16%Ni)1.6 Mt paFeNi(15-55%Ni)0.35
25、 Mt paClass 1(Ni 99%)0.8 Mt paCathodes,briquettes,pellets,rounds/crowns,coarse powder,carbonyl powderChemicals0.3 Mt paNiSO4(22%Ni)and otherfrom SemisNiO&Utility Ni(75%Ni)1 Mt Ni)Battery scrap(60kt Ni)Alloys scrap,revert scrap,plating residuesIndonesia Is the Main Center of Nickel Supply Growth,but
26、Should the Battery Industry Put All Eggs in One Basket?The future of the nickel market:Is there a sustainable response to the growing nickel demand262363590862250898602120222023ENPIFeNiNPI-to-Matte ConversionHPAL8598688407808692282361
27、4779792020202120222023ENickel Metal and PowderClass 2Nickelhemicals(inc.BatteryScrap)Nickel Output in Other Countries Declines,Class 1 Nickel Production UnchangedNickel Supply in Indonesia(1):+45%CAGR in 2018-2023Ekt Nikt Ni9Notes:1.Including new capacities in China
28、and Indonesia to produce nickel metalSource:Company estimatesNPI and other semi-products export ban?Evolution of Nickel Production in Indonesia and ChinaCommissioning of large-scale industrial production of NPIin IndonesiaDiscounts on NPI vs LMEConversion of NPI to matte and nickel sulphate,launch o
29、f HPAL projects for the EV sectorProduction of nickel cathodes in China and Indonesiafrom NPI-made nickel matte -20202023Discounts on nickelsulphate vs LMEMarket rebalancing:partial allocation of market surplusto Class 1 rather than Class 2The future of the nickel market:Is there a sust
30、ainable response to the growing nickel demand10Indonesia limits raw materials export to incentivize local battery production?PCAM/CAM producers ex-Indonesia face difficulties with raw material sourcing+their financial model will be under threatOversupply of High-CO2 Class 2 and Intermediates Has Res
31、ulted in Substantial Discounts for Indonesian Nickel.Will It Continue?Source:Company estimatesThe future of the nickel market:Is there a sustainable response to the growing nickel demandNPI and Nickel Sulphate Are Traded with Significant Discounts to the LME in 2022-2023In 2022,NPI was traded with a
32、n average discount of above$7,000/t Ni due to significant oversupplyDiscounted nickel units from Indonesia come with high carbon footprint and other environmental issues,making the use of this nickel in the global battery industry a non-sustainable optionSome Chinese producers announced plans to lau
33、nch Class 1 production in China and Indonesia to capitalize on discounted NPI-based nickel units and to close the price gap beneficial for battery producersUSD/t Ni-25000-20000-15000-0000Chinas NPI Premium/DiscountChinas NiSO4 Premium/Discount11(32)142(174)110200+200+250+202120222023
34、E2024E2025ELow-Grade Nickel(exessive capacities)High-Grade NickelSurplusDeficitRisk of Low-Grade Nickel Market Surpluses in 2023-2025E but the Market of Eco-Friendly Metal is Expected to be Tight12Source:Company estimatesThe future of the nickel market:Is there a sustainable response to the growing
35、nickel demandMarket Balance(Base-Case Scenario)kt NiMarket surplus will be mainly represented bythe low-grade nickel units,particularly NPI and FeNiThe market is likely to remain in a considerable surplus in the medium term due to the oversupply of non-ESG compliant Class 2 nickel(if there is no sem
36、i-products export ban from Indonesia)The high-grade nickel market outside China and Indonesia is forecast to stay tight due to the robust demand in traditional sectors,low stock environment and demand for high quality and ESG standardsThe supply of eco-friendly nickel for the needs of sustainable ba
37、ttery producers is quite limited High CO2 Footprint of NPI-Made NiSO4Will Affect Its Applicability for the Auto Sector Outside ChinaThe future of the nickel market:Is there a sustainable response to the growing nickel demandMost likely,European CBAM carbon charges on nickel products will be introduc
38、ed closer to 2030The carbon footprint of NiSO4 from NPI-made nickel matte is unlikely to decline below 40t CO2/t Ni(2)even in case of the development of renewable energy sourcesNotes:1.Nickel Industry LCA by Nickel Institute and Sphera Solution,2.Based on current carbon footprint of PT Vale,which ha
39、s already switched to renewable energy sources,3.TakingintoaccountfuturereductionofNornickelscarbonfootprintto 5t CO2/t NiSources:Nickel Institute,Sphera Solution,Company estimatest CO2/t NiCarbon Footprint of Indonesian Nickel vs Nornickel and Industry AverageThe CO2 tax paid when the battery mater
40、ial is imported to Europe will be$1,500 5,000 per tonne of Ni higher for the battery material producers using Indonesian NPI nickel units in comparison with the users of Nornickels metal4540158135*15*NiSO4 fromNPI nowNiSO4 fromNPI by 2030MHPNornickelnowIndustryaverage65(1)*CO2 footprint due to defor
41、estation*NPI-to-NiSO4 conversion footprint13There Is Not Enough ESG-Compliant Nickel for the Battery SectorThe future of the nickel market:Is there a sustainable response to the growing nickel demandSource:Company estimatesNickel Use in Batteries by Sustainability Criteria202120222023E2024E2025E2030
42、EESG-Compliant Green NickelNon ESG-Compliant NickelNickel Demand in BatteriesThere are significant ESG concerns of battery-grade nickel supply in IndonesiaEnvironmental issues of NPI-made matte:very high carbon footprint,deforestation,water and soil contaminationHPAL could suffer from dry stacked ta
43、ilings,which require safe and sustainable storageAs a result,Indonesian nickel will be integrated at the Western battery supply chain at a much lower scale than it could potentially beThe stainless steel sector is expected to implementthe same ESG requirements in 5-10 years14ESG Concerns of Indonesi
44、an Nickel Production15The future of the nickel market:Is there a sustainable response to the growing nickel demandErosionDeforestationWater ImpactsSource:Steven BrownApproaches for Battery Material Producers to Procure Nickel Units16The future of the nickel market:Is there a sustainable response to
45、the growing nickel demandBusiness as usualSustainableapproachThe way to choose suppliersPrice-basedCO2 footprint and ESG commitments are taken into considerationMarket accessLimited to ChinaGlobal without limitationsTrade restrictions&taxesHigh(CBAM and similar)LowUse of Nickel ResourcesSignificant
46、underutilizationwith further depletionSustainable andeconomically feasible useNornickel:Industry-Leading Position in the 1st Quartile of Global Nickel Carbon Intensity CurveThe future of the nickel market:Is there a sustainable response to the growing nickel demandNornickels CO2Nickel Emissions(per
47、tonne of Ni-eq.)NorilskEmissions Intensity(t CO2e/t Ni-eq.)Production(cumulative centile)2030 target:to sustain industry-leading position in the 1st quartile of global nickel industry GHG intensity curve8520202030EReduction of Carbon Intensity per Ni-eq.-38%Note:nickel equivalent volume has been cal
48、culated assuming 2020 average commodity prices,incl.reserve for CO2 emissions from Sulfur Program 2.0 execution,ex.residential consumptionSource:Company estimates17Speaker Contact DetailsThe future of the nickel market:Is there a sustainable response to the growing nickel demandAvailable for Public Download at:https:/ Nickel Market Update Latest update:November 30,2022Next issue:End of May,2023Peter VaryushinHead of Commodity Markets ResearchMMC Norilsk NickelTel:+7 495 7877667 ext.5110E-Mail:VaryushinPSnornik.ru18