Welcome to the nickel miners news for October. The trade war-depressed markets took its toll on nickel this month with the metal price falling significantly despite LME inventory levels also falling significantly. It shows the current market is driven by negative sentiment and fear of a China slowdown.
Nickel price news
As of October 26, the nickel spot price was US$5.37/lb, down from US$5.72 last month. The London Metals Exchange [LME] inventory also fell significantly for the month (see LME graph below).
Nickel spot prices - 5-year chart - USD 5.37/lb
LME nickel 5 year inventory
The chart below shows nickel inventory levels are declining from overstocked levels.
Nickel demand vs. supply forecasts
The chart below shows nickel is forecast to be in deficit after ~2022 (or at least require new supply to come online).
Source: Wood Mackenzie
Vale stated in their Q2 report:
Global stainless-steel production increased 8.6% in 2Q18 relative to 2Q17, while electric vehicles (EVs) sales worldwide grew 69% in 2Q18 relative to 2Q17. Demand for nickel in other applications continues to be positive, particularly in the super-alloy and plating sectors. Supply increased by approximately 6% in 2Q18 relative to 2Q17. The long-term outlook for nickel continues to be positive. Nickel in electric vehicle batteries will become an increasingly important source of demand growth particularly as battery chemistry favors higher nickel content due to lower cost and higher energy density. Capital investment for new projects and replacement volumes have been deferred within the context of challenging economic conditions. Capital is starting to flow back into the industry given the recovery in price. However, the timing of investments means production increase will lag and this will widen future deficits given continued demand growth.
Boom in EV batteries helps suppliers older than Ford’s Model T. Brazil's Vale expects the EV revolution to boost battery market nickel demand to as much as 700,000 tons in 2025, from just 36,000 tons this year.
Nickel Market News
On October 19 Mining.com reported:
Flow of LME nickel to hidden storage dents bull story. The bulk of nickel moving out of London Metal Exchange-approved warehouses in Asia is showing up in hidden facilities in Europe, analysts said, denting a bullish scenario of potential shortages. LME nickel stocks have shrunk by about 40 percent this year, largely from warehouses in Malaysia, Taiwan and Singapore, but much of that metal is not being consumed, industry sources and analysts said. BMO Capital's Hamilton estimates that 465,000 tonnes of nickel are stored in hidden, or non-exchange, warehouses. That is nearly double the 235,019 tonnes in warehouses linked to futures exchanges for which data is available.
On October 19 Mining.com reported:
NMC batteries dominating EV – sales to reach 63% of global market. The growing EV market will spur global demand for metals through their use in a wide range of chemistry combinations within the cathodes of lithium ion batteries. NMC-cathodes, a combination of nickel-manganese-cobalt, currently dominate the EV market, buoyed by high energy density and reliability. NMC cathodes currently account for nearly 28% of global EV sales, and Fitch forecasts that market share to grow to 63% by 2027.
Nickel Company News
Vale SA (NYSE:VALE)
Vale plans a US$1.7B Voisey's Bay expansion plan to boost nickel production. Note the comment below relates mostly to iron ore.
On October 25 Vale SA announced:
Vale's performance in 3Q18. Vale is turning into a very predictable company by delivering sound operational performance, higher price realization, lower costs and rigorous capital allocation. Chief Executive Officer, Mr. Fabio Schvartsman, commented on the 3Q18 results, “The strong 3Q18 results showcase the structural change in the Chinese iron ore and steel markets. We are the mining company that is best suited to further benefit from the flight to quality given the increasing share of premium products.” He concluded, “We are turning Vale into a very predictable company by delivering sound operational performance, higher price realization, lower costs and rigorous capital allocation.”
On October 22 MMC Norilsk Nickel announced:
BASF and Nornickel join forces to supply the battery materials market. BASF announces first location for battery materials production in Europe. BASF and Nornickel establish a strategic cooperation to meet the growing needs for battery materials in electric vehicles." Reuters also reported: "Chemicals giant BASF will build a plant to produce cathode materials for batteries in Harjavalta, Finland, adjacent to a nickel and cobalt refinery owned by Nornickel, the world’s second-largest nickel miner and a major cobalt producer.
Investors can read my very recent article "An Update On Norilsk Nickel."
BHP [ASX:BHP] (NYSE:BHP)
BHP recently announced a US$43.3m investment in its Nickel West project to enable conversion to nickel sulphate.
On October 29 4-traders reported:
BHP Billiton: Trims forecasts for U.S., China GDP growth due to trade conflict. The world's biggest miner BHP Billiton has trimmed its expectations of global growth for next year and 2020 due to a "lose-lose" result from the U.S.-China trade conflict, a senior executive said on Tuesday. BHP's modelling suggested the trade row would cut both Chinese and U.S. GDP growth by about a half to three quarters of a percentage point.
Jinchuan Group [HK:2362]
No news for the month.
On October 26 Glencore announced:
Third Quarter 2018 production report. Own sourced nickel production was 10,200 tonnes [13%] higher than the comparable 2017 period mainly reflecting the progressive ramp-up of Koniambo, with its second production line.
Sumitomo Metal Mining Co [JP:5713] (OTCPK:SMMYY)
Some news from last month reported on 4-traders:
Japan's Sumitomo to focus on battery material supply to Panasonic, Toyota. SMM, Japan's biggest nickel smelter, aims to boost its annual nickel output through smelting to 150,000 tonnes by March 2022 from 90,000 tonnes in March 2018.
Anglo American [LSX:AAL] (OTCPK:AAUKF)
On October 23 Anglo American announced: "Q3 2018 production report." As shown below nickel production was 5% down YTD vs. 2017.
On October 11 Eramet announced:
Eramet: a new brand identity for a new leap forward. Energy transition, optimization and preservation of resources, sustainable development: mining and metallurgical activities are at the heart of the challenges of the planet. In pursuit of those stakes, Eramet takes a new strategical leap and aspires to become the leader of the metals for energy transition.
On October 25 Eramet announced: "Eramet: sales up in third quarter 2018, driven by a favourable price environment." Highlights include:
- "Q3 2018 sales at €951m, up 8% versus Q3 2017, in an increasing prices environment (+11%2 for manganese ore, +26%2 for nickel) and favourable mineral sands markets.
- EBITDA forecast for 2018 approximately on par with 2017, assuming current market conditions are maintained."
Sherritt International (OTCPK:SHERF)[TSX:S]
No significant news for the month.
Independence Group [ASX:IGO] (OTC:IIDDY)
On October 23 Independence Group announced: "Zenith Energy to install Solar Capacity at IGO’s Nova Operation."
On October 25 Independence Group announced: "Lake Mackay JV: IGO meet 70% earn-in expenditure."
On October 29 Independence Group announced: "Quarterly report for the period ending 30 September 2018." Highlights include:
- "Nova and Tropicana achieved metal production guidance.
- Cash balance increased to A$176M, resulting in a net cash position of A$62M. A$29M scheduled debt payment made. A$12M dividend payment made. Underlying free cash flow of A$82M for the quarter.
- Commitment made to construct a solar farm at Nova under Zenith Energy BOO Contract."
Western Areas Ltd. [ASX:WSA](OTCPK:WNARF)
On October 3 Western Areas Ltd. announced: "Downhole EM surveys light up strong conductors at Investigators prospect. Drilling of the new conductors is scheduled to commence later this week. DHEM surveys of other recently completed drill holes is continuing."
On October 19 Western Areas Ltd. announced:
Further extensions of high-grade nickel-copper sulphides down dip at investigators. Exploration along the 1.5km east-west strike of the Investigators Prospect confirms that the large mineral system continues at depth with additional massive nickel-copper sulphides as well as new electromagnetic [EM] targets identified in the northerly down dip direction: MAD112 Line: Assays confirm a high-grade intersection in MAD112 that returned: 3.55m @ 4.67%Ni, 2.27%Cu, 0.20%Co and 2.94g/t total PGEs from 116m.
On October 22 Western Areas Ltd. announced:
Strong Odysseus DFS results in decision to mine. Western Areas Ltd is pleased to announce the results of the Cosmos Odysseus Definitive Feasibility Study (“DFS”), which confirms a robust 10‐year operation producing 130kt of contained nickel in concentrate. Odysseus is expected to generate significant EBITDA and free cash flow at a very low all‐in sustaining cost (“AISC”). The Board has approved a decision to mine (“DTM”), with Odysseus (or the “Project”) to continue the separate early works program announced in April 2018. The Project does not require any significant capital outlay for a number of years, therefore providing optionality around funding future commitments.
On October 25 Western Areas Ltd. announced: "Best ever intercept of nickel-copper sulphides at investigators."
First Quantum Minerals (OTCPK:FQVLF)
First Quantum has the Enterprise project in Zambia.
On September 28 First Quantum announced:
First Quantum Minerals comments on proposed changes to the mining tax regime in Zambia. First Quantum Minerals Ltd. today noted the following proposed changes to the Zambian mining tax regime that are pertinent to the Company. The proposed changes were included in the country's 2019 budget delivered on September 28, 2018 to the National Assembly and are expected to take effect from January 1, 2019.
Nickel Asia Corporation [PSE:NIKL] (OTC:NIKAY)
No news for the month.
Highlands Pacific [ASX:HIG] (OTC:HLPCF)
On October 8 Highlands Pacific announced:
Ramu Project. Highlands Pacific Limited has noted recent media reports regarding a potential expansion of the Ramu nickel and cobalt project in Papua New Guinea, in which Highlands holds an 8.56% interest (increasing to 11.3% upon repayment of project loans to Metallurgical Corporation of China Limited [MMC]). Highlands can confirm that MCC, the manager and majority partner in the Ramu joint venture, is investigating the expansion of the project which may cost in the order of US$1.5 billion.
On October 25 Highlands Pacific announced: "Quarterly activities report-for the period ended 30 September 2018." Highlights include:
Ramu Nickel Cobalt Mine (Highlands 8.56% with announced plan to move to 11.3%)
- "Production of 8,804 tonnes of nickel and 793 tonnes of cobalt in the September quarter.
- Product shipments were largely suspended during the September quarter but have resumed again in October.
- Nickel price closed the quarter at approximately US$12,500/t and cobalt was steady at approximately US$62,000/t.
- Major expansion of production capacity being studied by project manager MCC.
- Project partners continuing to work towards closure of Cobalt27 streaming transaction."
Sewa Bay Nickel (Exploration)
- "Discussions continue with Sojitz on future programs."
- Cash total led US$15.1 million (A$21.0million) at the end of September 2018."
Other nickel producers
Franco/Nevada [TSX:FNV], Mincor Resources, MMG [HK:1208], South32 [ASX:S32].
Axiom Mining [ASX:AVQ] (OTC:AXNNF)
On October 3 Axiom Mining announced:
Isabel Nickel Project update. Mining will commence in December 2018 with the first ore shipment due in Q1 2019. Mine development on San Jorge: construction of the ore loading facility and roadways is presently underway. Drilling has commenced with focus on grade control for initial pits for mining as well as exploration and resource definition.
On October 29 Axiom Mining announced: "San Jorge mining update–Drilling and fleet mobilisation." Highlights include:
- "20 holes drilled during the past week to bring the October project total to 55 holes drilled.
- Grade control drilling completed for initial mining target area.
- Drill rigs relocated targeting second area for commencement of grade control.
- Mining fleet equipment continues to arrive on site via ongoing barge deliveries.
- Operations remain on track for the first commercial shipment in Q1 2019."
RNC Minerals [TSX:RNX] (OTCQX:RNKLF)
RNC Minerals had several gold related announcements during the month from their Beta Hunt gold-nickel mine.
On October 24 RNC Minerals announced:
RNC announces record quarterly gold production of 31,360 ounces at the Beta Hunt Mine in third quarter of 2018. RNC Minerals Corporation is pleased to announce record quarterly gold production of 31,360 mined gold ounces in third quarter of 2018, a 199% increase versus third quarter of 2017 production and a 135% increase versus second quarter of 2018. Gold production for the first nine months of 2018 totaled 58,460 ounces compared to 24,305 for the comparable prior year period. The large increase in high grade specimen and coarse gold production led to a 198% improvement in the mined grade for the quarter to 6.67 g/t, as compared to 2.24 g/t in third quarter of 2017 and a 112% increase as compared to second quarter of 2018.
Panoramic Resources [ASX:PAN] (OTCPK:PANRF)
No news for the month.
Poseidon Nickel [ASX:POS] (OTC:PSDNF)
On October 22 Poseidon Nickel announced: "Continued success with more nickel sulphides intersected at Abi Rose." Highlights include:
- "PLJD0004 intersects Nickel-Copper bearing sulphides; 1.54m @ 1.82% nickel and 0.1 8% copper down plunge at Abi Rose, including 0.47m @ 4.36% nickel and 0.46% copper from 466.02m down hole.
- Since initial discovery in 2015, four out of four drill holes completed, including the current hole, have all intersected mineralisation. Two additional holes are to be drilled in the current program.
- Confirmation of magmatic Ni-Cu type emplacement model of which Emily Ann is interpreted to be the top, Ni rich accumulation."
On October 29 Poseidon Nickel announced: "Quarterly report 30 September 2018." Highlights include:
- "Successful completion of Share Placement and Renounceable Entitlement Issue raising $75m.
- Continued Success with drilling at Abi Rose, PLJD0004 intersects Nickel-Copper bearing sulphides."
Amur Minerals Corporation (LSE:AMC)
Amur currently has a potentially large nickel sulphide project in Kun-Manie in Russia.
No news for the month.
Garibaldi Resources [TSXV:GGI] [GR:RQM] [LN:OUX6] (OTC:GGIFF)
On October 18 Garibaldi Resources announced: "Garibaldi drills into new zone at nickel mountain." Highlights include:
- "Initial shallow drilling in the Central zone has intersected visually strong nickel sulphide mineralization over significant widths to depths of 75 meters - deeper holes are planned.
- Three massive sulphide showings (Crevasse, Gully and Cliff) have been identified in the Central zone, exposed by the retreating icefield, featuring a classic Nickel Mountain pyrrhotite-pentlandite-chalcopyrite mineral assemblage.
- XRF analysis completed on samples from one of the showings (Crevasse) supports a grade profile consistent with the Discovery zone."
Sama Resources [TSXV: SME] (OTC:LNZCF)
On October 23 Sama Resources announced:
Sama and HPX initiate 6,000-meter drilling program on Phase 1 Typhoon electromagnetic high-conductivity targets at Yepleu. The Company has planned the Phase 2 Typhoon survey over additional EM targets.
S2 Resources (ASX:S2R)
On October 16 S2 Resources announced:
Geophysics completed at Ecru, Nevada first drilling starts this week. Detailed gravity and AMT surveys complete. Geophysics has defined numerous features of interest in both AMT (conductive and resistive zones) and gravity (high and low density zones).
On October 24 S2 Resources announced:
Finland exploration update. Coincident nickel-copper-cobalt-palladium anomalies identified in regional ionic leach geochemical survey on Ruopas licence. Electromagnetic [EM] conductors also identified in large VTEM survey over Ruopas licence.
Cassini Resources [ASX:CZI]
On October 11 Cassini Resources announced:
OZ Minerals completes 51 per cent earn in for West Musgrave. Early metallurgical testing shows improvement in copper and nickel recoveries. Pre-Feasibility Study scheduled for completion in Q2 2019. Infill drilling program brought forward to enhance potential Feasibility Study schedule.
On October 23 Cassini Resources announced: "West Musgrave Project PFS update." Highlights include:
- "Resource Infill drilling returns best-ever Ni intersection at Nebo» 23m at 2.91% Ni, 1.13% Cu, 0.09% Co & 0.47g/t PGE (CZC0285)
- Thick, continuous zones of mineralisation intersected at Babel.
- Additional 23,000m of infill drilling brought forward into calendar 2018.
- Metallurgy program delivers significant improvements to nickel and copper recoveries.
- Substantial progress on environmental baseline studies.
- GR Engineering appointed to complete engineering design."
North American Nickel [TSXV:NAN]
No news for the month.
Ardea Resources [ASX:ARL], Artemis Resources [ASV:ARV], Australian Mines [ASX:AUZ], CleanTeQ [ASX:CLQ], Giga Metals [TSXV:GIGA], Mustang Minerals [TSXV:MUM], New Age Metals [TXV:NAM], Polymet Mining [TSX:POM], Transition Metals [TSXV:XTM], and Wall Bridge Mining [TSX:WM].
Note: Some of the above companies are covered in the Cobalt monthly news.
Nickel spot prices and inventories fell in October as negative sentiment takes over from fundamentals.
Highlights for the month were:
- Nickel spot prices were lower, and the LME inventory was lower.
- BMO Capital's Hamilton estimates that 465,000 tonnes of nickel are stored in hidden, or non-exchange, warehouses.
- Vale state - "The long-term outlook for nickel continues to be positive."
- BASF and Nornickel join forces to supply the battery materials market.
- Sumitomo aims to boost its annual nickel output through smelting to 150,000 tonnes by March 2022 from 90,000 tonnes in March 2018.
- Axiom Mining Isabel Nickel Project - Mining will commence in December 2018 with the first ore shipment due in Q1 2019.
- Poseidon Nickel successfully raises $75m.
- Cassini Resources - OZ Minerals completes 51 per cent earn in for West Musgrave.
As usual, all comments are welcome.
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Disclosure: I am/we are long NORILISK NICKEL [LSE:MNOD], GLENCORE [LSX:GLEN], RNC MINERALS [TSX:RNX], POSEIDON NICKEL [ASX:POS], SAMA RESOURCES [TSXV: SME], AXIOM MINING (ASX:AVQ), ARDEA RESOURCES [ASX:ARL], AUSTRALIAN MINES [ASX:AUZ] CASSINI RESOURCES [ASX:CZI].
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: The information in this article is general in nature and should not be relied upon as personal financial advice.
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