Consolidation of Nickel Producers Begin, page-279

When you zoom out and look at the macros - the title of the thread is actually very relevant. the Nickel Market is completely broken and uninvestable at the moment due to the LME bailing out Mr BigShot's/Tsingshan's massive short attempt, and LME and the bankers response to it. The LME went in and meddled with the market and all the Indonesian laterite supply and black market sanction-busting Russian supply came online, and traders and investors had by then lost faith in any price transparency or natural market price discovery.

The consolidation theory is valid if you think that the Ni market is broken and all western sulfide supply will get switched off - either voluntarily or involuntarily through companies going broke into administration. Plenty of evidence to see this happening now and the natural response is to turn off higher cost supply and as the cost curve is reset we will start seeing the higher cost and/or more environmentally problematic Indonesian suppliers also going out of business, and thats where I am thinking the next big supply disruption will happen - probably inside Indonesia, and it will be something like a big rainfall/environmental and even loss of life and political event that will disrupt the supply from Indonesia. This could take years to play out.

In the meantime it makes sense for Twiggy/Wyloo and even for BHP and any other WA sulfide producers who are somehow still alive to park/idle their supply, and this of course will be a prime opportunity for consolidation of sulfide concentrate supply and downstream Ni processing. Given how ugly and univestable it looks like Nickel is going to be, I am going to guess that it might be private equity and/or patient capital and maybe even commodity traders like Glencore and Trafigura who are part of the consolidation story.

Other posters have drawn interesting parallels with Chris Ellison and Gina Reinhart parking/blocking or sequencing all the hard rock WA Spod supply in the Li industry to be more disciplined about production and maintenance of upstream margins and to counteract the stranglehold that downstream Chinese interests have in volatile commodities.