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Nickel

UPDATE 1-Vale eyes Sudbury deal with Glencore to cut costs (Reuters U.S. – November 7, 2013)

http://www.reuters.com/

Nov 7 (Reuters) – Brazil’s Vale confirmed on Thursday it is in talks with Glencore Xstrata over potential cooperation between the mining groups’ nickel operations in Canada’s Sudbury basin, in an effort to cut costs as prices languish.

Vale said on Thursday it was not planning “a corporate joint venture” in Sudbury, but was looking at other options to join forces in mining, milling and smelting to save cash. Nickel prices have fallen by around a fifth since January and are languishing around four-year lows, weighed down by oversupply.

“We are looking at the synergies now and plan to start negotiating next year,” Vale’s chief executive Murilo Ferreira told analysts in a quarterly earnings call, adding an eventual deal would not involve a full merger.

Reuters reported last month that Glencore and Vale had revived talks over long-debated cooperation in Sudbury, with the companies considering a number of options for their mining and processing operations in the area. Sources familiar with the situation said then that talks were at an early stage.

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Canadian Royalties starts Nunavik production (Nunatsiaq-online – November 6, 2013)

http://www.nunatsiaqonline.ca/

Beleaguered mine says it will begin to generate revenue, pay off creditors starting at month’s end

Canadian Royalties Ltd. has shipped its first load of copper concentrate from its Nunavik Nickel project, the company said in a Nov. 5 news release.

That signals a new beginning for the beleaguered mine, which struggled to get operations up and running while owing more than $50 million to its creditors.

“We are very pleased that CRI has achieved the significant milestone of producing and shipping saleable concentrate,” said the company’s acting chief executive officer Parviz Farsangi Nov. 5. “As discussed with many of our suppliers, CRI will begin to generate revenue in less than a month from the sale of the concentrate and will be making payments as committed to all of its suppliers.”

After sinking $735 million into infrastructure, Jien Canada Mining Ltd., the Chinese company that took over Canadian Royalties several years ago, had planned to ramp up production in early 2013, training and hiring more Nunavik workers.

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Australian Iron-Ore Tycoon’s Next Bet is Nickel – by Rhiannon Hoyle (Wall Street Journal – October 31, 2013)

http://online.wsj.com/home-page

PERTH, Australia–Take an unloved commodity, land shunned by global mining companies, a large dollop of debt, and an optimistic view of Chinese demand.

This recipe helped turn Andrew Forrest into one of Australia’s richest men and transformed his company–Fortescue Metals Group Ltd. (FMG.AU)–from a tiny iron-ore explorer into the world’s fourth-largest producer of the steelmaking material in less than a decade.

Now, Mr. Forrest is betting the same strategy will work for another out-of-favor commodity: nickel.

The industrial metal used to make stainless steel has borne the brunt of a steep decline in metal prices this year, as demand fails to keep pace with the amount of material being produced by mines in countries like Australia, Russia and Canada. China’s retooling of defunct steel kilns to churn out a low-grade version of the metal–known as nickel pig iron–has also weighed on prices.

Nickel fell as low as US$13,205 a metric ton in July, half of what it fetched two years earlier and the lowest price since May 2009. At US$14,615 a ton now, it is down 14% this year, compared to a 9% fall in both industrial bellwether copper and iron ore.

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NEWS RELEASE: Royal Nickel to Capitalize on Upcoming Global Nickel Shortage

Fri, 25 Oct, 2013

(Vantagewire.com) – A very real structural shortage of nickel is coming in the second half of this decade. Nickel prices already spiked in 2006 and 2007, when the world ran into a similar structural shortage in supply. Now there’s plenty of reason to believe that we could be in for another one of those periods in the second half of the 2010s.

Beyond 2015, it’s believed that growing global demand will require over 500kt of new supply to meet the world’s needs. However, the “project cupboard” to meet this demand is almost bare. With not enough projects on deck, the world’s nickel markets will be challenged to overcome several years of under investment in new supply.

Among the few projects that look to be coming into stride when this supply differential truly hits is located in Quebec’s prolific Abitibi mining district. The Dumont nickel project, owned by Royal Nickel Corporation [TSX: RNX], is one of the world’s largest undeveloped nickel sulphide projects and could be around just in time as supply shortages start hitting their peak.

Royal Nickel and its Dumont project look to be one of the frontrunners to address the upcoming nickel shortage. Stacked with experienced senior management largely from Inco (former Canadian nickel producer taken over by VALE in 2006), Royal Nickel is capable of handling a project of this magnitude.

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Nickel Glut Extends to Fourth Year on China Supply: Commodities (Washington Post/Bloomberg News – October 21, 2013)

http://www.washingtonpost.com/

Oct. 21 (Bloomberg) — The global glut of nickel will extend into a fourth year in 2014 as new technology lowers costs for Chinese furnaces producing record amounts of a lower-grade substitute that helped drive prices into a bear market.

Chinese producers will supply 456,000 metric tons of nickel pig iron in 2014, or 49 percent more than last year, Morgan Stanley estimates. Costs at their rotary kiln electric furnaces more than halved to $11,000 a ton in five years, according to Beijing Antaike Information Development Co. That implies they’re still profitable even after prices slumped 16 percent since the start of 2013, reaching a four-year low of $13,205 in July.

China expanded NPI output from 3,000 tons in 2005 to make the stainless steel needed for its construction boom after costs for pure nickel reached a record $51,800 in 2007. While slumping prices previously shut furnaces in China and curbed excess supply, the new technology means they can now compete with traditional refineries. The cumulative surplus since 2007 will have reached about 589,000 tons by the end of 2014, or almost four years of U.S. demand, Morgan Stanley says.

“Most traditional nickel producers cannot compete on price and are having to close or scale back operations,” said Gavin Wendt, the founder and senior resource analyst at Sydney-based Mine Life Pty., who has followed the mining industry for more than two decades.

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Nickel Reaches 9-Week High as Export-Ban Prospect Spurs Buying – by Joe Richter (Bloomberg News – October 22, 2013)

http://www.bloomberg.com/

Nickel jumped to a nine-week high in London as investors purchased the metal to close out bets on mounting concern that ore exports will be halted next year from Indonesia, the world’s largest producer.

A government ban on shipments from Indonesia of ores including bauxite, used to make aluminum, and nickel may take effect next year to aid local processing. Nickel got a boost from investors who bought the metal to liquidate bets on lower prices, according to Citigroup Inc. Prices have tumbled 13 percent this year, the most among the six main metals traded on the London Metal Exchange.

There is “growing nervousness about a potential export ban on Indonesian ores that kicks in at the beginning of the new year,” Edward Meir, an analyst at INTL FCStone in New York, said in a report.

Nickel for delivery in three months climbed 3.4 percent to settle at $14,850 a metric ton at 5:51 p.m. local time on the LME. Prices reached $14,880, the highest since Aug. 19.

The metal slumped this year as stockpiles tracked by the LME expanded to a record, reaching 231,480 tons today, according to daily exchange data. Open interest, or the number of futures outstanding, fell 4.9 percent last week from a record on Oct. 11.

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Is BHP looking to escape the nickel market? – by Ryan Newman (The Motley Fool – October 18, 2013)

http://www.fool.com.au/

BHP Billiton’s (ASX: BHP) rivals are once again suspecting that the miner could be on the move to offload its largest nickel assets as part of its strategy to heavily reduce costs and increase its focus on core operations.

As reported by The Australian Financial Review, it is believed that the miner had placed its Nickel West and Cerro Matoso mines up for sale earlier in the year. This belief was bolstered when the company’s new CEO, Andrew Mackenzie, notably excluded nickel from his “four pillar” strategy in May, which outlined the company’s core operations and focus areas moving forward.

Speculation has once again heightened that the sale of the assets could be a very real possibility – particularly after the company was forced to impair its Nickel West asset by US$1.2 billion, according to BHP’s annual report.

Meanwhile, many believe that right now could be the bottom of the nickel market which would increase the interest in BHP’s assets. Whilst now may not prove to be the most profitable time to part ways with the mines, it would allow the miner to focus more heavily on reducing operating costs and increasing productivity in other key areas.

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Potential Indonesian nickel export ban bodes well for prices, poorly for pig iron – by Freya Berry (Mineweb.com – October 18, 2013)

http://www.mineweb.com/

While it is not certain the ban will go ahead unchanged, if it does, analysts say, it would be a game-changer for prices.

LONDON (REUTERS) – A potential ban on nickel ore exports by Indonesia next year and production cutbacks could lift the price of this year’s worst-performing base metal by more than 20 percent off multi-year lows, analysts said.

Indonesia, the world’s top exporter of nickel ore, has said it plans to bring in a ban on unprocessed ore exports from Jan. 1, 2014. Its ore is currently shipped to China to produce nickel pig iron, a cheap substitute for higher grade nickel in stainless steel.

It is not certain that the ban will go ahead unchanged, but if it does analysts said it would be a game-changer for prices. Benchmark nickel on the London Metal Exchange has fallen by around a fifth since January to four-year lows, weighed down by over-supply, and was trading at $13,963 a tonne at 1529 GMT on Thursday.

“It’s such an important swing factor for the market that you could see a decent rally in the nickel market if a ban is strictly enforced – at least 20 or 30 percent,” said Daniel Smith, head of metals research at Standard Chartered.

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Sudbury [mining Vale Glencore] merger likely: Analysts – by Carol Mulligan (Sudbury Star – October 15, 2013)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

Glencore Xstrata and Vale could and likely will one day merge their Sudbury operations. If and when that happens, it will be a marriage of convenience, not a “Rock Hudson- Doris Day romance,” says a nickel analyst.

It would be complicated to join the companies’ operations, but it may be necessary to compete against record-high production of nickel pig iron in China, says Terry Orstlan. He wasn’t surprised last week when Reuters broke the news Vale and Glencore Xstrata were in talks to explore combining their Sudbury operations.

Orstlan has been advising that for years. “Talks, that is exactly what they are, talks,” said Ortslan of TSO & Associates in Montreal. “Let’s have coffee and talk. Let’s have tea and talk. Let’s go out and talk,” he said. It would have made sense 30 years ago for the nickel giants to join forces, said Ortslan.

When Vale was owned by Inco and Glencore Xstrata by Falconbridge, their vastly differ-e nt cultures and powerful unions made a merger unthinkable.

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Norilsk Hires Barclays for International Assets Sale: Sources – by Gillian Tan (Wall Street Journal – October 14, 2013)

http://online.wsj.com/home-page

SYDNEY–Russia’s OAO Norilsk Nickel (GMKN.RS), the world’s largest nickel and palladium producer, has hired Barclays PLC (BARC.LN) to sell the majority of its international assets, including mines in South Africa and Botswana, people familiar with the matter said.

The U.K. bank has sent out information to prospective buyers for assets including Norilsk’s 50% stake in the Nkomati joint venture in South Africa. African Rainbow Minerals (ARI.JO) owns the remaining interest and has the right to match any offer for the stake, one of the people said.

The company’s 85% stake in Tati Nickel, which it co-owns with the Botswana government, is also for sale. Both assets were acquired when Norilsk outbid Xstrata PLC to acquire Canada’s LionOre Mining International Ltd. for 6.3 billion Canadian dollars (US$6.1 billion) in 2007.

Another asset on the block is the Norilsk Nickel Harjavalta refinery in Finland, which produces 50,000 metric tons of nickel a year, according to its website.

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Mining legend [Robert Friedland] speaks to Sudbury students – by Staff (Sudbury Star – October 11, 2013)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

Canadian mining companies have a responsibility to help people to make the goods they need to live in a smart and ethical way, one of the men who discovered Voisey’s Bay told a Sudbury audience this week.

Robert Friedland, chairman and founder of Ivanhoe Capital Corporation and executive chairman and founder of Ivanhoe Mines Ltd., delivered Laurentian University’s Goodman School of Mines’ inaugural lecture series on Wednesday.

Earlier in the day, he spoke to Laurentian students. “We’ll soon be sharing this planet with nine billion other inhabitants — most of whom, given a choice, would prefer to live in safety and comfort, drive cars, and have air conditioning and smartphones.” he said. “They also want clean air and clean water.

“In addition to its fundamental mission of finding and producing critical materials to support growing economies, the mining industry has a responsibility to present and future generations to develop and adhere to ethical and responsive practices, delivering effective management of the impacts of mining metals.”

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No plans to step down for Norilsk’s billionaire CEO – by Clara Ferreira-Marques and Douglas Busvine (Reuters U.S. – October 6, 2013)

http://www.reuters.com/

LONDON – (Reuters) – When he took the helm of Norilsk Nickel (GMKN.MM) last December as part of a deal that ended a long-running shareholder battle, Russian billionaire Vladimir Potanin hinted he saw himself in the job for roughly two years.

Almost a year on, Potanin is clearly relishing his role at the center of a major turnaround and indicates he has no plans to stand down as chief executive of the world’s largest producer of nickel and palladium. “I don’t like deadlines,” the 52-year-old Potanin told Reuters over tea in an upmarket London hotel late on Friday after a long day spent wooing investors.

His departure could be years away as he develops the Norilsk management into a world-class team, he said. “For a rich and reasonably successful guy, it is impossible not to enjoy your job, otherwise why would you spend so much time and effort doing it? I am a great fan of Norilsk and I like this kind of challenge.”

Potanin, whose more than $14 billion fortune began in banking, has long been a major shareholder in Norilsk, securing stock at a bargain-basement price in the loans-for-shares privatizations that followed the collapse of the Soviet Union and spawned a new oligarch elite.

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Rick Mills: Greenland Is the Final Frontier for Lower-Cost Mining – Interviewed by Kevin Michael Grace (The Metals Report – October 1, 2013)

http://www.streetwisereports.com/

Industrial minerals like copper and nickel are essential to global economic expansion. But everywhere you look, grades are getting lower, and costs are getting much, much higher. Is there a way out? Rick Mills says mining companies need to look to Greenland. In this interview with The Metals Report, the owner and host ofAhead of the Herd.com lauds the world’s largest island for its vast resources, its one-stop regulatory system and its year-round access to ocean transportation.

The Metals Report: You never really believed that there was anything resembling an economic recovery in the United States, correct?

Rick Mills: I don’t believe you can have an economic recovery with the type of jobs that have been created in the last few years. Wages have stagnated. The velocity of money, how many times it turns over in the economy, how many times it’s spent, is at a record low,

TMR: So the decision by the Federal Reserve to hold off on tapering quantitative easing didn’t surprise you?

RM: I’ve gone on record saying there would be no tapering this time around, but that doesn’t mean it isn’t coming—it certainly is. But it will likely be very gradual, and the Fed will start only when they feel the economic data support such a move. I firmly believe, however, that the Fed’s zero interest rate policy is here to stay, and this is very important for gold investors.

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Fickle nickel takes its toll on market darling Mirabela – by Sarah-Jane Tasker (The Australian – October 4, 2013)

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

MIRABELA Nickel once rode the commodities boom, hitting a share price peak of more than $7 in early 2008, but a perfect storm of low prices, debt, decreasing cash balances and a cancelled contract has seen the company join the ranks of the penny dreadfuls. Some 80 per cent has been wiped off the value of its share price in the last month alone — from an already low base.

This is a company that was valued by the market at about $800 million in 2008. Now? $14m. The price of a decent shack on Sydney’s waterfront.

Perth-based Mirabela this week became the latest high-profile casualty of a commodity that has been struggling more than most others.

Perth-based private equity firm Resource Capital Fund is Mirabela’s largest shareholder and is the hardest hit by the share price fall. The resources-focused fund stepped in to support the company last May, tipping in $20m at a share price of 40c, which at the time was at a 17.6 per cent premium to the junior’s share price. It also underwrote a $100m raising. The miner said at the time that the funds would strengthen its balance sheet.

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NEWS RELEASE: Norilsk Nickel Unveils New Strategy Focused on Tier I Assets and Higher Returns

October 04, 2013 09:05 AM Eastern Daylight Time

MOSCOW–(BUSINESS WIRE)--MMC Norilsk Nickel (hereinafter, Norilsk Nickel or the Company), the largest global nickel and palladium producer, today announced further details of its new strategy at MMC Norilsk Nickel’s “Unveiling New Strategy” event held in London.

Highlights

  • Capture full potential of MMC Norilsk Nickel’s unique resource base in Russia
  • Focus on Tier 1 assets to deliver sustainably high return on capital
  • Focus on capital discipline and introduction of return on investments as key metric for the organization
  • Increased focus of existing portfolio on copper and PGMs
  • Prioritize Polar Division Upstream assets, with a plan to:
    -Maximize high-margin production utilizing existing infrastructure
    -Develop the greenfield Skalisty mine, with a potential 2.4Mtpa ore capacity
    -Upgrade of the Talnakh infrastructure into a world class concentrator

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