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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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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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Two of Canada’s more isolated mines continue to impress: Raglan and Eleonore – by Russell Noble (Canadian Mining Journal – October 2013)

Russell Noble is the editor for the Canadian Mining Journal, Canada’s first mining publication.

Nunavik and Quebec’s Raglan Mine and Éléonore, operated by Glencore and Goldcorp respectively, are two of the larger and more successful mining operations in the country, but their locations are about as unfamiliar to most people as the northern landscapes where they are located.

In other words, most people don’t have a clue where they are on the map, let alone what the surroundings are like that far north. Both mines are indeed, remote and somewhat isolated, but when it comes to mineral deposits, Raglan Mine and Éléonore are at the forefront and envy of the mining community across the country.

In fact, the world is also keeping watch as Glencore and Goldcorp continue to move towards making their Canadian operations two of the more productive mines on the globe.

Starting at the farthest point north at the Raglan Mine, which is located in Nunavik approximately 1800 km northwest of Montreal or, about the same as Cuba is to the south, is near Deception Bay on the Hudson Straight and is linked by all-weather roads to an airstrip at Donaldson.

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Royal Nickel has high hopes for Dumont mine – by Robert Gibbens (Montreal Gazette – October 1, 2013)

http://www.montrealgazette.com/index.html

MONTREAL — Resource companies keep an eagle eye on the economic cycle and Royal Nickel Corp. believes its $1.2 billion U.S. Dumont nickel mine in northwestern Quebec will start up in 2016 as metal prices swing higher.

Base metals, including nickel — the key ingredient in stainless steel — mirror the economic cycle, with their price charts giving early warning of bad news to come.

This year they’ve been in the dumps, with nickel among the most volatile. Analysts blame overcapacity stemming from slower Chinese growth, the European debt crisis and North America’s tepid recovery from the 2008-09 recession.

But Royal, led by a team of former Inco (now owned by Brazil’s Vale SA) executives, has begun negotiating partnerships, offtake agreements and debt and equity financing for its Dumont open-pit nickel mine and mill near Amos, in the Abitibi region. It could rival Vale’s big Voisey’s Bay (60,000 tonnes a year) mine in Labrador when it hits full stride in 2020.

“We’ve been planning this for more than three years and we see a low-cost operation providing more than 500 permanent jobs, a mine life of at least 33 years and able to survive any future global economic cycles,” Tyler Mitchelson, Royal’s CEO, said in an interview.

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PRESS RELEASE: Nickel An Essential Material To Address Sustainability Challenges

BRUSSELS, Belgium – 25 September 2013 – The Nickel Institute has today released a new report ‘Nickel in Tomorrow’s World: Tackling Global Challenges’ which highlights how nickel contributes to technologies for a more sustainable society and economy, one which meets the needs of a growing global population.

Nickel’s versatility and robustness mean that it is an ideal material to provide solutions for energy, transport, food and clean water as well as meeting other key sustainability challenges.

Nickel metal is tough, malleable and highly-resistant to corrosion. Nickel containing materials such as stainless steel have a long lifespan and require less maintenance than many alternative materials. Nickel is light and can reduce the overall weight of products, reducing the energy required for their production and operation. In addition, nickel retains its value at end-of-life, making it well-suited for recycling and reducing the wastestream.

Tim Aiken, Nickel Institute President said, “Some of society’s greatest challenges include reducing energy consumption and assuring access to safe food, clean water and advanced healthcare for citizens. The Nickel Institute’s latest publication is part of our ongoing commitment to educate and inform our stakeholders on the essential role nickel plays in industrial applications to address these grand challenges.”

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Inuit employment in Nunavik mines still weak – by Sarah Rogers (Nunatsiaq-on-line.ca – September 27, 2013)

http://www.nunatsiaqonline.ca/

Only 175 Inuit work at the Raglan nickel mine

Nunavik Inuit still make up only 13 per cent of the work force at the region’s only fully operational mine. At the Raglan nickel mine complex, in operation since 1998, only 175 of 1,292 workers are Inuit — well under the 20 per cent initially targeted for the region.

And those numbers haven’t changed much since 2012. “The data for Xstrata mine site is very similar to last year,” said Margaret Gauvin, director of the Kativik Regional Government’s sustainable employment department, during a regional meeting earlier this morning.

“Contract companies have a harder time getting Inuit workers, and that brings the percentage down.” A number of companies like Katinniq Transport, Iglu Construction and Nunavik Construction are contracted to work at the Xstrata site. But increasing Inuit employment in the mining sector remains a priority for the KRG, which wants to encourage students to stay in school or return to school in areas related to mining, Gauvin said.

More than $10 million over the next two years is targeted at mine training in Nunavik — to respond to a growing number of mining projects in development and to address fears among Nunavimmiut that they are being left out of the process.

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