I like the vary last statement: “Brazilian supergroup Vale, world No 2 in nickel after Norilsk, probably sums up the outlook for most in the nickel sector in saying: "We expect a strong demand for nickel during 2010".”

Rising from the nickel wreckage

Investors flock to listed nickel stocks, as profitability returns to the global sector, and spot prices flirt with multi month highs.

Author: Barry Sergeant
Posted: Wednesday , 24 Feb 2010

JOHANNESBURG - Prices for nickel, sometimes referred to as the most volatile of any commodity, have found sharp traction over the past year, and survivors of the price tsunami are rising gently from the wreckage. One outcome is that measured against other global mining subsectors, listed nickel stocks are relatively among the most in-demand.
After touching as much as USD 25.00/lb around mid-2007, nickel prices looked set to break below USD 4.00/lb within the past 12 months, but have since more than doubled. The price devastation impacted even
On 21 January 2009, BHP Billiton announced the suspension, along with the processing of a mixed nickel cobalt hydroxide product at Yabulu. Charges relating to impairment, increased provisions for contract cancellation, redundancy and other closure costs added up to USD 3.6bn, excluding the loss from operations of Ravensthorpe nickel operations for part of the 2009 fiscal year of USD 173m.
Earlier, sky high prices for nickel had inspired some of the biggest mining takeovers of the 2002 to 2008 commodities supercycle. In 2007, >Norilsk tossed USD 5.8bn at LionOre shareholders. In 2006
Demand issues aside, the supply side of nickel was kicked savagely between the legs by the advent of a reborn nickel pig iron. The first component is the availability of tropical laterite ores, typified by that available at Acoje in the Philippines. The ore is gifted limonite (usually grading 47% to 59% iron, 0.8 to 1.5% nickel, along with trace cobalt), essentially a low-grade iron ore, a pig iron oxide.
The second component was the development by certain steel smelters in China of a process where nickel limonite ore is blended with conventional iron ore, producing feed material for stainless steel. Havoc ensued.
The relevant Chinese smelters are generally able to use stranded power, lowering costs, and are flexible, swinging into action when spot nickel prices rise above certain levels. The overall phenomenon now appears to be a permanent feature of the global nickel sector, forcing adaption, characterised by radical restructuring, extending as far as closures. The sector is now on the rise again, sometimes with new players, such as
Brazilian supergroup Vale, world No 2 in nickel after Norilsk, probably sums up the outlook for most in the nickel sector in saying: "We expect a strong demand for nickel during 2010".