hi all just wondering if anyone has any thoughts on this nickle price capped at 12 dollars..... it would be nice if hrr could shave some more of production costs for knp......
BHP Billiton is rumoured to be preparing for a new-year sale of its remaining nickel assets, with Chinese buyers tipped to be best placed to snap up the West Australian and Colombian assets for anywhere from $US3 billion to $US7 billion.
The wide variance in valuations is explained by equally wide market assumptions on the price of nickel, historically the most volatile of metal prices, with a 65 per cent price swing in the past two years alone.
The rumoured sale of the remaining nickel assets would follow BHP's embarrassing exit from laterite nickel processing in WA with the January closure of the Ravensthorpe operation.
That closure and its impact on the downstream processing at Yabulu in Queensland forced a $US4.12 billion write-down on the value of Ravensthorpe and Yabulu in the June year. Both projects have since been sold.
Those sales have left BHP with the Nickel West assets picked up with its 2005 takeover of WMC and the Cerro Matoso ferronickel project in Colombia that came with BHP's merger with the Anglo-African miner Billiton in 2001.
Nickel West assets include the Mount Keith mine, the Leinster mine, the Kambalda concentrator, the Kalgoorlie nickel smelter and the Kwinana nickel refinery.
Along with Cerro Matoso, production in the June year was 140,000 tonnes of nickel, with several junior nickel companies helping BHP to feed the Nickel West system from mines previously operated by WMC/BHP under long-term take-or-pay contracts that can be easily shuffled to a new owner of the business.
BHP would not comment yesterday on industry talk that the decision had been made to make a complete exit from nickel in the new year after first establishing a data room for the sale.
The sale of the nickel assets would be in keeping with BHP's internal assessment that the emergence of a nickel pig-iron industry in China in 2007 and 2008 in response to record nickel prices means that future nickel prices are capped at no more than $US12 a pound, compared with $US7.80 a pound at present.
But a sale would also fly in the face of comments chief executive Marius Kloppers made at the release of BHP's June-year results in August.
"Over the last couple of years, some new technologies and production means have entered into the nickel business, most notably the production of nickel pig iron in China through blast and electric furnace," Mr Kloppers said. "Both of these developments have changed the dynamics of the nickel market a little, and probably mean that prices will be capped more on the upside, because there is a large amount of ready capacity which can kick in when demand increases. "I do not think that that changes our commitment to the product at all. . . . We want to grow in due course."
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HRR Price at posting:
26.0¢ Sentiment: Hold Disclosure: Held
