The demand for ethical sourcing and environmentally conscious practices continues to gain momentum across industries. Now, the nickel industry is poised for a significant shift with the launch of green nickel prices by Benchmark Mineral Intelligence (Benchmark). This move comes on the heels of growing calls from producers for metals exchanges to introduce contracts based on sustainability metrics.
Benchmark’s initiative addresses the increasing focus on Environmental, Social, and Governance (ESG) factors in the nickel supply chain. However, concerns regarding the environmental impact of nickel production, particularly carbon emissions, have prompted calls for a more holistic approach.
Benchmark’s green nickel prices will be based on transactions by producers who meet their sustainability criteria, assessed using a comprehensive framework of 79 ESG indicators. This system aims to incentivize environmentally responsible practices and promote transparency within the nickel industry.
A Two-Pronged Approach for Green Nickel
Benchmark will assess prices every two weeks for two key nickel products: nickel metal and nickel sulfate. Nickel metal is a versatile industrial metal used in various applications, while nickel sulfate is a crucial component of electric vehicle (EV) batteries. The inclusion of nickel sulfate reflects the growing importance of EVs and the increasing demand for sustainable battery production.
This development comes amidst a backdrop of debate within the nickel industry. Earlier this year, nickel miner Wyloo, led by Australian billionaire Andrew Forrest, urged the London Metal Exchange (LME) to establish green nickel contracts. Forrest argued that classifying nickel contracts as “clean” or “dirty” would empower customers to make informed choices based on sustainability.
However, the LME expressed concerns about the potential lack of trading volume for a dedicated green nickel contract. As an alternative, the LME’s partner, Metalshub, is developing an index price reflecting demand for low-carbon nickel. This approach suggests a potential future for differentiated pricing based on sustainability factors.
The Future of Nickel: Balancing Sustainability and Supply
The launch of green nickel prices by Benchmark presents a significant step towards a more sustainable nickel industry. By rewarding producers who prioritize ESG factors, Benchmark’s initiative has the potential to drive positive change throughout the supply chain.
While the LME’s approach of an index price suggests a cautious stance, it acknowledges the growing importance of sustainability in the nickel market. The nickel industry faces the challenge of balancing environmental responsibility with maintaining adequate supply to meet the rising demand, particularly for EV batteries.
The development of green nickel pricing mechanisms represents a critical step in navigating this challenge. As the industry evolves, the interplay between established market forces and sustainability considerations will shape the future of nickel production and consumption.
Source: Mining.com
