Canadian nickel producers hope to benefit from Indonesia’s export ban – by Rachelle Younglai (Globe and Mail – January 17, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Indonesia’s ban on raw mineral exports has the potential to rejuvenate a nickel industry that is suffering from a plunge in metal prices.

The ban, which started on Sunday, has pushed nickel prices up on fears that there will be a shortage of the silvery white metal used to make stainless steel. That would help Canadian producers Sherritt International Corp., Lundin Mining Corp. and First Quantum Minerals Ltd.

Toronto-based Sherritt, which runs the Moa nickel mine in Cuba and is developing a giant nickel mine in Madagascar, could see benefits immediately. “Any improvement in the nickel prices will go straight to our revenue,” said Sherritt’s chief executive officer David Pathe.

Shares of Sherritt and other producers gained about 5 per cent on Thursday. Shares of tiny Canadian nickel companies First Nickel Inc. and Royal Nickel Corp. also made gains.

Although nickel is trading at two-month highs of $6.50 (U.S.) a pound, the metal is down 70 per cent from its record high of $24 reached in 2007 when supplies were scarce.

“This is wildly bullish for the industry,” said Mark Selby, senior vice-president of Royal Nickel, which is working on a project in Quebec that could one day rival the massive nickel mines in Sudbury.

Indonesia is the world’s largest producer of nickel and is responsible for about 20 per cent of global supply.

Although there is currently a glut of nickel on the market, the world could start running out of the metal in 2015 if the Southeast Asian country keeps the ban in place. That could send prices back into the double digits.

Indonesia’s raw mineral export ban stems from a 2009 law that required the country to process its ore domestically by 2014.

But Indonesia only has a handful of smelters and does not have the infrastructure in place to refine all of its ore.

Like Indonesia, Canada is a resource-rich country that struggles with how to boost the value of its raw materials.

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