In a significant setback for Australia’s battery materials landscape, Stellantis has decided to end its supply contract with Alliance Nickel, effective December 3. This announcement stems from Alliance's failure to meet critical deadlines for the NiWest nickel and cobalt project located in Western Australia.

Alliance has reported that challenging conditions in the global nickel market have hindered its ability to secure funding for new ventures, leading to these missed milestones. With nickel prices remaining low over the past two years, it has become increasingly difficult for producers to finance large-scale projects.

The company also indicated that the decline in commodity prices has negatively impacted its financial standing, resulting in delays of other obligations while it seeks funding for NiWest. Initially, this project was vital to Australia’s emerging status as a key provider of essential battery materials for electric vehicles.

Under the terms of the 2023 agreement, Stellantis had pledged to acquire 170,000 tons of nickel sulphate and 12,000 tons of cobalt sulphate within five years, which accounted for roughly 40% of NiWest’s projected annual output. The deal also included Stellantis acquiring an 11.5% share in Alliance Nickel, marking its inaugural investment in Australia’s battery materials sector.

This marks the second supply contract Stellantis has canceled with Australian firms recently, following the termination of its agreement with Novonix over unresolved product quality issues.

Alliance Nickel’s shares experienced a notable drop, plummeting by as much as 6.4% during early trading hours. Industry analysts believe that while this represents a hurdle for Alliance, it could also create opportunities to renegotiate terms that are more aligned with updated project timelines and market challenges.