Welcome to the nickel miners news for January. The past month saw nickel prices fall as China manufacturing is being impacted by the Wuhan coronavirus, causing nickel inventories to rise. Looking to 2020, there is quite a mix of views towards nickel from the industry analysts – I highlight some of them this month, as well as some nickel company news.
Nickel price news
As of January 28, the nickel spot price was USD 5.78, down from USD 6.35 last month. Nickel inventory at the London Metals Exchange [LME] rose last month from 146,694 tonnes to 194,526 tonnes.
Nickel spot prices – 5-year chart – USD 5.78/lb
Nickel demand v supply
On January 3, Fastmarkets reported:
2020 PREVIEW: Lackluster stainless steel, EV growth may keep nickel bulls at bay. An already-volatile nickel market will continue to face uncertainty in 2020 while demand wanes and stocks rise amid slowed growth expectations from both the stainless steel and electric battery sectors, market participants predicted.
On January 28, Mining Weekly reported:
Key EV markets to start growing again – WoodMac. This is according to consultancy firm Wood Mackenzie (WoodMac), which notes that interest around electrification shows “no signs of slowing”. Several major automotive manufacturers are launching ‘mass-market’ EVs on dedicated platforms, aimed at breaking down range and cost barriers. Mindful of consumer concerns around range, automotive manufacturers are opting for bigger batteries, offering more kilometres per charge and WoodMac notes that the trend of bigger batteries should continue over the short term.
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.”
Note: That is a 17 fold increase in just 8 years, albeit only on Class 1 nickel.
Nickel demand from EVs set to surge 5x from 2020 to 2025
Investors can also read my past article: “Top 5 Nickel Miners To Consider Before The Nickel Boom.“
Nickel Market News
On December 30, Investing News reported:
Nickel Outlook 2020: Deficit to support prices, EV story still strong. “The impact of the Indonesian ore ban may be underestimated if the domestic downstream plants and projects are unable to consume the surplus ore. The impact would be exacerbated if the Philippines industry also encounters problems,” she explained…..After 2020, however, Nornickel believes the market is likely to face a structural deficit. Nickel demand is likely to remain high as stainless steel production stays strong and electric vehicles (EVs) continue to rise in importance. “As lithium-ion battery manufacturers reduce the amount of cobalt used in battery cells, nickel consumption rises and it does so in a major way,” said Moores. He added that nickel demand is expected to increase up to 19 times if under-construction lithium-ion production facilities come online as planned. “Another year of deficit should underpin prices and limit the downside prices,” she said. “However, the deficit will be relatively modest, and combined with slower demand growth and large hidden stock levels, this should act as a brake on prices.” FocusEconomics’ panel of analysts projects that the price of nickel will fall in the coming months. Prices are forecast for US$15,856 in Q4 2020, while the average price for Q4 2021 is set at US$15,344.
On January 10, Mining.com reported:
‘Rising tide’ to float all battery-metal boats. Rising electric vehicle [EV] adoption is driving a massive transformation in lithium-ion battery production. Miller estimates total lithium-ion cell production will come in below 200 gigawatt hours (GWh) for 2019. As of January 2019, total production capacity in the pipeline over the coming decade (including projects producing, under construction and planned) totalled 1,550 GWh. By 2028, Miller estimates there will be 2,030 GWh in the production pipeline. Looking upstream at the mining picture, four critical minerals (cobalt, graphite, lithium and nickel) will see demand growth from the battery sector if the 99 planned megafactories come online, he says. Counting supply from existing operations and their expected growth, Miller forecasts the lithium market will move into deficit in 2022. Under a scenario where all projects under development today become producers, that deficit will arrive in 2027. Using the same assumptions, he says the cobalt market will be in deficit in 2020 or 2026, and a flake graphite deficit will emerge in 2022 or 2028.
On January 29, Wood Mackenzie released:
Uncertainty to cloud global nickel market outlook in 2020. All eyes will be on the Indonesian nickel market in 2020. The knives may be out for the country’s nascent stainless industry but the staggering potential for expansion in NPI may reduce the impact of the nickel ore export ban to a minor inconvenience. Although the global battery sector share of nickel demand is much smaller than other metals, getting the quantity of nickel that electric vehicles (EVs) will need by the mid-2020s will remain a challenge.
Nickel Company News
Vale SA (NYSE:VALE)
Vale plans a US$1.7B Voisey’s Bay expansion plan to boost their nickel production.
Some Vale news from October 2019 has relevance. Fastmarkets reported:
Brazilian mining company Vale expects to ramp up mine production at its Onça Puma nickel project in the northern state of Pará throughout the first half of 2020 and reach 100% capacity by July, it said in a presentation to analysts and investors on Wednesday October 2.
On January 22, Vale SA announced:
Dates for reporting of 4Q19 performance. 4Q19 Production and sales report on February 11, and 4Q19 Financial performance report on February 20.
Norilsk Nickel [LSX: MNOD] (OTCPK:NILSY)
No news for the month
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 January 8, BHP Group announced:
Retirement of Andrew Mackenzie as Chief Executive Officer and Executive Director. BHP Group Limited and BHP Group Plc (collectively, “BHP”) confirm that Andrew Mackenzie retired as an Executive Director of the Company on 31 December 2019.
On January 21, BHP Group announced: “BHP Operational review for the half year ended 31 December 2019.”
Jinchuan Group [HK:2362]
No news for the month.
Glencore (OTCPK:GLCNF) [LSX:GLEN]
No nickel news for the month; however, I did find a Glencore report titled “Glencore: Swiss Energy Strategy 2050.”
Regarding nickel they quote:
- “Nickel battery demand: c.50kt in 2010, c.200kt in 2019F, >500kt in 2025F (inc. 400kt Ni in EV).
- Nickel in Electric Vehicles forecast at 800kt by 2030.
- Trend for higher EV penetration, larger battery size and higher nickel chemistries (811 vs 622) suggest even higher nickel demand than forecast.
- Lifecycle of nickel and cobalt well understood and readily recyclable.
- Majority of nickel containing steels/alloys are recycled.
- Glencore processed 35kt of recycled material to recover 5kt nickel and 3kt cobalt in 2019.
- We are investing more than $2bn developing the next generation of Canadian nickel sulphide mines while upgrading our metallurgical facilities to responsibly supply nickel from our global operations.”
Source: “Glencore: Swiss Energy Strategy 2050.”
Sumitomo Metal Mining Co. (OTCPK:SMMYY)
No news for the month.
Anglo American [LSX:AAL] (OTCQX:AAUKF)
On January 23, Anglo American announced: “Q4 2019 production report.” Below is their nickel production which rose only 1% in 2019.
You can view a company presentation here.
No nickel related news for the month.
Sherritt International (OTCPK:SHERF) [TSX:S]
On January 22, Sherritt International announced: “Sherritt announces 2019 production results and guidance for 2020.” Highlights include:
- “Sherritt’s operations in Cuba met or exceeded production guidance for 2019 for finished nickel, finished cobalt, oil and power.
- Finished nickel and cobalt production at the Moa Joint Venture (“Moa JV”) in Q4 2019 on a 100% basis were 8,098 tonnes and 822 tonnes, respectively…
- The strong nickel and cobalt production totals at the Moa JV for 2019 are forecast to be sustained in 2020, reflective of the ongoing benefits of Sherritt’s operational excellence initiatives.
- Net direct cash costs at the Moa JV are forecasted to be in the range of US$4.00 and US$4.50 per pound of finished nickel sold in 2020, consistent with guidance for 2019.
- Sherritt’s share of total capital spending for 2020 is forecasted at US$41 million. The total will be primarily earmarked to replace existing equipment and infrastructure at the Moa JV and excludes any material spending on Block 10.”
Independence Group [ASX:IGO] (OTC:IIDDY)
On January 2, Independence Group announced:
Off market takeover bid for Panoramic Resources Limited. IGO to provide withdrawal right for Panoramic shareholders who have accepted IGO’s offer.
On January 8, Independence Group announced: “IGO first half metal production beats guidance.”
On January 9, Independence Group announced:
Off market takeover bid for Panoramic Resources Limited notice of status of defeating conditions. Peter Bradford, Managing Director and CEO of IGO stated: “IGO’s decision to allow the Offers to lapse reflects our disciplined approach to M & A and IGO will continue executing its growth strategy with a focus on returns and value creation for our shareholders.”
On January 20, Independence Group announced:
Off market takeover bid for Panoramic Resources Limited offer lapsed and notice of ceasing to be a substantial holder.
Western Areas Ltd. [ASX:WSA](OTCPK:WNARF)
On January 21, Western Areas Ltd. announced:
New Forrestania offtake contracts awarded. Western Areas Ltd is pleased to announce the award of new offtake contracts with BHP Billiton Nickel West Pty Ltd (“Nickel West”) and Jinchuan Co. Ltd (“Jinchuan”) for the Company’s high grade Forrestania Nickel Operation concentrate product…..Western Areas Managing Director, Dan Lougher, said: “The Company is very pleased with the execution of the new agreements that extend our long and mutually beneficial relationship with Nickel West and reintroduces Jinchuan as an offtake customer following completion of the Tsingshan contract as at 31 January 2020.”
On January 28, Western Areas Ltd. announced: “Activity report for the period ending 31 December 2019” Highlights include:
- “Mine production of 5,849 nickel tonnes (for Q4, 2019) and 11,654 nickel tonnes for the half year.
- … FY20 guidance range of 21,000 to 22,000 tonnes for full year.
- Unit cash cost of nickel in concentrate of A$3.10/lb for quarter and A$3.07 for the half year (FY20 guidance of A$2.90/lb to A$3.30/lb).
- Nickel sales of 3,991 nickel tonnes (for Q4, 2019) and 9,042 nickel tonnes for half year, impacted by timing of export shipment after quarter end on 1 January 2020.
- Net free cash flow of A$19.0m increased cash at bank to A$184.9m (Sep quarter A$165.9m).
- Final fully franked FY19 dividend of A$5.5m paid to shareholders.
- Successful commissioning of underground main pump station and associated infrastructure at Odysseus, with underground mine rehabilitation advancing.
- New nickel concentrate offtake contracts executed post quarter end, commencing in February 2020.”
Panoramic Resources [ASX:PAN] (OTCPK:PANRF)
Panoramic’s Savannah mine and mill has a forecast life of mine average annual production rate of 10,800t of nickel, 6,100t of copper and 800t of cobalt metal contained in concentrate.
On January 6, Panoramic Resources announced:
Sale of Thunder Bay North Project – Share purchase agreement signed…..The purchase price remains at C$9.0 million in cash.
Nickel Mines Ltd [ASX:NIC]
On January 28, Nickel Mines Ltd announced: “Quarterly activities report for the quarter ended 31 December 2019. Hengjaya Nickel and Ranger Nickel RKEF projects combine for 10,968 tonnes of nickel metal production.” Highlights include:
- “Record quarterly nickel production at both Hengjaya Nickel and Ranger Nickel RKEF projects.
- RKEF December quarter production of 10,968.3 tonnes of nickel metal (100% basis), up 9.5% from 10,019.6 tonnes of nickel metal in September quarter.
- NIC attributable nickel production of 6,580.9 tonnes of nickel metal, up 27.5% from 5,161.0 tonnes of nickel metal in September quarter.
- RKEF December quarter sales of US$141.1M (100% basis), up 20.4% from US$117.2M in September quarter.
- RKEF December quarter EBITDA of US$56.6M (100% basis), up 12.7% from US$50.2M in September quarter.
- RKEF December quarter cash costs: Hengjaya Nickel: US$7,778/tonne. Ranger Nickel: US$7,886/tonne
- Cash + receivables + inventory at quarter end of US$190.6M, up 23.2% from US$154.7M in September quarter. Additionally, Group liabilities were reduced by US$21.1M over the quarter.
- Quarterly production from the Hengjaya Mine of 194,159 tonnes, down 2.4%”
RNC Minerals [TSX:RNX] (OTCQX:RNKLF)
On January 6, RNC Minerals announced:
RNC exceeds 2H19 guidance with production of 51,090 oz (of gold) after record December monthly production since HGO acquisition; pays down $3m in debt early to reduce interest costs.
Axiom Mining [ASX:AVQ] (OTC:AXNNF)
No news for the month.
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 [TSX:FM] (OTCPK:FQVLF) plans to restart their Ravensthorpe nickel mine in early 2020.
Amur Minerals Corp. [LSE:AMC] [GR:A7L] (OTCPK:AMMCF)
On January 15, Amur Minerals announced:
Base line environmental assessment complete……Robin Young, CEO of Amur Minerals Corporation, commented: “Completion of the Base Line Environmental Assessment, that is required for inclusion in the TEO (Russian required feasibility study), confirms mining of our large scale Kun-Manie nickel copper sulphide deposit will not require any extraordinary programmes or procedures beyond those already planned by the Company to undertake the implementation of our operation. Typical monitoring and mitigation procedures can be implemented to ensure protection of the environment during construction and operations.”
Poseidon Nickel [ASX:POS] (OTC:PSDNF)
No news for the month.
Garibaldi Resources [TSXV:GGI] [GR:RQM] [LN:OUX6] (OTC:GGIFF)
On January 22, Garibaldi Resources announced: “Garibaldi expands lower discovery massive sulphide zone north.” Highlights include:
- “EL-19-75 has extended the Lower Discovery Zone (LDZ) 25 meters to the north where it remains open, cutting 2.14 meters of 7.1% nickel and 3.9% copper within a broader 90-meter mineralized interval. More significantly, this intersection demonstrates a contact-style massive sulphide along the eastern wall of the E&L main chamber. This greatly expands the potential for a shell of continuous massive sulphides along the country rock contact within this segment of the E&L intrusion;
- EL-19-74 has cut 5.98 meters grading 6% nickel and 2.6% copper, extending the Northeast zone eight meters to the east……….
- Two important geophysical anomalies (“F” and “Q”), approximately 700 meters southeast and nearly 1,000 meters south of the historic E&L deposit, respectively, are being revisited for their potential to greatly expand the nickel sulphide footprint at Nickel Mountain, underscoring the scale of this system.”
Cassini Resources [ASX:CZI]
On January 14, Cassini Resources announced: “New mineralised prospect discovered at Yarawindah.” Highlights include:
- “Maiden drill testing intersectsNi andCu-bearing sulphides, hosted by mafic rocks, over 50m wide intervals.
- New discovery named“Brassica Prospect”; located 4km from closest previously known mineralisation in the project area.
- Results confirm multiple, separate mineralised intrusions within the Project.
- Diamond drilling has re-commenced after the Christmas break.”
On January 24, Cassini Resources announced: “Activities report for the quarter ended 31 December 2019.” Highlights include:
- “Board of Directors personnel changes.
- $820,000 raised through exercise of Employee and Director options.”
West Musgrave Project (CZI 30%)
- “Pre-Feasibility Study nears completion, market release expected Q1 2020.
- Further exploration opportunities at Succoth and One Tree Hill.
- Expansion of Joint Venture regional tenement holdings.”
Yarawindah Brook Project (CZI 80%)
- “Maiden drill program commenced.
- Promising early results from new “Brassica Prospect”.”
Mount Squires Gold Project (CZI 100%)
- “Further analysis of RC drilling results and planning for 2020 exploration.”
St George Mining Ltd [ASX:SGO] [GR:SOG]
The Cathedrals, Stricklands and Investigators nickel-copper discoveries (at Mt Alexander) are located on E29/638, which is held in joint venture by Western Areas Limited (25%) and St George (75%). St George is the Manager of the Project with Western Areas retaining a 25% non-contributing interest in the Project (in regard to E29/638 only) until there is a decision to mine.
On January 28, St George Mining Ltd announced:
2020 exploration begins with more strong results…..Both EM anomalies are coincident with magnetic anomalies and interpreted to be bedrock conductors with potential to represent nickel-copper sulphide mineralisation. The largest of the two conductors is seen over 3 survey lines (at 200m spacing) and has a strike length of more than 500m.
Sama Resources [TSXV: SME] [GR;8RS] (OTCPK:SAMMF)
No news for the month.
Horizonte Minerals [LN: HZN]
No significant news for the month.
No significant nickel news for the month.
North American Nickel [TSXV:NAN]
On January 9, North American Nickel announced:
North American Nickel announces earn-in agreement with option to acquire a 100% interest in Loveland Nickel Property…..located 30km northwest of Timmins, Ontario. The transaction has been approved by the TSX Venture Exchange…..Recent analyses of a historic drill sample by the Ministry of Northern Development and Mines in Ontario returned 2.13% Ni, 0.19% Cu, 2.06ppm Pd. A VTEMMAX survey completed in 2017 identified several new and untested conductors. One of the targets extends for 950 m in strike length
Conic Metals [TSXV:NKL]
Conic Metals has been formed from the Cobalt 27 spin-out. Conic Metals offers broad exposure to nickel and cobalt through an 8.56% JV interest in Ramu, 11 royalty investments, and an equity share of ~7% of Giga Metals Corporation.
No news for the month.
Investors can view a recent CEO video here, or my recent CEO interview here on Trend Investing.
A new nickel and cobalt junior, Canada Nickel, is set to list soon (~January/February 2020) and will 100% own the Crawford Nickel-Cobalt Sulphide Project, near Timmins in Canada.
Investors can view a recent CEO video here, or my recent CEO interview here on Trend Investing.
Ardea Resources [ASX:ARL] (OTCPK:ARRRF), Artemis Resources [ASV:ARV], Australian Mines [ASX:AUZ], Blackstone Minerals [ASX:BSX], Cassini Resources [ASX: CZI] (OTC:CSSQF), Centaurus Metals [ASX:CTM], Clean TeQ [ASX:CLQ] [TSX:CLQ] (OTCQX:CTEQF), FPX Nickel [TSXV:FPX], Giga Metals [TSXV:GIGA], Grid Metals Corp [TSXV:GRDM, Inomin Mines [TSXV:MINE], New Age Metals [TXV:NAM], Nickel Creek Platinum [TSX:NCP] (OTCQB:NCPCF), Pancontinental Resources Corporation [TSXV:PUC], Polymet Mining [TSX:POM], Rox Resources [ASX:RXL], S2 Resources (ASX:S2R), Talisman Mining Ltd. [ASX:TLM], Talon Metals [TSXV:TLO], 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 were lower and LME nickel inventory rose in January.
Highlights for the month were:
- Lackluster stainless steel, EV growth may keep nickel bulls at bay.
- Wood Mackenzie: “Uncertainty to cloud global nickel market outlook in 2020.”
- Nickel Outlook 2020: Deficit to support prices, EV story still strong.
- BHP CEO Andrew Mackenzie retires.
- Glencore releases “Glencore: Swiss Energy Strategy 2050.”
- Independence Group takeover bid for Panoramic Resources lapses.
- Western Areas Ltd. achieves new off-take contracts with BHP Billiton Nickel West Pty Ltd. and Jinchuan Co. Ltd. for their Forrestania Nickel Operation concentration product… FY20 guidance range of 21,000 to 22,000 tonnes of nickel for full year.
- Panoramic Resources announced the sale of Thunder Bay North Project for C$9m cash.
- Nickel Mines – Record quarterly nickel production at both Hengjaya Nickel and Ranger Nickel RKEF projects.
- Amur Minerals – Base line environmental assessment complete
- Garibaldi expands lower discovery massive sulphide zone north.
- Cassini Resources – New mineralised prospect discovered at Yarawindah.
- North American Nickel announces earn-in agreement with option to acquire a 100% interest in Loveland Nickel Property located 30km northwest of Timmins, Ontario.
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], AMUR MINERALS [LN:AMC]. 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.