Report: Vale strike drives up price for battery-grade nickel

At the picket lines across the Sudbury area Thursday, striker Vale workers were collecting cash donations for the Sudbury Food Bank. (Alana Everson/CTV News)

A nickel market analyst expects the strike at Vale operations in Sudbury to drag on, as prices for the high-grade nickel produced in the area increases, in part because of the local labour disruption.

According to a story from Bloomberg, the strike is putting pressure on the supply of nickel needed to make batteries for electric vehicles.

"Sudbury is one of the world’s few producers of nickel pellet, a form used to produce alloys for aerospace, electronic and nuclear industries," the story said. "Production at Vale’s northeast Ontario operation halted when unionized workers went on strike on June 1. The disruption is driving consumers to tap battery-grade nickel briquette as an alternative."

That shift is increasing competition for briquette, the main form of nickel stored at LME warehouses. Supply has fallen by nine per cent since a peak in April and are now at the lowest in more than a year, Bloomberg said.

"Battery-grade nickel is a key ingredient in rechargeable batteries for electric vehicles, helping pack more energy into cells and allowing producers to reduce use of cobalt, a more costly metal that typically has a less transparent supply chain," the story said.

"The market for such nickel is expected to be in a tight balance in the next two to three years and could slip into a deficit as early as 2024, according to energy data and analysis firm BloombergNEF."

Members of Steelworkers Local 6500 have been on strike since last month. Issues include benefits for new workers.

Adrian Gardner, principal analyst for nickel markets at research firm Wood Mackenzie, told Bloomberg the strike could last for several months. Vale faced a yearlong strike in Canada back in 2009 and 2010.

Striking workers represented by United Steelworkers Local 6500 have twice rejected a wage offer presented by the Brazilian mining giant this year.

Read the full story here.