longterm outlook for the nickel

SYDNEY (Dow Jones)--Australian nickel miner Albidon Ltd. (ALB.AU) said Thursday it will
delay work on its uranium project joint venture in Zambia, citing turmoil in global
financial markets.
Albidon started a bankable feasibility study on two deposits in May 2008 with joint
venture partner African Energy Resources Ltd. (AFR.AU)
In light of uncertainty in financial markets, the JV partners have decided to stop work
at the project, but will continue work on an update of the resource estimate as well as
ongoing metallurgical test works.
"The participants will continue to monitor the situation on an ongoing basis and
expect to resume the outstanding components of the BFS once market conditions
improve," Albidon said in a statement.


By Anna Stablum
LONDON, Oct 29 (Reuters) - Many nickel projects are expected
to be delayed because they have become unprofitable due to
falling prices, but this could cause future supply tightness and
push prices up again, industry sources said.
"The current financial turmoil is setting the stage for
another boom," Simon Purkiss, managing director of London-listed
European Nickel told a Nickel Day seminar late on
Tuesday.
London Metal Exchange three-months traded nickel futures
hit a record high of $51,800 a tonne in May last year
spurring exploration and new projects around the world.
But since then substitution, falling demand from its key
consumer the stainless steel sector and recently a global
financial crisis, in which all commodities have been sold off,
drove prices down to $12,300 a tonne on Wednesday.
"With nickel down at $4.5 ($9,921/t) or $5 ($11,023/t) per
pound some 40 odd percent of the world's nickel suppliers are
under water and losing money," said Dale Rogers, managing
director of Albidon .
The low nickel price, depressed equity markets and credit
constraints are now forcing many producers to stop expansions of
existing projects and postpone new projects setting the stage
for a tight nickel market when global demand picks up again.
"One would expect at some stage nickel prices will respond,"
Albidon's Rogers told the seminar organised by the Mining
Journal.
Albidon has just started to produce nickel at its Munali
nickel project in southern Zambia and it expects to ramp up to
full production in the first quarter of 2009.
"Just below $4 a pound we break even ... that is $1 or $2 a
pound better than most," he said.
European Nickel's Purkiss cited Standard Bank and expected
150,000 tonnes of nickel supply, including Chinese nickel pig
iron, to be cut this year in an overall global market of 1.4
million tonnes of nickel output.
"There are other projects that will need to also take action
because they are not profitable in these markets," said Nick
Poll, managing director at Mirabela Nickel .
"So the long-term outlook for the nickel price is
excellent," he said at his presentation at the Nickel Day.
The Australian miner said the aim was to start production at
its Brazilian site Santa Rita by mid-2009 and because of cash
constraints it had decided to halt further exploration.
"We think it is prudent," Poll said.
Longer term the fundamentals for nickel were sound with firm
demand expected from the emerging economies Brazil, Russia,
India and China and that project delays would keep the market
tight for years to come, said European Nickel's Purkiss.
"The BRIC economies are still growing ... nickel does still
have the strongest fundamentals of any of the commodities," he
added.