Welcome to the nickel miners news for May. The past month saw nickel prices flat and LME inventories decline further remaining at 7-year lows. Many of the major nickel producers nickel production volumes are lower. The nickel juniors continue to advance, while Poseidon Nickel hits very high nickel grade at Silver Swan.
Nickel price news
As of May 24, the nickel spot price was US$5.51/lb, about the same from US$5.57 last month.
Nickel spot prices - 5-year chart - USD 5.51/lb
London Metals Exchange [LME] nickel 5 year inventory
The chart below shows LME nickel inventory levels declining further, having now reached a 7-year low.
Nickel demand v supply
The chart below shows nickel is forecast to be in deficit after ~2020-2022 (or at least require new supply to come online).
Source: Wood Mackenzie
Note: Some others such as BMI have been forecasting a nickel surplus by 2020 due to increased Indonesian production and reduced Asian demand.
As a reminder, the November 2017 McKinsey report stated:
"If annual electric vehicle [EV] production reaches 31 million vehicles by 2025 as expected then demand for high-purity class 1 nickel is likely to increase significantly from 33 Kt in 2017 to 570 Kt in 2025."
That is a 17-fold increase in just 8 years, albeit only on Class 1 nickel.
On May 20, Reuters reported:
Column: Confusing signals cloud London nickel market. The London Metal Exchange (LME) nickel market was last week gripped by the most acute tightness in a decade. Falling inventory and tighter spreads are normally strong bull signals in a commodity market. And in nickel's case they seem to tally nicely with the International Nickel Study Group's (INSG) forecast that supply will fall short of usage for the fourth successive year in 2019. However, conspicuous by its absence is any strength in the outright nickel price, which has fallen from a March high of $13,765 per tonne to a current $11,910. Nickel has been caught up in the broader base metals negativity caused by slowing global manufacturing activity and U.S.-China trade tensions.......Some of the metal leaving LME warehouses may well have gone to meet end-user demand but there is a robust analysts' consensus that some of it has simply been moved to statistically opaque off-market storage.....Resurgent mine production in Indonesia, up 71% last year, is driving strong nickel pig iron (NPI) production.
Nickel Market News
On May 9, Investing News reported:
Chris Berry: Battery industry waking up to supply chain issues. Berry said the reason why there haven't been more deals like the one between Volkswagen and Ganfeng is simple: No raw material has experienced such sustained demand over a long period of time before, so no one saw the need to lock down their supplies. "No one, whether you're an investor, a policy maker or an automotive manufacturer, has ever seen this much interest, this much stress along the lithium-ion supply chain." Berry also touched on where the industry is today, saying that the boom times of the beginning are now at an end, and it's up to investors to do their homework, learn about management teams and pick investments they can stick with over a five to seven year window. "That's the investment window that you need for this space right now," he said. Graphite hasn't been invited to the dance when it comes to junior company share prices, said Berry. However, he added, "I would assume that graphite and nickel will be the next metals to sort of move based on this theme (of supply issues)."
On May 14, Reuters reported:
U.S. Senate moves forward on plan to develop electric vehicle supply chain. U.S. lawmakers on Tuesday moved closer to developing a national electric vehicle supply chain policy, with senators voicing bipartisan support for legislation designed to parry China's dominance in metals production and battery manufacturing. The pending legislation would require a tally of metal reserves in the United States and seek to streamline permitting for the EV sector, an area where China already leads by a wide margin.
Nickel Company News
Vale SA (NYSE:VALE)
Vale plans a US$1.7B Voisey's Bay expansion plan to boost their nickel production.
On April 29, Vale SA announced:
Vale S.A. informs that, after a Board of Directors meeting held today, Eduardo Bartolomeo was confirmed as Vale's CEO. Eduardo Bartolomeo was appointed by Vale's Board of Directors from a list prepared by Spencer Stuart, an international recruiting company, in accordance with Vale´s governance.
On May 8, Vale SA announced:
Vale's production and sales in 1Q19. Production of finished nickel reached 54,800 t in 1Q19, 14.4% lower than 4Q18 and 6.5% lower than 1Q18. The decrease was mainly due to lower production from: [I] PTVI, due to the scheduled maintenance shutdown at the Matsusaka refinery, in Japan; [II] VNC, due to the scheduled maintenance at the Dalian refinery, in China; and, [III] Sudbury, due to timing differences in the nickel processing chain.
On May 9, Vale SA announced:
Vale's performance in 1Q19. Brumadinho dam rupture financial impacts led to Vale's first negative EBITDA in history totaling the negative of US$ 652 million in 1Q19. The financial impact of the Brumadinho dam rupture on 1Q19 EBITDA was US$ 4.954 billion....... LME nickel prices increased 7% during 1Q19 to an average of US$ 12,369/t, from US$ 11,516/t, in 4Q18. Total exchange inventories (LME and SHFE) continued to decline closing at 193kt by the end of 1Q19, down nearly 30kt since 4Q18. LME stocks at the end of the 1Q19 stood at 183kt, a decline of 25kt since the end of 4Q18. SHFE inventories also declined to 11kt by the end of 1Q19, a difference of 4kt since 4Q18.
Norilsk Nickel [LSX: MNOD] (OTCPK:NILSY)
On May 7, Norilsk Nickel announced:
Nornickel presents the third review of the nickel and platinum group metals [PGM] markets.....Growth nickel demand drivers in 2018 continued to be the production of stainless steel and battery materials. Global demand for primary nickel rose by 7.4% last year due to an increase in stainless steel production at the Indonesian factory Tsingshan. The growing appetite of manufacturers of battery materials, caused mainly by increased production of electric vehicles, increased consumption of nickel products in this sector by 42%. The demand for nickel in 2019 will grow, but not as fast. In general, it will slow down to 4.7%. The significant increase in demand from the stainless steel sector will be due to China, which has imposed trade restrictions on the import of slabs and hot-rolled products from Indonesia, Korea, and Japan.
Investors can read my article "An Update On Norilsk Nickel."
BHP Group [ASX:BHP] (NYSE:BHP)
In 2017, BHP announced a US$43.3m investment in its Nickel West project to enable conversion to nickel sulphate.
On May 8, BHP Group announced: "BHP to defend Samarco legal claim."
Jinchuan Group [HK:2362]
On May 8, Jinchuan Group announced:
Operational update for the three months ended 31 March 2019 and update on the legal dispute with the non-controlling shareholder of a subsidiary of the group.
On April 30, Glencore announced:
First quarter 2019 production report. Own sourced nickel production of 27,100 tonnes was 3,000 tonnes (10%) lower than Q1 2018, reflecting severe weather in Canada, which impacted the timing of deliveries to the Nikkelverk refinery, and maintenance at Koniambo.
Sumitomo Metal Mining Co [JP:5713] (OTCPK:SMMYY)
On May 9, Sumitomo Metal Mining Co announced:
FY2019 capital expenditure and total investment plans. Sumitomo Metal Mining Co., Ltd. plans to undertake a total of 72.4 billion yen on capital expenditures, on a consolidated basis during the 2019 fiscal year (April 1, 2019 - March 31, 2020). The total investment represents a 52.7% increase from that of FY2018.
Anglo American [LSX:AAL] (OTCPK:AAUKF)
On May 1, Anglo American announced:
Anglo American becomes founding sponsor of the World Bank's Climate Smart Mining fund.
On May 13, Eramet announced:
Eramet sponsors Hackathon at Viva Technology to improve traceability in metal supply chains.
Sherritt International (OTCPK:SHERF)[TSX:S]
No nickel-related news for the month.
Independence Group [ASX:IGO] (OTC:IIDDY)
On April 30, Independence Group announced: "Quarterly report for the period ending 31 March 2019." Highlights include:
- "Nova delivered new records in the Quarter for production (8,375t nickel and 3,731t copper) and cash costs (A$1.50/lb payable).
- Nova and Tropicana remain on track to deliver full year production guidance.
- Downstream Nickel Sulphate studies to date demonstrate high extraction rates for nickel and cobalt with high-quality, battery grade nickel sulphate and saleable copper-cobalt mixed sulphide produced.
- Exploration drill programs commenced during the Quarter to follow up numerous prospective targets on the Nova mining lease, Fraser Range and Lake Mackay projects. Promising geology and mineralisation intersected in drilling on the Nova mining lease and in a number of Fraser Range targets.
- Underlying EBITDA of A$117M and unaudited Profit after tax of A$45M for the Quarter.
- Strong underlying Quarterly free cash flow of A$89M resulting in net cash of A$172M at Quarter-end."
On May 23, Independence Group announced:
Mincor announces acquisition of Long Nickel Operation from Independence Group NL. Mincor to acquire the high-grade Long Nickel Operation from Independence Group, adding a further significant leg to its nickel restart strategy in the world-class Kambalda District.
On May 23, Independence Group announced: "Exploration commences, West Kimberley 2019."
Western Areas Ltd. [ASX:WSA](OTCPK:WNARF)
On April 30, Western Areas Ltd. announced: "Activity report for the period ending 31 March 2019." Highlights include:
- "Lowest quarterly cash cost for the year, unit cash cost of nickel in concentrate of A$2.82/lb and A$2.98 (financial) YTD.
- Mine production of 6,066 nickel tonnes and 17,785 nickel tonnes (financial) YTD.
- Cash at bank plus nickel sales receivables increased to A$149.9m (December quarter A$143.8m).
- Stronger nickel price for the quarter (A$8.31) with $10.3m cash receipted on 1 April resulting in higher sales receivable balance at quarter end."
Panoramic Resources [ASX:PAN] (OTCPK:PANRF)
Panoramic's Savannah mine and mill has a forecast life of mine average annual production rate of 10,800 t of nickel, 6,100 t of copper and 800 t of cobalt metal contained in concentrate.
On April 30, Panoramic Resources announced: "Quarterly report fourth period ending 31 March 2019." Highlights include:
- "Concentrate shipments - Two concentrate shipments from Wyndham port, aggregate provisional invoice value of $15.8 million.
- Mining - production rates improved markedly in March after a poor February. Significant changes made to improve performance.
- Processing- Most commissioning issues resolved and metal recoveries steadily improving. Average nickel recovery during April of 84% compared to target of 85%.
- Metal production - 926t Ni, 625t Cu and 48t Co contained in concentrate for the quarter.
- "Group Cash - $20.7 million in available and restricted cash."
Axiom Mining [ASX:AVQ] (OTC:AXNNF)
You can read the company's quarterly activities report for the period ended 31 March 2019 here.
Other nickel producers
Franco/Nevada [TSX:FNV], MMG [HK:1208], South32 [ASX:S32], Lundin Mining [TSX:LUN], Nickel Asia Corporation [PSE:NIKL] (OTC:NIKAY).
Note: First Quantum Minerals halted their nickel production from their Ravensthorpe mine in 2017 due to low nickel prices.
RNC Minerals [TSX:RNX] (OTCQX:RNKLF)
On May 15, RNC Minerals announced:
RNC announces first quarter 2019 results. Restart of gold and nickel production: Limited restart of bulk gold mining is well underway at Beta Hunt. By the end of April 2019, the restart had already achieved a 40,000 ounce annualized run rate. Nickel production has also resumed and will contribute cash flow going forward.
Note: Nickel in concentrate produced in 2018 was 320 tonnes well down on 2017's 800 tonnes as no nickel was mined in H2 2018. 2018 gold production was 73,801 ounces.
Poseidon Nickel [ASX:POS] (OTC:PSDNF)
On April 30, Poseidon Nickel announced: "Quarterly report 31 March 2019." Highlights include:
- "Commencement of underground drilling at the Black Swan and Silver Swan Deposits.
- Phase 1 drilling to test at depth extension of resources below the Black Swan Open Pit.
- Phase 2 drilling to focus on delineating Silver Swan extension potential and Resource infill drilling."
On May 6, Poseidon Nickel announced: "Successful phase 1 drilling under Black Swan open pit." Highlights include:
- "Phase 1 drilling of the Black Swan deposit below the open pit completed.
- Initial hole PBSD001A intersected 223.1m, @ 1.02%Ni disseminated nickel sulphides (including 74m @ 1.5%Ni) 900m below the Black Swan Open Pit.
- Second Hole-PBSD002 intersected 292m of disseminated mineralisation with assays pending."
On May 27, Poseidon Nickel announced: "High grade nickel intersections at Silver Swan." Highlights include:
- "Poseidon's drilling program at Silver Swan extends high grade sulphide nickel ore bodies.
- Initial assay from the first three holes of the current program at Silver Swan has confirmed some of the highest grade sulphide nickel intersections achieved so far - PBSD003 - 5.9m @ 9.92% Ni (True width 2.5m) - PBSD005 - 7.48m @ 10.89% Ni (True width 2.9m) - PBSD006-13m @ 5.64% Ni (True width unavailable, exited footwall).
- The continuing 3,000m Silver Swan drilling program will be completed over the next 5 weeks with assays to follow thereafter."
Garibaldi Resources [TSXV:GGI] [GR:RQM] [LN:OUX6] (OTC:GGIFF)
No news for the month.
Cassini Resources [ASX:CZI]
No news for the month, but you can read the company latest presentation here.
North American Nickel [TSXV:NAN]
On May 15, North American Nickel announced:
North American Nickel acquires new property in Ontario. North American Nickel Inc. is pleased to announce that it has acquired 100% ownership of property near the southern extent of the Lingman Lake Greenstone Belt in northwest Ontario, and in the Quetico region near Thunder Bay Ontario. The acquisition of these properties are part of the company's strategy to develop a pipeline of new nickel projects. The Company recently staked 188 claim cells in northwest Ontario. The property, known as the Lingman Nickel Project, covers a portion of the Archean age Lingman Lake Greenstone Belt that includes tholeiitic-komatiitic rocks and sulphide facies iron formation. Historic field work has identified ultramafic rocks with elevated nickel and copper in grab samples. A 2011 VTEM survey shows a strong magnetic response over 13km in strike length with numerous coincident magnetic/EM anomalies that are untested. The compilation of historic data has been completed and the Company is preparing plans for an initial program of field work to evaluate the Ni-Cu-Co and precious metal potential.
Amur Minerals Corp. [LSE:AMC] [GR:A7L] (OTCPK:AMMCF)
No news for the month.
Ardea Resources (OTCPK:ARRRF) [ASX:ARL], Artemis Resources (OTCQB:ARTTF) [ASV:ARV], Australian Mines (OTCQB:AMSLF) [ASX:AUZ], Cassini Resources [ASX: CZI] (OTC:CSSQF), Clean TeQ (OTCQX:CTEQF) [ASX:CLQ], Giga Metals (OTCPK:HNCKF) [TSXV:GIGA], Grid Metals Corp (OTCPK:MSMGF) [TSXV:GRDM, New Age Metals (OTCQB:NMTLF) [TXV:NAM], Nickel Creek Platinum [TSX:NCP] (OTCQX:NCPCF), Pancontinental Resources Corporation (OTC:PUCCF) [TSXV:PUC], Polymet Mining (NYSEMKT:PLM) [TSX:POM], S2 Resources (ASX:S2R), St George Mining Ltd [ASX:SGO] [GR:SOG], Transition Metals (OTC:TNTMF) [TSXV:XTM], and Wall Bridge Mining [TSX:WM].
Note: Some of the above companies are covered in the Cobalt monthly news.
Nickel spot prices were flat in May and LME nickel inventory fell even further and are at 7-year low levels.
Highlights for the month were:
- Confusing signals cloud London nickel market.
- Vale - Eduardo Bartolomeo was confirmed as Vale's new CEO.
- Nornickel stated global demand for primary nickel rose by 7.4% last year, EVs nickel consumption increased by 42%.
- Independence Group - Nova delivered new records in the Quarter for production (8,375t nickel and 3,731t copper) and cash costs (A$1.50/lb payable).
- RNC Minerals - Restart of gold and nickel production.
- Poseidon Nickel intersects 223.1m, @ 1.02%Ni and 74m @ 1.5%Ni. Silver Swan has confirmed some of the highest grade sulphide nickel intersections achieved so far - PBSD003 - 5.9m @ 9.92% Ni (True width 2.5m) - PBSD005 - 7.48m @ 10.89% Ni.
- North American Nickel acquires the Lingman Nickel Project.
As usual, all comments are welcome.
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Disclosure: I am/we are long NORILSK NICKEL [LSE:MNOD], GLENCORE [LSX:GLEN], RNC MINERALS [TSX:RNX], AXIOM MINING (ASX:AVQ), ARDEA RESOURCES [ASX:ARL], AUSTRALIAN MINES [ASX:AUZ], POSEIDON NICKEL [ASX:POS], SAMA RESOURCES [TSXV: SME]. 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.