Impact to PRN was factored into the small earnings downgrade on 11 December 2023. Article from AFR 9 December mentions PRN.

Nickel miners brace for job losses after Panoramicends production (AFR 9/1/2024)

Job losses in Australia’s nickel sector are expected to growwith a massive oversupply of the metal forecast this year amid growing tensionsbetween Canberra and Indonesia, a major producer, over the issue. Local minersare bracing for worse to come with Indonesian President Joko Widodo introducingpolicies that have supercharged Chinese investment in nickel production in theSouth-East Asia nation. The International Nickel Study Group has forecast thatnickel supply will exceed demand by 239,000 tonnes in 2024 and Australianbureaucrats predict lower prices based on oversupply from Indonesia.

Administrators in charge of ASX-listed Panoramic Resources lateon Monday called a halt to mining, with the nickel price weakening further andadding pressure on mines owned by BHP and Andrew Forrest. The shuttering ofPanoramic’s Savannah mine in Western Australia’s Kimberley region will resultin about 300 job losses. Mining contractor Perenti, which has about 160 workersat Savannah, said it would look at options to redeploy its personnel acrossother mines in Australia and overseas.

Australian nickel miners have warned that hundreds more jobs areat risk and remain frustrated that the federal government omitted nickel froman expanded critical minerals list released in December. Dr Forrest, thebillionaire businessman behind Fortescue, has bet big on nickel through hisprivately owned Wyloo Metals. He declined to comment. Wyloo is struggling tokeep open the Mincor operations it acquired for $760 million last year and istrying to drum up support for the London Metals Exchange to distinguish betweenthe metal produced under high environmental, social and governance standardsand what it refers to as dirty nickel produced in Indonesia.

Benchmark Minerals estimates that more than half of global productioncomes from Indonesia and predicts that could hit 66 per cent by 2032 and thatby then Chinese-owned companies will control more than half of the South-EastAsia nation’s nickel-refining capacity. The industry in Indonesia relies onnickel laterite production amid increasing concerns about environmental damage,including deforestation and tailings being dumped into the ocean. ResourcesMinister Madeleine King recently took a swipe at Indonesia and its long-standing ban on the export of unrefined nickel when asked about the crisis hitting Australian producers. She indicated the bans had distorted the market, with China subsequently investing tens of billions of dollars in refining assets in Indonesia.

Price falls sank Savannah

“I’m conscious of the impact that export bans are having on globalbattery minerals markets,” she said. “Australia is a great trading nation, andour economic prosperity has grown enormously from an open and rules-basedtrading environment.” FTI Consulting had intended to keep the Savannah minerunning when it was appointed administrator in mid-December, but said nickel prices continued to fall. “After further engagement with major creditors, key suppliers and other stakeholders, the administrators have determined that operations at the Savannah nickel project will be suspended over the coming days,” Panoramic investors were told late on Monday. Panoramic reopened the Savannah mine in Kimberley in 2021 but struggled last year when nickel prices halved, an important piece of machinery failed and bad weather severed an important transport route.

FTI is trying to sell or recapitalise the failed nickel miner againstthe increasingly grim outlook for the sector in Australia. The benchmark pricefor nickel measured by the London Metals Exchange has fallen to about $US16,600a tonne after the metal was fetching just over $US30,000 a tonne last January. Lastmonth, BHP Nickel West asset president Jessica Farrell told TheAustralian Financial Review that uncertainty had swept through the Australian industry. Nickel West employs more than 2500 people across its mining and downstream operations in WA. Nickel and lithium producer IGO conceded in December that it may have to write off all of the $1.3 billion it paid for the Western Areas nickel assets in mid-2022. The admission came as IGO started shedding jobs at the troubled Cosmos nickel project in WA. Advisory firm Treadstone Partners spent a month trying to save Panoramic through a sale or joint venture deal before it was put into administration. Multinational commodity trader Trafigura has a contract to buy most of the nickel, copper and cobalt concentrate produced by Panoramic. Trafigura is believed to have security over Panoramic’s assets according to the details of an unresolved loan announced to the ASX in April 2021. FTI Consulting’s Daniel Woodhouse said on Monday that the odds of a quick fix emerging for Panoramic were low.