Sherritt International Corp says more than 60% of global nickel output underwater despite recent price rally – by Peter Koven (Financial Post – July 27, 2016)

TORONTO — Nickel prices have jumped almost 40 per cent since bottoming out in January, yet most miners of the steelmaking metal are still bleeding cash at a rapid rate.

Canadian nickel miner Sherritt International Corp. noted this week that more than 60 per cent of global output is losing money on a simple cash margin basis. Once capital spending and other costs are added in, the actual percentage of production underwater is even higher.

The nickel price rally has accelerated over the last few weeks, which has injected some hope back into the industry. But Sherritt’s disclosure shows that the sector is still in the midst of a severe crisis. Nickel is currently worth about US$4.69 a pound, compared to a peak of more than US$24 in 2007.

“This rally in the last few weeks is perhaps more robust than some false starts we’ve had over the last year,” chief executive David Pathe said in an interview on Tuesday.

“But it’s got a ways to go before we think we’re at a long-term nickel price that’s sustainable.” Nickel prices have been slammed over the past couple of years due to middling demand, high inventories and rising supply from the Philippines.

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