Minmetals New Energy Secures Nickel Supply Through Strategic Investment in Jinchuan Nickel and Cobalt

Minmetals New Energy

In a strategic move to secure a steady supply of essential nickel raw materials, China's Minmetals New Energy (MNE) has committed to investing 500 million yuan ($69 million) in Jinchuan Nickel and Cobalt (JNC). This investment will support MNE’s growing production needs in a rapidly evolving battery materials market.

Investment Details and Supply Agreement

MNE will acquire newly issued equities in JNC, a subsidiary of the major diversified metals producer, Jinchuan Group, as announced on December 11. The exact number of shares acquired remains undisclosed. Under the terms of the agreement, JNC will supply MNE with at least 200 tons per month, but no more than 12,000 tons per year, of nickel metal equivalent in nickel sulphate form.

Expanding Capacities and Market Impact

MNE, based in Changshan, Hunan province, boasts a significant production capacity that includes 120,000 tons per year of nickel-cobalt-manganese (NCM), 60,000 tons per year of lithium-iron-phosphate (LFP), 30,000 tons per year of NCM precursor, and 5,000 tons per year in waste battery recycling. The company reported a substantial increase in its LFP product shipments from June to September, with approximately 6,000 tons shipped, marking a significant rise from the previous quarter.

Jinchuan Group has been enhancing its production capacities to meet the burgeoning demand for battery materials. It initiated production at its nickel salts facility in 2018 with a capacity of 100,000 tons per year and expanded by an additional 100,000 tons in 2022. Furthermore, Jinchuan is constructing another nickel sulphate plant in Gansu province, anticipated to eventually contribute an additional 280,000 tons per year to its total output, reinforcing its position as a pivotal player in the nickel market.

China's Graphite Market to Grow in 2025 Despite Oversupply and Geopolitical Challenges

China Graphite

China's graphite flake market is set to expand further in 2025, driven primarily by sustained demand from the new energy vehicle (NEV) industry. Despite challenges such as oversupply and geopolitical uncertainties, the market remains resilient due to the critical role of graphite in producing lithium-ion battery components like anodes.

The NEV industry, a major consumer of graphite, has grown exponentially in China over the past decade, supported by the country's decarbonization agenda. In 2023, NEV production reached 11.345 million units (up 35% year-on-year), with sales climbing 36% to 11.262 million units. By October 2023, NEVs accounted for 46.8% of China's auto market, up from 26% in 2022.

To meet rising demand, China's domestic graphite flake production increased from 930,000 tons in 2020 to 1.2 million tons in 2023. Major companies, such as China Minmetals Heilongjiang Graphite, have launched large-scale projects, including a 6 million tons/year graphite flake ore production complex. Additional capacity expansions are underway, including projects by Heilongjiang Ruitong, Heilongjiang Longda, and Inner Mongolia Hengyu.

Export Licensing Challenges and Geopolitical Headwinds

However, Beijing's introduction of export licensing controls on graphite products like flake and spherical graphite is curbing exports. From January to October 2023, Chinese graphite flake exports dropped 23% year-on-year to 49,647 tons. Exports to India plummeted to zero, compared with 9,379 tons in the same period last year, largely due to the new regulatory restrictions.

Exporters must now comply with stringent licensing procedures that require detailed documentation, including technical descriptions, end-user identity verification, and export contracts. This move aligns with China's broader export control legislation for dual-use items, which applies to goods that have both civilian and military applications.

China also reduced tax rebates for spherical graphite exports, an essential component in lithium-ion batteries, from 13% to 9%, effective December 1, 2023. Meanwhile, stricter inspections on US-bound graphite shipments reflect escalating trade tensions between the two countries. Policies such as the US Inflation Reduction Act and the EU's Critical Raw Materials Act are further encouraging global battery manufacturers to diversify supply chains away from China.

Global Battery Producers Adapt

In response to export restrictions and potential US tariff hikes, Chinese battery manufacturers are increasing overseas investments. BTR, a major battery material producer, recently launched an 80,000 tons/year anode material plant in Indonesia and began building additional facilities in Morocco. Similarly, Shijiazhuang Shangtai is investing $154 million to establish a 50,000 tons/year anode material plant in Malaysia.

Such initiatives are helping companies hedge against geopolitical risks while ensuring a stable supply of raw materials for the growing global battery market.

Uncertain Political Climate

Political developments, such as a potential re-election of Donald Trump as US president, could further disrupt the global electric vehicle (EV) market. Trump's policies favor traditional energy sources and could lead to increased tariffs on lithium-ion batteries and related raw materials. This uncertainty underscores the importance of diversifying supply chains and expanding overseas production.