Canadian nickel exporters eye EU carbon boost

[Ben Graham]

The European Union’s Carbon Border Adjustment Mechanism (CBAM), which took full effect this month, has imposed a carbon price on products imported from non-EU countries, including steel, iron, aluminium and cement. 

European importers are now required to pay a carbon price equivalent to the cost of carbon allowances under the EU’s Emissions Trading Scheme, currently close to EUR90/tonne ($105/tonne).

On Dec 18, the European Commission proposed expanding CBAM to cover 180 downstream products that typically contain a high share of steel and or aluminium, ranging from car parts and machinery to construction equipment and washing machines. The proposal will require approval from the Council of the EU and the European Parliament before taking effect.

Despite lobbying from Euromines, the Brussels-based association for European miners, nickel was not included in this round of expansion. Unlike copper, lead and zinc, which appear unlikely to be added, the European Commission has not ruled out including nickel in future updates, potentially from 2028, when the next legislative proposal is expected.

Such a move would be significant for Canadian nickel exporters. Under CBAM, Canadian nickel would be more cost competitive, as European importers would need to purchase fewer EU carbon allowances compared with imports from higher-emission producers. Canada’s power generation is relatively low-carbon compared with many other nickel-exporting countries, notably Indonesia, which relies heavily on coal-fired power.

“Most of the nickel coming from Canada has a low-carbon footprint compared with, for example, Indonesia, which has a massive carbon footprint,” Mark Selby, CEO of Canada Nickel (TSX-V: CNC), told MINING. COM “We will benefit from existing CBAM on steel, and if it gets extended to nickel, then we will benefit as well.”

Canada Nickel is advancing the Crawford Nickel Sulphide Project north of Timmins, Ontario, toward construction by year-end 2026 and views Europe as a key export market. Nickel is a critical raw material for Europe’s green and digital transitions, including electric vehicles and batteries, as well as defence applications such as advanced weapon systems and aerospace components.

“We expect to produce 30,000 tonnes of nickel per year initially and then ramp up to 50,000 tonnes per year,” Selby said. “The bulk of that will be exported either directly or embedded in semi-finished stainless alloy and steel products outside of Canada. Around 30–40% of the nickel will be sold within Canada.”

The company has yet to sign offtake agreements with European buyers, but Selby said that is planned over the next 24 months as the project advances. He added that the project’s low carbon footprint gives it a strategic advantage in the European market.

With the Crawford project not expected to come online before the end of 2028, followed by a production ramp-up in 2029, Selby is hopeful nickel will be included under CBAM around that time.

First big test

Although CBAM reporting requirements took effect in 2023, the system remains largely untested, and critics have warned that its complexity could make compliance difficult to monitor. The full-scale launch in January next year will therefore be a key test for exporters and importers of CBAM-covered goods.

Photinie Koustavlis, vice president of economic affairs and climate change at the Mining Association of Canada, said a well-designed CBAM that accurately measures embedded emissions and recognises credible domestic carbon pricing would tend to favour low-carbon nickel producers such as Canada.

“At the same time, we would need to look closely at the specific design details of any CBAM expansion to understand how carbon intensity would be measured, how different processing routes would be treated, and how Canadian exports would be affected,” Koustavlis told MINING.COM. “Ensuring transparency, robust methodology and fair treatment of responsible producers would be essential.”

Canada is the world’s sixth-largest nickel producer, with output of about 160,000 tonnes per year based on 2023 figures from the federal government. Indonesia is the largest producer, accounting for about 1.8 million tonnes, or 51% of global output.

Europe is heavily dependent on imported raw and processed nickel. In 2024, 100% of the EU’s mined nickel production came from just two sulphide nickel mines, both located in Finland. Canada is already an established exporter of nickel to the EU, with scope to increase its market share.

Koustavlis said independent analysis by London-based Skarn Associates consistently shows Canadian nickel has among the lowest carbon intensities globally, largely due to Canada’s clean electricity grid and sustained investments by producers to reduce emissions.

“By contrast, publicly available research indicates that nickel production in several major producing countries, particularly where coal is the dominant energy source, is significantly more carbon intensive,” she said. “A number of studies have shown that emissions from some Indonesian nickel operations can be multiple times higher than those from Canada.”

Factbox: EU nickel supply

The EU sources nickel ores and concentrates from Finland (39%), Canada (24%), Greece (19%), South Africa (8%) and the US (4%). 

The EU sources refined nickel from from Russia (29%), Finland (18%), Norway (11%), Canada (7%), Australia (7%), Greece (4%) and several smaller importers. 

Source: European Commission: Study on the critical raw materials for the EU, 2023

CBAM fast facts

BAM took full effect on Jan. 1, following a transitional period or ‘soft launch’ that began in 2023.

Under CBAM, the obligation falls on the importer: Importers of steel and iron ore, aluminium, cement, fertilizers, electricity and hydrogen from non-EU countries will have to purchase and surrender CBAM certificates corresponding to the CO2 emissions linked to the products they import. 

The price for a CBAM certificate will be similar or equal to the price of CO2 allowances under the EU ETS. 1 CBAM certificate corresponds to 1 tonne of CO2 emissions.

As CBAM comes into effect, free CO2 allowances for heavy industry in the EU will gradually be phased out by 2034. The EU says this will create a level playing field globally for the trade of CBAM goods. 

The EU is looking to expand CBAM to cover additional products. On 18 December, it proposed to expand the scope to 180 downstream products but it has not ruled out including nickel in the future. 

The European Commission will review CBAM in 2026. 

Source: European Commission

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Andreas Walstad has written extensively about energy issues for almost two decades. Dividing his time between London and Brussels, he has a special focus on energy policy and regulation. Andreas regularly speaks and moderates discussion panels at conferences.