Commodity Markets Weighed Down By A New Factor, Environmental Metal – by Tim Treadgold (Forbes Magazine – February 4, 2016)

In theory nickel, a steel-hardening metal, should be poised for a big price recovery as high-cost material is driven from a depressed market, but that’s before a new factor started to influence the business of nickel mining, environmental metal.

Similar in character to another non-market price driver, social metal, the new influence is entirely man made or, to be more specific, government made.

Social metal has been around for decades and is most evident in South American copper-mining countries where governments keep loss-making copper mines open as a way of maintaining employment to avoid social unrest.

Social Oil Joins Social Metal

Loss-making oil production in countries such as Venezuela is another example of government interfering in a business which ought to close but keeps producing because it delays an immediate financial crisis, but probably adds to a future financial disaster.

Environmental metal is another government creation, albeit one that has evolved from good intentions and can be seen at its worst in Australia where two big nickel projects are kept in production despite hefty losses because to shut would trigger a heavier cost.

The problem for independently-owned Queensland Nickel and Nickel West, a division of BHP Billiton , is that both businesses are more than 40 years-old.

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