BASE METALS

Research group sees modest rise in nickel consumption

Intierra expects global nickel consumption to rise to about 1.3 million tonnes in calendar 2010, reflecting an expected rapid recovery in consumption in Asia

Author: Ross Louthean
Posted: Thursday , 14 Oct 2010

PERTH  - 

Market research and analysis group Intierra Resource Intelligence sees global nickel consumption increasing to about 1.3 million tonnes in calendar 2010, reflecting an expected rapid recovery in consumption in Asia and forecast moderate growth in Europe and North and South America.

Intierra's commercial director Gregory Kay told the final day of the Paydirt Australian Nickel Conference in Perth today that the modest growth outlook compared favourably with the 2009 result when world nickel consumption declined by an estimated 8% to 1.2 Mt.

"As a result of significant increases in nickel prices between mid-2003 and mid-2007, a number of stainless steel producers substituted other less expensive input materials such as manganese for nickel," Kay said.

"Despite a significant decline in nickel prices, many stainless steel producers have not yet switched back to nickel in stainless steel production," he said.

"If this trend continues in the short term, it could limit any significant nickel demand growth, particularly in OECD economies."

Kay said nickel consumption in Japan, Chinese Taipei, the United States and the European Union declined by more than one-third, and world consumption fell by 25% in the first two months of 2009, compared with the same period in 2008.

Declining production of consumer durables, motor vehicles and industrial buildings contributed to lower stainless steel demand and falling stainless steel mill utilisation rates. Consumption also fell in China on a year on year basis, but by a comparatively moderate 7% over the same period.

"In some applications such as hot water services, the current low nickel price has resulted in some substitution back to nickeliferous stainless steel. However, in other applications, for example in cutlery, substitution is yet to happen."

Consumption of nickel in developing Asia is expected to increase by about 10% in 2010, as economic growth recovers, particularly in applications where other grades of stainless steel are not as suitable such as in industrial kitchens.

On nickel mine production, the Intierra forecaster said that while rapid declines in world nickel prices had made production at some mines uneconomic, the major nickel mines had maintained production from 2008 levels.

All major nickel producers, including the Russian Federation, Canada, Australia, Indonesia and New Caledonia have been affected by closure or downsizing of mining operations.

"In 2010, nickel mine production is expected to begin increasing in line with the forecast of a moderate rise in world prices. At these forecast prices, comparatively low cost mines are likely to begin restarting some or all of their capacity.

"As a result, production is forecast to increase by 6% to 1.4 Mt tonnes in 2010.

"Refined production this calendar year is forecast to increase by around 9% to 1.3 Mt, as higher prices are expected to encourage higher outputs," he added.

Refined nickel production in Australia was expected to increase by 5% to about 110,000 tonnes. Mr Kay said that despite mine closures, current rates of production of nickel ores and concentrates are expected to be sufficient to meet this forecast increase in production.

In another paper at the conference, delegates were told new nickel laterite heap leaching technology will increasingly provide more competitive and "greener" mining and processing options as the global sector makes the transition from nickel sulphides to majority nickel laterite production.

European Nickel Plc finance director, Mark Hanlon, said proprietary heap leaching technology - developed in part by the company in partnership with BHP Billiton - had now achieved three years of successful and substantive test work.

"It will be the foundation of European Nickel's new Caldag nickel laterite mine on the west coast of Turkey and our second planned mine, Acoje in the Philippines," Hanlon said.

"Despite the previous history of difficulties in processing nickel laterites, the results -- based on full height trial heaps and demonstrated permeability and recovery rates -- have encouraged us to commercialise the process as it offers significant lower capex and opex than more conventional laterite HPAL processing methods," he said.

European Nickel says heap recoveries under test have averaged 75% and an annual capex of about $US6/lb nickel concentrate -- one third the cost of more conventional smelting operations -- making it particularly suitable for smaller laterite deposits.

"The method also has a low carbon footprint and does not require a large team of ‘experts' to be hired to monitor and maintain the process," he said.