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Nickel Laterites

COLUMN-China throws cold water on nickel bulls – by Andy Home (Reuters India – September 23, 2014)

http://in.reuters.com/

(Reuters) – It’s now a full eight months since Indonesia turned off the supply of nickel ore to China’s giant nickel pig iron (NPI) sector.

The unexpected fulfilment in January of a long-standing promise to ban exports of unprocessed minerals such as nickel ore sent the London nickel market on a super-charged rally, which peaked in May at a high of $21,625 per tonne.

Much of those gains have since been given back as the market kicks its heels waiting for some tangible sign of supply stress, not least in China. On the London Metal Exchange (LME), benchmark three-month nickel was trading either side of $17,000 on Tuesday morning.

China, however, is not playing its expected role in the nickel story, the country’s latest trade figures representing another dousing of cold water for the many nickel bulls.

Not that there has been any resumption in Indonesian exports of nickel ore. China’s trade figures for August showed imports of just 39,000 tonnes, very much in line with the previous three months. This material is, in all likelihood, iron ore with a high nickel content that China’s customs department has misclassified.

Moreover, the latest figures from the International Nickel Study Group show Indonesian mined nickel output collapsing to 138,000 tonnes in the January-July period from 421,000 tonnes a year earlier.

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Axiom eyes legal win over Japanese giant Sumitomo – by Sarah-Jane Tasker (The Australian – September 23, 2014)

http://www.theaustralian.com.au/business

AUSTRALIAN-listed minnow Axiom Mining is confident of winning its “David versus ­Goliath” battle with Japanese giant Sumitomo Metal Mining to develop one of the world’s largest nickel laterite deposits.

Axiom chief Ryan Mount is undaunted by his battle opponent, a metals major and Japan’s No 2 copper producer, and is hopeful that when the judge delivers his decision this week on the project, in the Solomon Islands, Axiom will win.

In what has been the longest-running and most expensive case on the Solomon Islands, Sumitomo has fought to be recognised as the developer of the nickel asset, after it was taken off the Japanese giant and given to Axiom by the traditional owners of the land.

Analysts have estimated that Axiom has spent more than $10 million on its court action. They have also outlined that Sumitomo spending millions to challenge Axiom’s ownership of the Isabel project was a clear indication that the asset was of great significance to a major company.

“It was worth pursuing. It will be of significant value to our shareholders. We feel confident as to our rights on this matter,” Mr Mount said. “We didn’t initially believe it would take this long.”

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Philippine lawmaker sees five-year grace period before ore export ban – by Enrico Dela Cruz (Reuters U.S. – September 9, 2014)

http://www.reuters.com/

MANILA – (Reuters) – A proposed Indonesia-style ban on exports of unprocessed metal ores from the Philippines may not be implemented for about seven years, the proponent of a bill before Congress said on Tuesday, potentially easing pressure on nickel prices.

Congressman Erlpe John Amante said a law aimed at forcing miners to process raw minerals before export could take two years to be enacted, while miners deserved a five-year grace period before mandatory domestic processing took effect.

News last week of the proposed legislation has unsettled the nickel market, which was caught off guard when Indonesia banned nickel ore exports in January. Nickel jumped 7 percent in four sessions to Monday’s close and is up 41 percent this year.

The Philippines currently supplies China with virtually all of the nickel ore that it uses to make nickel pig iron, a raw material used by steelmakers, following the Indonesian ban.

Amante said the Philippines could triple its revenue from mineral exports if his bill, which was filed in July and has been approved at the committee stage in the lower chamber of Congress, becomes law. A matching bill was filed in the upper house Senate in late August.

“We’ve started the ball rolling so I’m very hopeful with the timeline,” he said in an interview with Reuters in his office in Congress, adding that he hoped the bill would become law within two years.

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COLUMN-Proposed Philippines minerals ban spooks nickel – by Andy Home (Reuters India – September 10, 2014)

http://in.reuters.com/

The opinions expressed here are those of the author, a columnist for Reuters.

(Reuters) – News that the Philippines was preparing to follow Indonesia in banning exports of unprocessed minerals caused panic in the London nickel market last week.

The Philippines has emerged as the main supplier of nickel ore to China’s massive nickel pig iron (NPI) sector after the cessation of exports from Indonesia. The threat that this flow too would be cut off appeared to represent a dramatic acceleration of an already bullish story.

Until it emerged on Tuesday that any Philippines ban is several years away. On the London Metal Exchange (LME) benchmark three-month nickel collapsed by $1,000 per tonne to $18,925 on Tuesday, wiping out the gains notched up over the previous days.

However, the market might be overly complacent about the apparently extended time-line before any Philippines ore ban, if it’s collectively assuming that events in that country will mirror those in Indonesia.

What is less in doubt is what the recent price roller coaster says about the bullish mindset in this market, particularly its responsiveness to supply-side news.

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Tsingshan eyes first Indonesian nickel pig iron output in Jan – by Fergus Jensen and Melanie Burton (Reuters U.S. – September 4, 2014)

 http://www.reuters.com/

JAKARTA/SYDNEY – (Reuters) – China’s Tsingshan Group expects to start production at its Indonesian nickel pig iron smelter as soon as January, becoming the second plant to ramp up since the country’s new mineral processing laws came into force at the start of the year.

“Hopefully by October or November we will have started commissioning,” said Slamet Panggabean, finance manger of Tsingshan’s local joint venture partner Bintang Delapan Mineral, referring to the firm’s pilot smelter project in Morowali on the Indonesian island of Sulawesi.

“The plan is for production (to begin) in January or February.” As part of a strategy to reap more value from its mineral wealth, Indonesia banned ore exports in January as it pushed its nickel and copper miners to set up metal processing plants. The move has driven up London Metal Exchange nickel prices by a third so far this year.

Stocks of nickel pig iron at China’s stainless steel makers are running down, leaving them exposed to a supply gap next year and fuelling the need to build smelters in Indonesia as quickly as possible.

Tsingshan, China’s second largest stainless steel company, was one of the few firms to act when the law was enacted in 2009 and is well ahead of other nickel pig iron producers, many of which held back on hopes the ban would be rolled back.

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Indonesia ban on nickel ore, bauxite exports to stay – officials – by Fergus Jensen (Reuters India – August 11, 2014)

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JAKARTA, Aug 11 (Reuters) – Indonesia has no plans to wind back a seven-month old ban on exports of unprocessed nickel ore and bauxite that has led to billions of dollars in planned investments in smelters, top government officials said.

Indonesia – previously the world’s top exporter of nickel ore and a major bauxite producer – effectively halted all but processed metal shipments in January in an effort to force miners to build smelters, winning the country bigger returns from exports of its mineral resources.

Last month the government allowed a handful of firms producing partially processed minerals such as copper concentrate, including Freeport McMoRan Inc, to resume exports.

However, Indonesia’s chief economic minister Chairul Tanjung said the same rationale does not apply to unprocessed exports of nickel ore and bauxite.

“Nickel is different because if you are smelting in Indonesia the added value is much higher than copper,” Tanjung
told Reuters in a recent interview. “Because of that it’s a separate issue.”

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New Caledonia cancels vast Eramet, Vale nickel project – by AFP (August 8, 2014)

http://www.afp.com/en

New Caledonia on Friday cancelled a deal with Brazilian mining giant Vale and France’s Eramet to allow the exploration of one of the last major untapped nickel deposits in the world.

President of the southern province, Philippe Michel, said the agreement signed in April was illegal on five different counts, “each of which is enough to cancel the allocation of the resources”.

New Caledonia, off northeastern Australia, has a quarter of the world’s deposits of nickel, a key ingredient for manufacturing stainless steel.

The French overseas territory has been reviewing its mineral laws after a change of leadership and a surge in nickel prices, which have jumped a third this year after top miner Indonesia banned ore exports.

New Caledonia President Cynthia Ligeard told AFP that she “did not want to react at the moment” on the decision. Eramet also declined to comment.

The government estimates the Pernod and Prony deposits in question are estimated to hold between four million and seven million tonnes, but Michel said the amount had been understated in the deal with the miners.

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UPDATE 2-China’s Ramu nickel mine in PNG restarts after attacks – embassy – by Sonali Paul, Melanie Burton and Polly Yam (Reuters India – August 7, 2014)

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Aug 7 (Reuters) – A Chinese-owned nickel mine in Papua New Guinea has resumed production three days after an attack by armed villagers forced work to halt, a Chinese embassy official in the South Pacific country said on Thursday.

The $2.1 billion mine, forecast to produce 22,000 tonnes of nickel in 2014, is operated by Ramu NiCo, which is majority owned and run by Metallurgical Corporation of China Ltd (MCC) .

Equipment including nine excavators, a fuel truck and a lighting vehicle were burned and five Chinese workers were injured in the attack on Monday, the embassy said, confirming earlier media reports.

“The embassy strongly condemns these brutal attacks and makes urgent request to the PNG Government to take immediate and effective measures to prevent the violence from recurring and ensure the safety of the personnel and properties, and to bring those attackers to justice to deter such criminal acts,” an embassy official said in an emailed response on Thursday.

“With the assistance of the police force, now the situation is under control and the mining production has been resumed.”

Mining and energy projects are the major source of income for Papua New Guinea, but outbreaks of violence sparked by landowner disputes and environmental concerns are not uncommon.

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Indonesia Ore Ban to Remain Should Widodo Win Poll – by Jake Lloyd-Smith and Yoga Rusmana (Bloomberg News – July 10, 2014)

http://www.businessweek.com/

Indonesia’s ban on ore exports will probably remain in place and speculation that the curb may be relaxed if Joko Widodo becomes the country’s next president is misplaced, said Australia & New Zealand Banking Group Ltd.

Nickel fell as much as 2 percent in London yesterday as unofficial counts showed Jakarta Governor Widodo won the most votes in the world’s third-biggest democracy, putting him ahead of Suharto-era general Prabowo Subianto. While the market perceives Widodo’s market-friendly policies as an indication that the ban will be lifted or at least watered down, that’s unlikely, analysts including Mark Pervan wrote in a note.

The ban in the biggest mined nickel producer, which was implemented in January to induce investment in processing plants, spurred forecasts for global shortages of the metal used in stainless steel. Nickel rallied in May to the highest level since 2012, and outperformed all other base metals this year. Widodo, who’s known as Jokowi, would probably relax the ore ban, Mike Dragosits, senior commodity strategist at TD Securities in Toronto, said yesterday as prices retreated.

That decision is unlikely “given the upside to revenue is substantial, and the fact that the policy has been in place for six months already and appears to be encouraging investment in processing facilities,” Pervan said.

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NEW CALEDONIA: Is a Vast Marine Sanctuary Any Use if You Can’t Police It? – by Ian Lloyd Neubauer (Time Magazine – June 29, 2014)

http://time.com/

Tiny New Caledonia relies on a handful of French ships to patrol a marine reserve twice the size of Texas

For the first half of June — until the U.S. declared an even bigger one — the tiny, French semiautonomous territory of New Caledonia boasted the largest nature reserve on earth.

Covering a vast 1.3 million-sq-km region of the South Pacific, the Natural Park of the Coral Sea was established on May 28 to protect the world’s second largest coral reef and its attendant lagoon. Already safeguarded in parts by a UNESCO World Heritage listing, this wonderland is a nursery for 25 kinds of marine mammals (including sea cows and humpback whales), 48 species of shark and five different marine turtles. It also spawns vast numbers of pelagic fish, 3,000 tons of which make it into the Pacific every year – an important food source for tens of millions, and a source of employment for thousands of people living in the region.

But before most people had even heard of the creation of the Natural Park of the Coral Sea, U.S. President Barack Obama went one better by using his executive powers to create an even larger marine park in the south-central Pacific on June 17. Known as the Pacific Remote Islands Marine National Monument, it protects 2 million sq km of ocean and a smattering of islands and atolls between Hawaii and American Samoa from commercial fishing.

Obama’s announcement made world news, while New Caledonia’s barely received a mention. Perhaps that’s because the U.S., while sketchy on the details, has the hardware and manpower to enforce the no-take rule at the core of any national park.

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Solomon Islands nickel ore legal fight nears decision – by James Regan (Reuters India – June 12, 2014)

http://in.reuters.com/

SYDNEY, June 12 (Reuters) – A court ruling in the Solomon Islands may finally unlock a large nickel deposit that geologists have known about for half a century but have been unable to exploit because of ownership changes and legal wrangling.

Japanese giant Sumitomo Metal Mining and tiny Australian explorer Axiom Mining are fighting over the Isabel nickel laterite discovery and will submit final arguments to the Solomon Islands High Court on June 23, following a court case that has already run for 88 days.

A ruling is expected soon after and could lead to development of the deposit, at a time when nickel prices have soared following a ban in January on ore exports by Indonesia, the world’s biggest supplier.

Analysts estimate Isabel compares in size or grade to other large South Pacific nickel mines, such as Vale SA’s Goro mine in New Caledonia and the China-owned Ramu mine in Papua New Guinea.

Axiom, with a market value of just A$55 million ($52 million), would aim initially to ship unprocessed ore within two years to hungry Chinese buyers to make nickel pig iron.

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Non-mining areas key issue in Vale’s contract renegotiation [Indonesia] – by Raras Cahyafitri (Jakarta Post – June 10, 2014)

http://www.thejakartapost.com/

The Energy and Mineral Resources Ministry and nickel miner PT Vale Indonesia are still hammering out issues relating to Vale’s contract renegotiation.

The ministry’s director general for minerals and coal, R. Sukhyar, recently said Vale had agreed to return around 83,000 hectares (ha) of its concession area to the government.

However, he said, both parties were still negotiating to accommodate requests by the local administration regarding the utilization of areas that had not been mined or explored. These areas have been left idle.

A meeting attended by several governors and regents of areas where Vale holds concessions was held last week. According to Sukhyar, local administrations were seeking assurance that Vale’s activities would benefit the regions.

“It’s important to know Vale’s future plans. If they conflict with governors and regents’ plans, we have to settle. In the future, if none of the plans are realized, Vale’s operation can be reviewed,” Sukhyar said.

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Nickel Gain Enables BHP to Anglo to Sell Mines: Real M&A – by Maria Kolesnikova and Firat Kayakiran (Bloomberg News – June 4, 2014)

http://www.bloomberg.com/

The 37 percent surge in nickel this year means some of the world’s biggest metals companies may finally be able to sell as much as $14 billion in unwanted mines they’ve held for years.

Diversified mining companies such as BHP Billiton Ltd. (BHP) and Anglo American Plc (AAL) don’t see the metal as strategic because it generates less cash than other commodities and requires more investment. With nickel prices improving and companies looking to cut costs, OAO GMK Norilsk Nickel, the largest producer, last month agreed to sell two mines in Australia. BHP, valued at $174 billion, said May 14 that it’s holding talks to sell its Australian nickel unit, while London-based Anglo said it may consider shedding its mine in Brazil.

Private-equity firms and smaller companies such as $12 billion First Quantum Minerals Ltd. (FM) could be potential buyers, according to Sanford C. Bernstein & Co. Should nickel prices continue to rise, BHP’s assets could be valued at as much as $9 billion and Anglo’s at $5 billion, Macquarie Group Ltd. said.

“Deals chase a rising commodity,” Lee Downham, global mining transaction chief at Ernst & Young LLP in London, said by e-mail. When prices climb, those companies “with a strategy to divest look to capture positive market sentiment in order to generate a higher valuation.”

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China Builds Sulawesi Smelters as Ore Ban Cuts Jobs: Commodities – by Yoga Rusmana (Bloomberg News – June 2, 2014)

http://www.bloomberg.com/

Since Indonesia banned ore exports, the global nickel industry has been rocked by surging prices, Chinese workers like Zhang Qi Guang are building smelters in Sulawesi and business at Eva’s Jewel restaurant has collapsed.

Indonesia, the world’s largest producer of mined nickel, halted shipments Jan. 12, sending prices up as much as 56 percent and prompting Morgan Stanley to forecast a global output deficit over the next five years.

The government’s rationale for the ban was that too much wealth was leaving the country because the raw ore is worth far less than refined metal. It figured the world would come to its doorstep to build smelters that extract nickel from the red earth. While some of those investments have begun, the downside is idle mines, tens of thousands of lost jobs and piles of unwanted ore waiting to be processed. Sales at Eva’s Jewel in the town of North Konawe fell as much as 80 percent.

“You never get the sweet thing unless you eat the bitter thing,” said Alexander Barus, vice president of PT Sulawesi Mining Investment, a joint venture of Jakarta-based Bintangdelapan Group and Chinese steelmaker Tsingshan Holding Group, which is building two smelters on Sulawesi. “We feel sad about the people, but just you wait two or three years.”

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UPDATE 1-New Caledonia allows conditional restart of Vale nickel mine – by Cecile Lefort (Reuters U.S. – June 1, 2014)

http://www.reuters.com/

SYDNEY, June 2 (Reuters) – New Caledonia authorities said on Monday they have authorised a conditional restart of Brazil-based Vale’s nickel operations, which were suspended more than three weeks ago after acid-tainted effluent spilled into a river.

The leak sparked violent riots by young Melanesians that caused more than $20 million in damage to buildings, equipment and vehicles and left three policemen with gunshot wounds.

Police remained on alert as protesters maintained a presence near the plant. “The situation is calm and some (protesters) are still camping near the plant,” said a local government spokeswoman.

Some protesters, who have been frustrated by the lack of response from indigenous Kanak chiefs to the chemical spill, are seeking the permanent closure of the mine – something Vale said last week was not on the table. Vale could not immediately be reached for comment on when production would restart.

The Southern Province of the French-administered Pacific island noted it was Vale’s sixth major incident at the $6 billion Goro site and set hightened safety standards as a condition of the mine operations resuming.

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