The return of high nickel prices – US$15,095 per tonne at close on Tuesday 13 July – is coinciding with big and small miners lining up to commission projects in WA and around the world.
Underpinned by China’s strong appetite for construction materials, the buoyed sentiment has even inspired a second generation of nickel laterite projects — two of which are slated for WA at an estimated cost of almost $3.5 billion.
Analysts are forecasting global nickel demand to grow between 3 to 4 per cent a year, and despite the number of new projects due they are still not expected to plug the gap.
“The pipeline is not looking full at all,” Hartleys’ analyst Kevin Tomlinson said.
Costly and highly unreliable technology, which unlocked previously unmined laterite ore, unfortunately saw some high profile mining entrepreneurs and their investors take nasty haircuts in the late 1990’s.
The setback, however, has not detracted from the white hot metal.
Mr Tomlinson said while the new lateritic mines were still high risk, they had been somewhat de-risked by ground breaking engineering work.
Explorers and producers are now scrambling to launch new projects while myriad other juniors are re-commissioning smaller, older nickel mines.
Heron Resources MD Ian Buchhorn who recently announced the ambitious 50,000 t/a $1.4 billion nickel laterite project (KNP) near Kalgoorlie, reckons the world needs a new Kalgoorlie Nickel Project (KNP) every year to meet the existing demand.
Mr Tomlinson noted that Heron’s $1.4 billion start up cost seemed cheap compared to Inco’s US$1.8 billion Goro project in the South Pacific with both expected to produce 50,000 tpa of nickel.
“I would suspect [KNP] is going to cost an easy $A1.5 plus billion,” Mr Tomlinson said.