‍Could phytomining solve the nickel pollution problem? Exploring climate tech solutions to one of the world’s dirtiest supply chains‍

Nickel is an essential component in everything from EV batteries to the steel underpinning our buildings. Today, around 60% of the world’s nickel goes into stainless steel production, and around 16% into batteries, largely for EVs. Despite the rise of LFP batteries in China, batteries which do not require nickel, analysts expect battery-driven nickel demand to surge by 2040, effectively doubling overall demand. Stainless steel demand also remains high and growing, as countries continue to build.

In short, Europe cannot decarbonise, or build the infrastructure we need, without nickel. This is problematic, because the mineral has one of the most polluting value chains and one that is highly exposed to geopolitical tensions. 

China, Indonesia and the coal-powered refining problem 

Both copper and nickel emit across the mining and processing chain, however nickel is by far the heavier emitter of the two. Nickel ores are inherently more complex and chemically stable and require more energy intensive and complex multi-step smelting and refining processes (e.g. HPAL and RKEF), driving up its carbon footprint. 

Nickel mining is dominated by Indonesia who is responsible for about half of global production. China and Indonesia then refine the majority of the world’s nickel, with China predominantly processing laterite ores, which are more energy intensive to process. Refining is usually achieved via heavily polluting coal-powered smelting or high-pressure acid leaching (HPAL), an expensive, high-pressure, heavy-chemical, energy-intensive process that emits as much as 40-80 tonnes of CO₂ for every tonne of nickel produced. Today, such smelting and refining account for almost 60% of the industry’s emissions.

The process means nickel is one of the highest-emitting minerals on a per-tonne basis, exceeding copper, aluminium and lithium. And, if nothing changes, World Fund data analysis shows the nickel industry could emit up to 500 Mt CO₂ annually by 2040. 

There is also a resilience element here: China and Indonesia control around 70% of global nickel production and refining, which puts European decarbonisation and industrial capacity at risk should the supply chain ever be disrupted. This is why, we at World Fund, together with our colleagues at the BioInnovation Institute (BII), are researching the alternative nickel production and sourcing space.

If Europe and its allies want resilient supplies of a cleaner material, we need either new supply chains that bypass the current setup, or new refining processes that can compete on cost under tight emissions regulations. Achieving this low-cost goal will be hard, and require innovative new climate technologies. As we explore below, China has a huge cost advantage, as HPAL technology has primarily been developed and operated by Chinese companies, and it also benefits from cheaper minerals, labour, and energy.

We believe this is an area where climate tech could make a real difference, if deployed and supported correctly. 

Two exciting innovation pathways, and the startups already making waves

We have identified two promising routes for nickel supply chain innovation and disruption. They are:

1. Phytomining – building a brand-new nickel supply chain

Currently, two types of ore dominate in nickel production: nickel laterites and nickel sulphides. Nickel laterites account for roughly 70% of global reserves and require HPAL processing or smelting. Nickel sulphides are more commonly found in the West, and can be refined through a short smelting and electro-winning route. The latter is a far less CO₂-intensive process, but represents a shrinking share of global supply. For example, the EU currently relies on just a few sites for domestic nickel extraction and refining, with almost 90% originating in Finland, according to recent studies. To put this into perspective, Finland represents a mere 1-3% of total global nickel production. 

Phytomining – the process of using plants to extract critical materials from the soil – offers an alternative. It involves cultivating hyperaccumulator plants on soil that is too rich in nickel to be farmed but too poor to justify traditional mining. Because it uses otherwise unproductive land, phytomining does not typically compete with food production.

We believe leveraging hyperaccumulating plants is a financially interesting alternative to traditional nickel mining. It represents a Mt-level opportunity to set-up new lower-cost, lower-emission nickel supply chains and reduce reliance on geopolitically exposed regions.  

Notably, some leading phytomining startups, such as Genomines (recently backed in a Series A round by Engine Ventures and Forbion), believe they can start producing meaningful volumes in five to seven years.

However, our research has shown that phytomining faces real-world constraints. These include securing enough suitable land and allowing root networks to develop over several growth cycles. Furthermore, unit economics for phytomining are yet to be proven, and companies will need to work closely with refineries in locations such as Finland, which had the cleanest tech available, to build more clean refining capacity. Nontheless, this presents an interesting opportunity to keep a close eye on further down the line.

2. Cleaner refining – updating and improving existing processes in Australia and beyond

Several factors have given Chinese and Indonesian producers a decisive cost advantage in recent years. China has offered state support, Indonesian government mandates have required 25% of domestic coal output to be sold to domestic firms at a roughly 30% cost advantage. This has meant selling at a capped price of $70/tonne, while the global trading benchmark is $105/tonne. Both countries also have access to cheaper, high-skilled labour and less costly access to chemicals. Crucially, energy prices in these regions are around 3-4x less expensive than in Europe or Australia. Unable to compete on cost given far more stringent regulations, many mines in Australia have shut down as they can no longer profitably produce nickel at globally competitive costs.

A more rapid solution to the current polluting nickel supply chain could involve investing in and rolling out new, cleaner and more modular refining processes that adhere to European and Australian emissions and chemical-use regulations. This would be done while operating at feasible cost positions.

One exciting company we have identified here is BANiQL, which is developing a three-step process: acid electro-leaching, acid precipitation and final nickel electro-winning. The process claims to be 95% more energy-efficient than HPAL and around 30% lower in cost of goods, with high selectivity for nickel-cobalt separation.

However BANiQL and other companies in this space are still at an early stage: they must prove they can operate at industrial scale (kilotonnes per year) and obtain permits fast enough to be deployed at or near mine sites.

‍A phytomining and cleaner refining future will require wider support

We are most excited by phytomining companies and the opportunity they represent long-term, including the potential to avoid mining altogether. However, if we are to reach a future where phytomining represents the majority of nickel sourcing, innovative startups will need significant investment and regulatory support from governments across Europe, Australia and North America, as well as from investors like ourselves. 

Phytomining in particular requires access to large tracts of land and up-front capital to prepare and harvest the first growth cycles, needs that often fall outside standard VC return horizons. Governments need to step in here to help, and in doing so they will reap a clear strategic-sovereignty return on their investments: few minerals are as concentrated and geopolitically sensitive as nickel.

Mining companies could also play a role by opening up surrounding low-grade lands for joint ventures with phytominers, especially if incentivised by governments. 

Nickel production is one of the dirtiest and most geopolitically exposed parts of the energy transition. Neither phytomining nor novel modular refining technologies are perfect solutions, but they represent an enormous opportunity to significantly reduce nickel emissions worldwide and to help secure European resilience and sovereignty. This is too big an opportunity to ignore and we urge policymakers and investors to heed this call to action. 

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About Dr. Nadine Geiser, Principal, World Fund

Dr. Nadine Geiser holds a PhD in Biotechnology from ETH Zurich and has led on several food, agriculture and land use investments for World Fund, including fermentation leader, Farmless. She previously closed deals at venture firms including M Ventures, Bank Vontobel, Redalpine, and sits on the advisory board of the Bioinnovation Institute - Novo Nordisk Foundation. 

About Arnoud Klokke, Senior Associate, BII

Arnoud Klokke holds a MSc in Bio-pharmaceutical Sciences and in Business Administration. Arnoud started off his career at Inkef, focusing on Seed to Series B stage investments in the pharmaceutical industry and for the past 4 years has worked on pre-seed to seed stage investments in the DeepTech/Climate space at the BII in Copenhagen.