Resource World Magazine

18 www.resourceworld.com D E C E M B E R / J A N U A R Y 2 0 2 0 COMMODITIES OUTLOOK 2018 and has struggled to break above US $1.36/lb since and is currently trading around the US $1.04 mark. The consensus long-term zinc price forecast has recently seen downgrading by many banks and brokers to the $1.00- $1.10/lb range. PLATINUM & PALLADIUM From its high of nearly US $1,200/oz in 2010, platinum declined to a low of just below US $600 at the beginning of 2016. Despite a quick bounce back to nearly US $900 in August of the same year, the price slipped back and is currently trading around the US $890 mark. Platinum's catalytic and physical prop- erties made it a metal of choice for many industrial applications, the largest being the automotive industry. According to the latest World Platinum Investment Council's report, 2019 showed a significant increase in overall platinum demand strength- ened by a growing investment demand that offset a slightly declining demand in the automotive, industrial and jewellery segments. The supply/demand fundamentals of platinum and palladium differ strongly, which has been reflected in the price movements of both metals. Historically, platinum was the more expensive metal, but this changed in 2018 and palladium is now trading at record highs at US $1,821/ oz. The increase in the palladium price might make auto manufacturers look for alternative technologies resulting in fur- ther growth for platinum as a replacement for palladium in gasoline cars. NICKEL Wood Mackenzie estimates strong demand from non-stainless applications, currently increasing by approximately 5% a year, from about 750 kt in 2019 to 980 kt in 2025 and rising to 2.11 Mt in 2040 driven by increasing nickel consumption for use in Li-ion batteries for electric vehicles and energy storage. Nickel prices are up 70-80% year-to- date as a result of further strong demand in the stainless steel sector. Other factors have also played into the nickel price rise, such as the news that an Indonesian ore ban, due to come into force in 2022, will be brought forward to January 2020. Nickel is now the best performing base metal of 2019 with the price moving from US $5.00/lb in January to US $8.00 by September although is currently trading around the US $6.35 mark. MOLYBDENUM According to the International Molybdenum Association, 80% of the molybdenum mined each year is used to make stainless steel, cast iron and superalloys. Demand is expected to remain depressed until macro-economic conditions improve. Supply remains overwhelmingly a by-product of copper production and short term growth in the market is forecast to remain anaemic. RARE EARTHS Roskill forecasts rare earth demand to grow by over 5% in 2019, driven by the increased use of rare earth permanent magnets in automotive and renewable energy applica- tions, supported by underlying demand growth in catalysts, ceramics and polishing powders. Rare earth magnets are forecast to form 28% of total demand in 2019. China is forecast to account for 77% of global rare earth production, with six state-owned enterprises forming the majority of supply. Despite its global dominance, China's production of mined rare earths has been impacted in recent years by the introduction of environmen- tal legislation and industry consolidation. Environmental legislation has led to many operations, predominantly in southern China, suspending production. As a result, Chinese processors have looked to alterna- tive sources of rare earth raw materials, creating opportunities for producers both in the Chinese domestic market and in the rest-of-world. Illegal production remains a significant source of raw materials in China, though efforts by local and central government have reduced illegal production by almost 50% since 2016. NIOBIUM Approximately 90% of all niobium used is consumed as ferroniobium in steelmak- ing. The rest goes into a wide range of smaller-volume but higher-value applica- tions, such as high-performance alloys (including superalloys), carbides, super- conductors, electronic components and functional ceramics. According to Roskill, demand for fer- roniobium has increased considerably over the past two years as a result of substitu- tion. A tight vanadium market coupled with the introduction of new rebar stan- dards in China caused ferrovanadium prices to spike in 2018. This prompted unexpected levels of substitution of ferro vanadium with ferroniobium. With Chinese regulations now requiring higher ferroalloy loadings in construction, the outlook for ferroniobium and ferrova- nadium demand looks positive. URANIUM The only significant commercial use for uranium is in the oxide form U 3 O 8 as a fuel for nuclear power plants to generate elec- tricity. Uranium has other commercial uses in the fields of medical diagnosis and other industries, but these markets are very small in terms of volume. After the 2011 Fukushima disaster, the uranium industry all but collapsed and prices slid from around US $52/lb to $28 in 2014. Today, it's even lower, trading around US $26/lb. As a result, uranium mining became unprofitable leading to mine closures – several years ago there were 500 companies mining uranium. Now, 80% of the world's primary uranium supply comes from just 10 mines. And future global supply is dependent on just five newly proposed projects. As an energy source, uranium is far more efficient than solar, wind, and even coal and a new nuclear renaissance has led to rise in uranium demand. The need for supplying growing global nuclear-gen- erating capacity is seen at 80,383 tonnes in 2020, rising to 90,780 tonnes in 2025, and 106,301 tonnes in 2030. However, estimated total production of uranium is

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