Queensland Nickel asks suppliers to share pain
Clive Palmer’s Townsville nickel refinery has urged its suppliers to cut their prices by 15%, according to a report in the Australian newspaper.
Queensland Nickel refinery.
Queensland Nickel invited its suppliers to cut prices by 15% in a letter on July 12 from QN operations director, Ian Ferguson.
According to the Australian, QN has unveiled a “competitive tender” for all non-contracted goods and services valued at more than $5,000.
Clive Palmer bought QN from BHP Billiton in 2009 after nickel prices slumped following the global financial crisis.
Palmer then enjoyed rising nickel prices which saw him reward his QN staff in 2010 with Mercedes cars and overseas holidays.
However, nickel prices have since slumped from US$24,750/t in 2010 to US$15,480/t and QN’s margins are being crunched.
The company imports nickel ore from New Caledonia and the Philippines for processing at the Townsville plant. Prices for raw ore have not fallen as steeply as those for finished metal.
Despite low nickel prices, QN reports that its business is travelling well. A press release on 1st August, by Clive Palmer and Phil Collins, said that the plant is setting production records, with nickel output at the end of June 2012 hitting 39,506t, well up on the previous record of 33,824t.
The press release announced continued recruitment, substantial investment in R&D and no cutbacks in environmental programmes.
QN is not alone in feeling the nickel price pinch. BHP Billiton recently wrote down the value of its western Australian nickel business by US$450m and analysts have speculated that with nickel prices below the marginal cost of production of US$17,000/t, many producers are losing money.