good signs for long-term nickel price

http://www.theajmonline.com.au/mining_news/news/2009/october/october-22-09/top-stories/good-signs-for-long-term-nickel-price

Good signs for long-term nickel price— filed under: Commodities, Nickel, Economic, Financial Markets, Forecasting
by Paula Wallace — created Oct 20, 2009 03:42 PM

At the Paydirt Nickel conference in Perth last week, it was tipped that the long-term nickel floor price has “turned the corner” and would continue to rise over coming decades.



While there will be periods where the base metal grapples with price fluctuations within a new “super cycle”, resources advisor Martin Pyle said the bottom line was that the nickel price had grown 5-6 per cent (on average) for the past decade and none of the analysis suggests it will be any different going forward.
“In fact, forecasts of 500,000 tonnes a year in new nickel demand by 2020 now look conservative.
“I am expecting that the long-term price, although influenced by the short-term spot price, will be in the top end of the range of between US$6.00-7.50 per pound - and that does not fully account for the emergence of a new super-cycle driven by demand growth from China.”
He said the firmer price will also be underpinned by increasing evidence of nickel in emerging alternative energy forms such as nuclear, solar and wind. “All of these have strong elements of nickel within their project componentry,” said Pyle.
“Nickel also has the added appeal of high recyclability and in every sense, is the ‘metal of the future’.”
Pyle said the major threat to nickel’s long-term price trend upwards would be from nickel substitutes from lower quality stainless steel use - although some of that risk was being mitigated as nickel prices fell from their lofty 2007 levels, encouraging a return to higher nickel stainless post the global financial crisis.
He added that nickel laterites - although continuing to be a dilemma for many new project owners with a history in Australia of false project starts and supply difficulties - were “here to stay” in the nickel supply mix.
Also addressing the conference, Poseidon Nickel’s chief executive officer, David Singleton said that Australia needed to protect against potential loss of market overseas.
“Two years ago, we had nickel resources in this country of 29 million tonnes in-ground. At today’s nickel price that is well over half a trillion dollars worth of nickel already reserved in Australia…a prize well worth protecting and pursuing.
“In Western Australia alone, in 2008, nickel exports were worth A$4.2 billion and were responsible for employing 3,500 people directly – although that figure will be a little less today.
“Research and development has been fundamental to growing this particular corner of the resources sector.”
Singleton said ongoing and well funded R&D was also critical for the nickel sector’s push to deliver environmentally sustainable production with increasing capacity to adopt new technology.
“This includes maintaining our advances in ion exchange processes and the whole High Pressure Acid Leach (HPAL) industry.
“Although HPAL has had an up and down history, it is going to be a critical part of the nickel sector’s technology base going forward as 80 per cent of Australia’s nickel resources are hosted in laterite mineralisation,” he said.
Managing director of Western Areas, Julian Hanna, told conference attendees that while laterites will be needed to meet market demand they will always face high capital costs to establish. He said what the industry needed now was another “world class” nickel sulphide discovery.
“To put this in context, some 40 per cent of global nickel sulphide production comes out of discoveries made as far back as 120 years ago,” he said.
“There have been worthwhile and useful smaller discoveries since but not on the scale necessary to sustain smelters in the long term.”
Western Areas is aiming to double its nickel metal output to 20,000 tonnes per annum in calendar 2010.
“We are then looking from the end of next year to achieve sustained production at around 25,000 tonnes per annum primarily though our Spotted Quoll and Flying Fox mines on the way to becoming Australia’s second largest and highest grade nickel producer,” Hanna said.
“Our objective is to reach this output performance while maintaining a cost target of between US$2.00 and US$2.50 per pound before smelting and refining.
“This is achievable as Flying Fox is already emerging as one of the lowest cash cost nickel mines in Australia,” Hanna said.

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