Nickel mining looks simple from a distance and is anything but up close. The metal comes out of the ground in two fundamentally different forms, and the way each is mined and processed explains nearly everything about why nickel prices have behaved the way they have. Marc Lichtenfeld’s Oxford Income Letter pitch leans on nickel demand from electric vehicles, but the supply mechanics are the part of the story that actually moves prices.
Two Kinds of Nickel Deposit
Nickel comes from two geological settings. Sulfide deposits, found in places like Russia, Canada, and Australia, hold nickel in dense rock that can be concentrated cheaply into high-purity metal. Laterite deposits, found across the tropics in Indonesia, the Philippines, and New Caledonia, are shallow, widespread, and rich in nickel, but they are expensive to turn into something usable.
That distinction drives the whole market. Sulfide nickel is the high-purity, battery-grade material that commands a premium. Laterite nickel is the abundant, lower-grade material that floods the market with supply. The two do not compete directly on quality, which is why a headline glut of laterite nickel does not automatically make battery-grade nickel cheap.
The Laterite Problem
Laterite ore is the bottleneck. It cannot be economically concentrated the way sulfide ore can, so miners have to process enormous volumes of it. The traditional route turns laterite into ferronickel or nickel pig iron, a lower-purity product that feeds stainless steel mills. The newer, more expensive route uses high-pressure acid leach plants, which dissolve the ore under heat and pressure to produce a battery-grade product.
Indonesia bet heavily on both routes. Its nickel pig iron boom gave the world a cheap stainless steel feedstock, and its acid leach plants added battery-grade supply on top. That combination is why nickel has been oversupplied even as electric-vehicle demand climbed, and it is the core of the market’s recent pain.
Indonesia Changed the Game
Indonesia’s rise is the defining event in modern nickel mining. After banning raw ore exports in 2014 and again in 2020, the country forced processing to happen domestically, attracting billions in Chinese-linked investment. The result was a wave of new nickel supply that reset the global price and pushed higher-cost producers elsewhere to the margin. Our global nickel production piece maps exactly where that supply lives.
For miners outside Indonesia, the implication is stark. They are price-takers in a market where the biggest player keeps adding capacity. That is the reality behind the demand story the promo tells.
What It Means for the Thesis
Nickel demand for electric-vehicle batteries is real, and high-nickel cathodes genuinely enable long range. But the supply side has been the dominant force on price for years, and any nickel investment has to account for Indonesia’s ability to keep producing through lower prices. The demand side of the story is covered in our nickel stocks explainer, and the full promo context is in our SpaceX biggest threat teardown.
The Processing Bottleneck
The hardest part of nickel mining is not digging the ore out, it is turning that ore into metal someone can use. That processing step is where most of the money, and most of the risk, lives. Sulfide ore can be concentrated mechanically and smelted into high-purity nickel relatively cheaply, which is why sulfide mines have historically been the most profitable. Laterite ore cannot be concentrated the same way, so producers must use either energy-hungry smelting for ferronickel or the more complex high-pressure acid leach process for battery-grade material.
The acid leach route is the expensive one, and it has a long history of cost overruns and commissioning failures, from Madagascar to New Caledonia. The plants run at high temperature and pressure, wear out their equipment fast, and generate a waste stream that is difficult to store safely. When they work, they unlock battery-grade nickel from abundant laterite. When they do not, they can sink a project for years.
That bottleneck is why the Indonesian processing buildout was so consequential. It converted a country that mostly exported raw ore into one that produces finished metal at scale, and it did so faster than almost anyone expected. The rest of the nickel mining world now has to compete with that capacity, and the processing step is where the competitive battle is actually won or lost. A cheap-looking deposit that needs an expensive, unproven processing plant is not cheap at all, and a great deposit paired with the wrong process can destroy capital. That is the detail most nickel headlines leave out, and it is the one that separates a real mine from a resource story. In practice, the processing route matters as much as the ore grade, and a nickel thesis that skips it is only telling the comfortable half of the story.
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