Nickel: Batteries, Supply Chains, and Environmental Risks (2025)

Nickel is vital for EV batteries and stainless steel, but its extraction and processing-especially from laterite ores-pose major environmental, social, and supply chain risks.
Data: IEA, ISS ESG, Maplecroft, MIT, ScienceDirect, Lead the Charge, Goldschmidt, NERC, Fastmarkets (2025)

Key Uses

Batteries, Steel, Alloys

NMC/NCA batteries, stainless steel, aerospace[2][3]

Top Producer

Indonesia

Largest producer, mainly laterite mining[1][2][3][5][6]

Battery-Grade Demand

+60–70% by 2040

Driven by EVs, grid storage[2][3][8]

Supply Chain Risks

High

Export controls, China midstream, price volatility[2][3][6]

Recycling Rate

<10%

Nickel from batteries, scrap[2][3]

Environmental Impact

Severe

Deforestation, emissions, water pollution[1][2][3][4][5][6][7][8]

Global Nickel Production by Country (2024)

Indonesia, Philippines, Russia, Australia, Canada[1][2][3][5][6]

Nickel Use by Sector (2024)

Batteries: 18%, Stainless Steel: 68%, Alloys: 7%, Other[2][3]

Environmental Controversies in Nickel Mining

Most common: water pollution, biodiversity loss, emissions[1][2][6][7]

Nickel Ore Type: Laterite vs. Sulfide (2024)

Laterite: 60%+ of global supply, higher impact[2][5][7][8]

Nickel Reserves in High-Risk Areas

40% in high biodiversity, 35% in high water stress regions[2]

Nickel Demand for Batteries (2020–2040, indexed)

Battery demand for nickel to rise 5–7× by 2040[2][3][8]

Market, Geopolitical, and Environmental Context

Aspect	Status	Key Details
Export Controls	Indonesia	Ban on raw ore exports, push for domestic refining[6]
Chinese Market Power	Dominant	Heavy investment in Indonesian processing, midstream control[6]
Environmental Criticism	Severe	Deforestation, water/air pollution, biodiversity loss[1][2][3][4][5][6][7][8]
Recycling & Urban Mining	Growing	Still minor, but key for future supply[2][3]
Alternative Chemistries	Rising	LFP batteries reduce nickel/cobalt demand[2][3]

[1] ISS ESG, [2] Maplecroft, [3] MIT, [4] NERC, [5] ScienceDirect, [6] Lead the Charge, [7] Goldschmidt, [8] IEA (2024–2025)
All values are latest available estimates; ESG and supply chain risks remain high.

Nickel

Nickel is a crucial component of high-performance lithium-ion battery chemistries, particularly those used for electric vehicles requiring long range and high energy density. Nickel-rich cathodes, such as NMC (Nickel-Manganese-Cobalt) and NCA (Nickel-Cobalt-Aluminum) formulations, allow batteries to store more energy while reducing reliance on expensive cobalt. As demand for electric vehicles and grid storage grows, nickel has emerged as one of the most strategically important minerals for the clean energy transition. However, the environmental costs of nickel extraction and processing, especially from laterite deposits, present serious challenges. Without improved extraction practices and recycling infrastructure, nickel supply chain pressures could undermine both the environmental and economic sustainability of electrification strategies.

Key uses: Lithium-ion battery cathodes (NMC and NCA batteries), stainless steel production, specialty alloys for aerospace and industrial applications.
Physical properties: High energy density contribution in batteries, excellent corrosion resistance, high thermal and structural stability.
Projected demand: Global demand for battery-grade nickel is expected to rise by 60–70% by 2040, with EVs accounting for the largest share of incremental growth.

Supply Concentration and Geographic Sourcing:

Indonesia has become the world's largest nickel producer, primarily through laterite nickel mining and high-pressure acid leach (HPAL) processing.
Philippines is a major supplier of lower-grade laterite ores to Chinese refineries.
Russia, Australia, and Canada are key suppliers of sulfide nickel deposits, which are generally less environmentally damaging to process than laterites.

Environmental and Social Criticisms:

Laterite mining impacts: Laterite nickel mining requires strip mining of tropical ecosystems, leading to widespread deforestation, biodiversity loss, and severe land degradation.
High carbon footprint: HPAL processing for laterite ores is energy-intensive and produces significant greenhouse gas emissions, undermining the climate benefits of EVs if sourcing is not improved.
Water contamination: Acid leaching processes can cause toxic runoff and heavy metal contamination of freshwater systems, particularly when tailings management is weak or under-regulated.

Geopolitical and Market Risks:

Supply chain bottlenecks: The sharp rise in demand for Class 1 nickel (battery-grade) is outpacing supply growth, creating long-term pricing volatility risks.
Indonesian export controls: Indonesia has imposed export bans on raw nickel ores to encourage domestic refining, reshaping global trade flows and creating dependency risks for battery manufacturers.
Chinese market consolidation: China has invested heavily in Indonesian nickel processing infrastructure, consolidating its influence over the midstream processing of battery-grade nickel products.

Industry Responses and Emerging Trends:

Nickel recycling and "urban mining": Initiatives to recover nickel from used EV batteries and stainless steel scrap are accelerating but still face technical and economic barriers at scale.
Sulfide deposit development: New investments are being made in lower-carbon sulfide nickel projects in jurisdictions with stronger environmental regulations, such as Canada and Australia. However, there are also drawbacks to this method.
Alternative battery chemistries: Growth in lithium iron phosphate (LFP) batteries, which require no nickel or cobalt, could partially alleviate future nickel demand, particularly for lower-range EVs and energy storage systems.