The sell off, page-3

The sell off has been caused by the huge fall in the Ni price and because some are now questioning the future of sulphide nickel production. Indonesia, with the assistance of Chinese expertise and funding, is now churning out large amounts of Ni made from laterite ores. This production process is dirty and carbon intensive but is relatively cheap. Until recently the common wisdom was that this Ni from laterite ore was not suitable for battery manufacture (it is suitable for steelmaking). People also thought that Western manufacturers would prefer the cleaner Ni made from Ni sulphides i.e. Lunnon's type of Ni, even if it costs a little more.

However, it appears that the laterite Ni process has now been improved to the stage that some of this Ni is suitable for battery manufacture. It also appears that Ni consumers want what is cheapest (as long as it's suitable) and are not prepared to pay extra for 'clean Nickel'. These developments then beg the question 'Is there a future for Ni sulphide production?' BHP is expected to write down the value of their WA Ni sulphide assets significantly, IGO has already taken a big writedown on their WA Ni assets, PAN has gone broke (they were producing Ni in WA until recently but the low price has forced them out of business), Wyloo Metals is closing their WA Ni mine at Cassini (and is apparently losing $20 million per month at the current Ni price). Hence the sell down of all Ni sulphide stocks including LM8.

For what it's worth, I'm not convinced that Ni sulphide is dead just yet. I'm an LM8 holder and I will likely look to buy more on further price weakness. This is because over the years I've seen numerous Ni price cycles come and go and I've also heard of the demise of many things that then seem to hang in there and even bounce back.

GLTA & DYOR