A look into the future: Nickel – Part One
In the last of a four-part series highlighting what experts believe the future may hold for Australia’s key commodities, Paula Wallace takes a look at what could be in store for nickel.
Yabulu nickel refinery, previously owned by BHP Billiton
By Paula Wallace
The last few months have seen some significant shifts in the nickel industry. At the time of writing the nickel price had just sailed past US$18,000 per tonne, and Mincor Resources was toying with the idea of bringing its Miitel mine back on line.
The first half of 2009 saw some strategic moves, with sales contracts with BHP Billiton and Jinchuan, and a development deal over Kagara’s Lounge Lizard deposit. It also saw billionaire iron ore developer, Professor Clive Palmer, enter the scene as the new owner of Yabulu nickel refinery in Queensland, previously owned by BHP Billiton (BHP).
Coinciding with the nickel price rebound during the third quarter of 2009, almost doubling since October last year, several Australian nickel stocks enjoyed a stellar run. One such company, Western Areas, saw its share price more than double from March to August. It aims to produce 35,000 tonnes per year of nickel by 2011, which would make it Australia’s second-biggest producer after BHP.
While the recovery in the nickel price may see the restarting of some Australian projects if it continues, one project that will remain on the scrap heap is BHP’s Ravensthorpe.
Although the miner has flagged the sale of its massive nickel laterite operation in Western Australia, it won’t be until the end of this year that it releases the results of its ongoing “options study”. In a statement, BHP said it would begin the formal evaluation of divestment as part of the study.
BHP said it had received numerous expressions of interest from third parties regarding a possible acquisition of Ravensthorpe and it “will further test the market through this process”.
The Australian Bureau of Agricultural & Resource Economics (ABARE) released its forecasts in June, for nickel prices, supply and demand. However, it noted that there is “significant” risk to its forecasts depending on the rate at which closed nickel mines and refineries re-open.
“If these mines and refineries restart more quickly than currently anticipated, prices could fall below current forecasts. Alternatively, if restarts occur more slowly, stocks may fall more quickly than forecast and prices rise faster,” said ABARE.
Australian nickel mine production is estimated by ABARE to have declined by approximately 7 per cent in 2008-09, to 177,000 tonnes. Falling nickel prices have resulted in around 100 000 tonnes of Australia’s mine capacity being shut down since mid-2008. The full effect of these mine closures is not expected to be realised until the 2009-10 financial year, when Australia’s mine production is forecast to decline by a further 24 per cent, to 135,000 tonnes.
Despite the decline in nickel prices many stainless steel producers using less expensive input materials have not switched back to nickel in stainless steel production and according to ABARE they are not expected to do so in the near-term.
Due to China’s ability to produce pig iron nickel, it has been suggested that they have effectively capped future nickel price rises at no more than $US12.00 per pound.
“There are other factors in play too, and some of them are positive for primary nickel: for example, low nickel prices have also severely restricted scrap availability, and this has meant that the percentage fall in primary nickel going into stainless steel has been much less than the fall in stainless output over the last two quarters,” said John Barkas of Metalytics.
To read the final part of this report visit:
OR get a copy of the current print edition of The Australian Journal of Mining. The September-October edition includes a range of informative features including: Railway Transport, Dragline, Minerals Processing, Strata Roof/Ground Control.
Follow this link to order your free copy of the current AJM print edition - http://www.theajmonline.com.au/dvfxd/mining_magazine_freetrial
| Tweet |
