The 2014 Metals Outlook: Nickel – by Cole Latimer (Australian Mining – December 9, 2013)

Australian Mining has investigated the current state of Australian metals and looks into how they will perform in the coming year. In the third part of this five part series we look at nickel.

The nickel industry has always been one of sharp busts and booms, with the busts now lasting longer and longer. To sum up the sector in a single word – volatile.

After an astounding leap in revenues in 2006-07, where it skyrocketed 132.9 per cent after shrinking 5.7 per cent the previous year, nickel has undergone a series of sharp price corrections, seeing an annualised fall of 12.1 per cent in revenues from 2008 through to this year.

This was due to prices retreating from unsustainably high levels. However after two years of serious gloom for the sector, following another brief spike in 2010-11, nickel is predicted to grow again, according to IBISWorld reports.

Western Areas CFO Joe Belladonna explained that this is mostly likely due to the forecast squeeze on global nickel supplies, particularly as the higher grade, easier to process nickel sulphide supply swindles.

“Nickel laterites and nickel pig iron are not capable of filling this sulphide void at a time [when]the metal is increasingly being recognised and sought for its strategic application in stainless steel and other products with extraordinary performance characteristics,” Belladonna said.

Due to this “industry performance is expected to improve during the five years through to 2017-18, with revenue rising at an annualised rate of 5.2 per cent to total $3.13 billion in 2017-18,” IBISWorld stated.

This will be driven by trends in US dollar nickel prices, the value of the Australian dollar, and the volume of nickel production.

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