Chinese Hand In Global Nickel Price Collapse

And then on Saturday (February 17), the West Australian premier granted miners a temporary 50% rebate on royalties for the next 18 months whenever prices are below US$20,000 per tonne.

Lithium, cobalt, nickel and graphite are needed for batteries and were touted by Treasurer Jim Chalmers as essential for powering the clean-energy technologies of the future.

Australia and Indonesia hold the world's largest reserves of Nickel, each with about 21 million tonnes .

But China is by far the largest customer, accounting for 35% of the nickel processed worldwide plus about another 15% it processes in Indonesia.

China also accounts for about 80% of the rare earths processed worldwide, 90% of the lithium, 70% of the gallium and the 70% of germanium.

Its incredibly low cost of processing and competitive labor market give it an almost unassailable advantage, turning suppliers into price takers rather than price makers.

So, what went wrong for Australia? To help keep prices low China invested in mines in Indonesia, hugely increasing their output.

Australia is attempting to establish alternative processing chains, entering into critical minerals partnerships with India, Japan, Korea, the United States and the United Kingdom.

But such attempts run the risk of strategic responses in the form of export bans on processed commodities (China has previously imposed bans on the export of Gallium, Germanium and rare earths ) and moves to create oversupplies.

Australia is a leading producer of critical minerals, supplying all ten of the elements needed for lithium-ion batteries, and has the advantage of better environmental, social, and governance (ESG) standards that make it an attractive destination for investment.

But it lacks the capacity to refine all of its own production, meaning it has to dispose of many of the critical minerals it extracts as byproducts.

Until Australia can find a way to break free of the market stranglehold of our biggest customer, those investments will remain at risk.

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On Monday (February 19), Albanese said he was working on a larger response that would ensure Australia had an“ongoing industry in nickel”, which would be one of the resources of the 21st century.

One such effective response would be the creation of a large processing facility to service multiple mines, selling Australian-sourced and processed critical minerals that adhere to higher ESG standards compared to those sourced and processed elsewhere.

The prime minister said the decision wouldn't be quick. He didn't want a response that lasted“a day or two.”

Mohan Yellishetty is co-Founder, Critical Minerals Consortium, and Associate Professor, Department of Civil Engineering, Monash University

This article is republished from The Conversation under a Creative Commons license. Read the original article .

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