New nickel projects will inject a further 275,000 tonnes of the metal into global markets by 2013 - but supply-demand dynamics are expected to remain tight, Delta Securities' research analyst Carey Smith told the 2007 Paydirt Australian Nickel Conference today.
The full text of an announcement by Paydirt conference organisers is pasted below
New nickel projects will inject a further 275,000 tonnes of the metal into global markets by 2013 - but supply-demand dynamics are expected to remain tight despite the additional volumes, according to a commodities researcher.
Addressing the second day in Perth today of the 2007 Paydirt Australian Nickel Conference, Delta Securities' research analyst, Mr Carey Smith, said the 2013 objective represented a 20% increase over current worldwide demand for nickel in 2007.
"With consumption expected to grow at a compound rate of around 4%, and an expected 50,000 tonnes dip in demand for this calendar year, the supply and demand comparisons are going to remain in very tight balance," Mr Smith said.
"Laterite heap leaching technology, if successful, has the potential to add significantly to global nickel volumes although such growth is not likely to occur until after 2012.
"The real wild card in the sector is emerging bacterial heap leaching technology for low grade sulphide deposits. If this is successful, it could change the entire industry supply chain."
Among the string of new nickel projects coming on stream over the next six years is:
- BHP Billiton's US$2.2 billion Ravensthorpe mine;
- CVRD's US$3.2b Goro project in New Caledonia and its US$1.5b Onca Puma mine in Brazil;
- Xstrata's US$3.8b Koniambo mine in New Caledonia;
- Talvivaara Mining's Finland project, and
- European Nickel's US$300 million Caldag mine in Turkey.
Mr Smith warned that future supply and demand issues in the nickel market included concerns about the reliability of data on a year to year basis and the fact demand growth was almost entirely reliant on continuing growth in China.
"This includes some recognition that China's economy is a lot more fragile than people realise and is still dependent on investment rather than consumption for GDP growth."
On the Australian nickel market performance specifically, Mr Smith said its three year market returns had been "remarkable".
"It will be hard if not impossible, to repeat this performance however," Mr Smith said.
"The Australian nickel price is also likely to average significantly lower for 2007-2008 compared to the previous financial year.
"In all likelihood, the Australian nickel sector's highest profitability, for this stage of the commodity cycle, may already be behind it."