Ore and electricity are the two largest expenses for the RKEF lines, followed by reagents.
The ore price declined moderately as nickel prices fell, but the NPI price cratered due to oversupply. This divergence between input and product pricing squeezed their margins compared to the PCP.
The NPI price has recovered significantly over the past month though (https://www.metal.com/Nickel/201106150005) while the LME price has remained reasonably steady. NIC's EBITDA for the Sept quarter should be back above US$65m (100% basis).
Coal prices have come down but electricity prices remained elevated compared to the PCP which also impacted margins. With ANI and ONI under their own power, the electricity is far cheaper now per unit produced. The bulk of profits are now from these 2 projects. A cloud still hangs over the future of RNI and HNI. Hopefully some commentary on these two projects today from JW.
All imo.
Edit: Forgot to mention that the haul road is now online as well, so by my calculations, theoretically 75% of the ore input costs for the RKEF lines will be "hedged" when sales from the mine are fully ramped.
Ann: Half Year Reports, page-8
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