The Australian government on Friday added nickel to the country’s critical minerals list, enabling nickel companies to access billions in government funding as the industry struggles amid falling prices.

Nickel prices have plunged around 40% in the past year, driven by a hike in Indonesian supply and a drop in EV demand. On Friday, the three-month nickel price on the London Metal Exchange (LME) was 16,258/tonne, a staggering drop compared to the metal’s 2022 peak of over $42,000/t, Kallanish notes.

“The international nickel price is forecast to stay relatively low through 2024, and likely for several years to come until the surplus of nickel in the market is corrected,” says Australia’s resources minister, Madeleine King. “In the meantime, this puts further Australian nickel operations at risk.”

Australia’s nickel industry has been severely hit by the nickel downturn, with six operating nickel facilities either having announced a reduction in operations or gone into care and maintenance since mid-December 2023, the government says in a statement. Just this week, global miner BHP flagged a $2.5 billion impairment on its nickel operations, warning of a potential to place its Nickel West operations in Western Australia into care and maintenance.

King says that the government “must be proactive” in supporting the country’s nickel industry. By adding nickel to the critical minerals list, nickel companies will now be able to access the AUD 6 billion ($3.9 billion) critical minerals facility and other critical minerals-related grant programs including the recently announced AUD 40 million international partnerships program.

Australia’s critical minerals list, which is updated on an as-needed basis, was expanded last December to 30 minerals, but excluded nickel and copper. The decision was criticised by the industry, with the Association of Mining and Exploration Companies (AMEC) calling it a “wasted opportunity.”

Local government and producers have been calling for a “green premium” in favour of Australia-produced nickel that follows stronger environmental, social and governance standards compared to nickel produced in Indonesia.

“Minister King said she had been progressing important discussions with international counterparts in US, Canada and EU to ensure the high standards applied in Australian mining and production of nickel and other critical minerals are reflected in future pricing on international markets,” the government adds. “When the playing field is fair, Australian resources stand a fair chance.”