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Nickel Prices Up 40% This Year
SYDNEY—Nickel miners are ramping up spending on exploration for deposits of a metal used to make stainless steel and readying new investments, as the industry emerges from a prolonged slump in prices.
The change in sentiment is being driven by Indonesia’s ban on exports of unprocessed ore, which has helped push up nickel prices by 40% this year. Russia’s ongoing tensions with Ukraine have also played a part in the turnaround in nickel’s fortunes, as metals traders bet on the potential for trade sanctions that could disrupt global supply.
For years, nickel was one of the worst-performing commodities as supply outpaced demand from industries such as auto manufacturing and construction.
A report by U.K. consultancy Wood Mackenzie last year estimated that two-fifths of the world’s nickel was being produced at a loss. To protect profits, producers of the metal including Australia’s Western Areas Ltd. WSA.AU +1.81% and Russia’s Norilsk Nickel GMKN.MZ +0.44% cut spending, laid off workers and even closed pits.
“Last year wasn’t a very good time for us,” says Dan Lougher, Western Areas’s managing director. “But suddenly the planets all aligned and we’ve got this rise in the nickel price, and it’s gathering momentum.”