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Norilsk Sinks in Nickel Bear Market Wiping Out 46% Gain – by Halia Pavliva (Bloomberg News – October 8, 2014)

http://www.bloomberg.com/

OAO GMK Norilsk Nickel (NILSY), the best performer earlier this year among Russian shares traded in the U.S., sank to a six-month low on concern demand will weaken amid expectations for a slowdown in global economic growth.

American depositary receipts of the world’s largest nickel producer dropped 1.6 percent to $17.23 yesterday as the metal, used to prevent corrosion in stainless steel, slumped the most in two weeks. The stock has lost 20 percent since July, reversing a five-month rally that made it stand out as the benchmark Micex Index tumbled after President Vladimir Putin’s annexation of Crimea in March.

Nickel entered a bear market last month amid a slowdown in China, the largest metals consumer, and as stockpiles ballooned to a record. The International Monetary Fund on Oct. 7 cut its forecast for global growth, sparking concern that demand will ebb. Norilsk skirted the selloff in Russian equities triggered by sanctions over the nation’s role in the Ukraine war, surging 46 percent to an almost three-year high in July after months of nickel shortages.

“The company, which wasn’t affected by the sanctions, is now reacting to investors’ concern over economic growth, particularly in China, because that signals less demand for the metal,” Sergey Donskoy, an analyst at Societe Generale SA in Moscow, said by phone yesterday.

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Open The Door [Global Nickel Outlook] – by Richard (Rick) Mills (Ahead of the Herd – October 6, 2014)

 http://www.aheadoftheherd.com/

Nickel is present in over 3000 different alloys that are used in over 300,000 products for consumer, industrial, military, transport/aerospace, marine and architectural applications.

Nickel’s biggest use, about 65 percent, is in alloying – particularly with chromium and other metals to produce stainless and heat-resisting steels. Its primary function is to stabilize the austenitic (face-centered cubic crystal) structure of the steel. Normal carbon steel will, on cooling, transform from an austenite structure to a mixture of ferrite and cementite.

When added to stainless steel nickel stops this transformation keeping the material fully austenite on cooling. Austenitic stainless steels have high ductility, low yield stress and high tensile strength when compared to carbon steel – aluminum and copper are examples of other metals with the austenitic structure.

Another 20 percent is used in other steels, non-ferrous alloys (mixed with metals other than steel) and super alloys (metal mixtures designed to withstand extremely high temperatures and/or pressures or have high electrical conductivity) often for highly specialized industrial, aerospace and military applications.

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Four months on, fallout from Chinese scandal drives up nickel stocks – by Melanie Burton (Reuters U.K. – October 3, 2014)

http://uk.reuters.com/

SYDNEY, Oct 3 (Reuters) – A commodity fraud at China’s Qingdao port has hit bank financing of metal deals, sparking a surprise jump in nickel exports and pushing back expectations of a global supply shortage of the metal used mainly in stainless steel.

The Chinese exports have helped global stockpiles hit record highs, confounding expectations of a deficit as soon as next year that drove a spike in nickel prices after Indonesia enforced a ban on ore exports in January.

That was part of Indonesia’s ambition to retain more of its mineral wealth by building a processing industry. Investors bet that Chinese stainless steel mills would run out of feed before Indonesia’s industry reached full swing, putting a rocket under prices.

“The market got quite bullish. The reason they got bullish is still there. But now they are looking at all this metal coming out of financing deals,” said analyst Lachlan Shaw of Commonwealth Bank of Australia in Melbourne.

“It doesn’t change the reasons for the deficit next year -essentially the ferronickel sector in China not being able to access the ore because of Indonesia’s export ban,” he said. China is the world’s biggest consumer of nickel.

Its stainless steel mills relied on Indonesian ore to make nickel pig iron (NPI), a cheaper substitute for refined nickel, and the result of the export ban was a 50 percent jump in nickel prices by May.

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Supply a critical issue for suitors of Nickel West – by Tess Ingram (sydney Morning Herald – October 3, 2014)

http://www.smh.com.au/

Possible buyers for BHP Billiton’s Nickel West business are scrutinising the sector’s junior miners as they weigh up the potential for long-term supply for one of its key assets, the Kalgoorlie smelter.

The sale of the Nickel West business has been under way for some months and industry sources suggest interested buyers have been narrowed down to resources giants Glencore and Jinchuan Group.

Any buyer of the West Australian assets would have to work with local nickel producers to secure supply for the smelter, which has run about 10 per cent under capacity and at a high cost for BHP, with industry suggesting that either a secure offtake agreement or an acquisition of a local player is highly likely.

Fingers appear to be pointing towards both Western Areas and Sirius Resources due to the quality of their nickel concentrate and their relative freedom to sign a deal.

Western Areas managing director Dan Lougher confirmed that the company had been in talks with prospective buyers, including Glencore and Jinchuan, but had not yet been approached in regards to an acquisition.

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Reform essential for WA’s future success – by Kevin Skinner (Australian Mining – October 2, 2014)

http://www.miningaustralia.com.au/home

Kevin Skinner works with Field Public Relations.

The government agency charged with driving the reform of Western Australia’s $121 billion a year resources industry says it is essential that the current reforms within the sector continue – and in close consultation with the industry – if the sector is to emerge successfully from the current easing in mineral commodities demand and pricing.

Addressing the Paydirt 2014 Australian Nickel Conference in Perth today, the Director General of WA’s Department of Mines and Petroleum, Richard Sellers, said it was essential however, that any reforms did not add to the cost of doing business in Western Australia, nor detracted from its appeal as a destination for global investment in exploration and mining.

“One of the most successful outcomes to date of our reform is the slashing of the tenement titles approvals processes and backlog to its best level in more than two decades,” Sellers said.

“When you consider there are more than 22 000 active mineral titles operating in Western Australia covering an area of almost 550 000 square kilometres, or just over one fifth of the State’s land mass, the Department’s moves to cut the backlog of outstanding titles applications have seen this drop from more than 18 000 in 2007 to just over 4000 today,” he said.

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UPDATE 1-Nickel miner Talvivaara gets debt cut plan, still lacks financing – by Jussi Rosendahl (Reuters U.S. – September 30, 2014)

http://www.reuters.com/

HELSINKI, Sept 30 (Reuters) – Finnish nickel miner Talvivaara lacks the long-term financing it needs to avoid bankruptcy, it said on Tuesday after an administrator proposed an eight-year restructuring plan that includes slashing its debts by up to 99 percent.

Talvivaara listed to great fanfare in London in 2007 when nickel peaked at around $51,000 per tonne.

But nickel prices have more than halved, and hurt by repeated production disruptions and environmental damage, the company last year suspended its mining operations and started a court-led debt restructuring process to avoid bankruptcy.

The administrator on Tuesday proposed Talvivaara’s unsecured debts of around 1.4 billion euros ($1.8 billion), including group internal debt, be cut by 97-99 percent. The plan could involve a share issue, which the administrator warned could dilute the company’s shares.

It shares fell as much as 24 percent on Tuesday. The company lamented on Tuesday that implementing the plan would need funds and creditor support, which is does not have.

“In order to ramp-up the Talvivaara group’s mining operations to full scale, a significant amount of new financing for the operative activities is required immediately,” it said in a statement.

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Brazilian giant Vale joins Fraser Range nickel rush – by Peter Ker (Sydney Morning Herald – September 30, 2014)

http://www.smh.com.au/

It’s the hottest exploration province in Australia, and now Brazilian mining giant Vale wants a piece of it. Vale’s Perth-based exploration unit is understood to have joined a long list of explorers in the Fraser Range region of Western Australia, in the hope of making a new major nickel discovery.

The region came to prominence after Sirius Resources hit the jackpot with the Nova nickel and copper discovery two years ago, and has since become one of the most active exploration regions in the nation. Most of the companies drilling in the region are tiny ASX-listed hopefuls, making the $US55 billion Brazilian quite the exception.

Vale is the world’s second biggest producer of nickel, behind only Norilsk Nickel of Russia, which decided to quit operating in Australia about 12 months ago.

Vale’s Australian office declined to comment on the strategy behind the move into the Fraser Range, but it is understood the claim area was acquired within the past month, and is located slightly off the main mineralisation trend, on the eastern edge of the range.

The company’s move into the Fraser Range is ironic, given Sirius’ first big nickel discovery in the region in 2012 was notable for the fact that it revealed a type of nickel mineralisation not previously seen in Australia.

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Nickel price drop to have minimal impact on suppliers – by Jonathan Migneault (Northern Ontario Business – September 23, 2014)

Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North.

A recent drop in the price of nickel should not have a major impact on Sudbury’s mining supply and services sector, said the executive director of the Sudbury Area Mining Supply and Service Association.

“Fluctuations in nickel prices don’t seem to alarm many of our guys,” said Dick DeStefano. “They just accept it as part of the process of working in the Sudbury area with nickel mines.”

The price of nickel was US$7.71 a pound Tuesday, after a drop from nearly $9 a pound in early September. DeStefano said many of his association’s members have learned to diversify, providing services and products for a variety of different mining companies.

Even if production at a mine slows, companies like Vale and Glencore still need to maintain their equipment and pay for many of the services on which they rely on a regular basis, DeStefano added. He said other issues have had a bigger impact on his sector.

“The biggest issue for our guys is that there’s such a lack of exploration going on,” DeStefano said. He said uncertainty around the Ring of Fire has also been like a “dark cloud” hanging over the mining supply and services sector.

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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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Perfect Policy Storm Causes High Nickel Prices – by Tim Maverick (Wall Street Daily – September 17, 2014)

http://www.wallstreetdaily.com/

Back in March, I told Wall Street Daily readers that the stars were aligned for a nickel bull market. Sure enough, nickel became a commodities standout this year. It’s up about 40% so far in 2014 at $19,400 per metric ton.

The reason behind the rise was a ban on raw nickel ore exports from Indonesia – the world’s top supplier of high-grade nickel ore. Now the world’s second-largest producer of raw nickel ore, the Philippines, may be following suit.

On top of that, China, a huge consumer of nickel and a major customer of the Philippines, is running low on its once-vast stores of iron ore. This means that the Chinese will be looking to buy nickel from other sources soon. With these two factors looming on the horizon, the market is sure to swing into a deficit in 2015.

With Indonesia out of the picture, the Philippines has become a key cog in the Chinese industrial machine, supplying 98% (that’s five million metric tons) of China’s nickel ore imports. The raw nickel produced by both of these countries is much cheaper than the refined product produced by the other major providers.

Nickel is also crucial for making stainless steel and thus an essential commodity for China. In 2014, exports of raw nickel ore to China tripled and now make up 61% of China’s total nickel ore imports.

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Vale’s Q2 nickel production plunges in Sudbury (Northern Miner – September 10, 2014)

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry.

Vale ’s (NYSE : VALE) companywide nickel production in the second quarter of 2014 was 61,600 tonnes, an 8.6% drop from the first quarter and 5.3% fall from the year-ago period. Vale says the decline mainly reflects the impact of four weeks of planned maintenance work carried out on the acid plant and furnaces in Sudbury, Ont. For the first half of 2014, Vale’s companywide nickel output was only off 0.7% to 129,200 tonnes.

Vale’s Sudbury operations produced 9,100 tonnes nickel in the second quarter, a decline of 48.4% from the first quarter and 49.2% from the second quarter of 2013. For the first half of 2014, Vale produced 26,800 tonnes nickel in Sudbury, off 23.6% from the 35,000 tonnes produced in the first half of 2013.

(Elsewhere in Canada in the second quarter, Vale produced 6,900 tonnes in Thompson, Man., or up 11% year-over-year; and 12,100 tonnes at Voisey’s Bay, Labrador, down -19.7%.)

The low point of the quarter came on April 6, when millwright Paul Rochette was killed at Sudbury’s Copper Cliff smelter complex. The United Steelworkers Local 6500 and Vale carried out a joint investigation into the fatality.

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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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Nickel price rally still has a long way to go – by Frik Els (Mining.com – September 9, 2014)

http://www.mining.com/

Indonesia, supplying more than a fifth of global exports, surprised the mining world in January by putting into effect an outright ban on nickel ore exports.

Initially record warehouse inventories, massive stockpiling by Chinese pig iron producers and growing mine supply kept a lid on the price which was languishing at near five-year lows below $14,000 a tonne at the start of the year.

But the Asian nation, against expectations, stuck to its guns and the ban, in combination with fears that tensions with Russia could affect supply from top miner Norilsk, sent the price of the steelmaking ingredient above $20,000 in May.

The price subsequently pulled back from those levels, but last week saw nickel take another stab at $20,000 a tonne after the Philippines – the only other source in the region of high-grade laterite ore required by China and responsible for 9% of global mine supply – hinted that it may follow Indonesia’s playbook.

Even before suggestions of an ore export ban Philippine supply has been sketchy

Nickel was last trading at $18,750 and is up 35% in 2014, but expectations are for the price to appreciate sharply this year and next. Capital Economics, a research house, says Chinese pig iron makers are likely to have run down their stocks by the first half of next year.

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