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A U G U S T / S E P T E M B E R 2 0 1 8 www.resourceworld.com 53 NICKEL Around two-thirds of the world's nickel production is consumed in the manufac- ture of stainless steel. With global stainless steel output rising over 6% last year, the market has seen a significant drop in nickel inventories and a corresponding rise in price. The metal has come off a low of around US $4.00/lb in mid-2017 to recent highs of nearly US $7.00/lb – a rise of 75% in just a year. According to Scotiabank's Metals Market Outlook Q2 update, the price of nickel is finally beginning to tick upwards after a decade of surplus in supply saw prices fall from US $25/lb in 2007 to a low of US $3.50/lb in 2016 and Scotiabank pre- dicts that the price will continue to push upwards heading into 2019 and beyond. "Nickel prices are expected to gradually move higher over the next half decade as inventories normalize, averaging US $6.00/ lb in 2018 and US $6.50/lb in 2019," says the report Total primary production of nickel is in the region of 2 million tonnes annually but stagnated through the period of low prices from 2015; however, according to the International Nickel Study Group, pro- duction rose by nearly 6% last year and is expected to rise to 2.35 million tons this year. China is the now world's largest con- sumer and when prices peaked at over US $20/lb in 2005 they could not purchase enough of the metal in order to satisfy their booming stainless steel and alloy industries. China's solution was to produce nickel pig iron (NPI) from low-grade nickel laterite ores as opposed to the traditional sulphide smelting routes used for refined nickel or ferro nickel. However, once processed, its nickel content rises significantly, making it highly suitable for use in stainless steel production. Indonesia and the Philippines account for about 40% of the known world reserves of nickel laterite. Conventional nickel producers are con- cerned though with the environmental practices of nickel pig iron producers. It has been called "dirty nickel" because the production process emits high levels of carbon dioxide. Nickel is a crucial element in the pro- duction of batteries for Electric Vehicles (EVs) and according to JP Morgan, demand for nickel is expected to increase significantly between now and 2025, with the EV battery sector predicted to become the second largest consumer of nickel after the stainless steel market. Today only around 5% of nickel production goes into batteries. Although ore supply is likely to increase sharply this year after Indonesia, top supplier to China's NPI producers, lifted its export ban, fears remain around future nickel supply as investment in new reserves has been poor when the nickel price was lower over the recent years. Another concern is the increasing depen- dence on ore supplies from higher political risk countries – particularly Indonesia and the Philippines – which have implemented policies in recent years that caused substan- tial supply disruption. n * Resource World does not sell your information to third parties #604-700 W Pender St., Vancouver BC V6C 1G8 Canada online at www.resourceworld.com or phone 1.877.484.3800 SAVE 50% up to NAME ADDRESS TEL EMAIL Nickel Outlook by Ron Hall