Russian miner Nornickel’s experts believe that the post-Covid recovery of primary nickel demand will increase this year, the company says in its market review.

The company forecasts the demand will be more by 15% on-year in 2021 and it will be offset by the massive expansion of Indonesian nickel pig iron (NPI) capacities, Kallanish notes.

Since the December report, the experts revised the market surplus for both 2020 and 2021. They currently estimate the surplus at 76,000 tonnes of nickel in 2020 (108,000t previously) and at 52,000t in 2021 (75,000t previously).

In 2022, Nornickel expects its surplus to exceed 100,000t on the back of a continuing expansion of low-grade nickel. An accelerated growth in the battery sector with its ever-tightening requirements for ESG-compliance and respective supply curtailments could mitigate the surplus.

The future market balance will be determined by the pace of electrification, the company’s experts say.

Currently, the electric vehicle market is growing at a double-digit rate thanks to legislative support, government incentives, and evolving battery chemistries as well as cost optimisation. The experts maintain the view that the long-term growth in nickel demand will primarily come from the battery sector.

Earlier, the company said it will invest about RUB 80 billion ($108 million) in reconstruction of its own oil bases after the fuel spill in the Arctic last year.

Last month, Nornickel resumed ore mining at the Oktyabrsky mine back to its full capacity after a flood. In February, the miner partially halted production at its Oktyabrsky and Taimyrsky mines due to flooding. Operations have also been impacted by a deadly accident at the Norilsk Concentrator.

At present, Oktyabrsky mine has recovered its daily mined volume to its full capacity of 14,100t. The mine can produce 5m t/year of ore and the Taimyrsky mine some 4.3m t/y of ore.

The Taimyrsky mine is also on track to resume operationsin early June. The Norilsk Concentrator (approximately 5.2m t/y of ore) is expected to return to its full capacity by October.