We need a lot of new nickel
This development with Tsingshan is not nailed on. There’s no guarantee that they wil be able to make any more of a success with HPAL than all of the companies who have tried previously. Before they can significantly impact the market they need to:-
Build an HPAL plant, timescale 4 years+
Bring it up to nameplate, timescale 2 years+
Master operations and avoid down time
They need to achieve all of this at a price that’s competitive.
The next couple of years in the nickel market is not going to be dull that’s for sure.
“Even John Goodenough, the man who helped invent the lithium-ion battery and at 95 is now working on a solid-state battery, said it is unlikely the new technology will available before 2035…”
“While most base metals have positive underlying fundamentals to add support, nickel could potentially be the odd one out. The once bullish nickel outlook has started to be called into question recently, and it is a story the TD Securities team has had doubts about for awhile. Speculators took a shining to nickel amid fears that there would not be enough battery quality nickel to feed electric vehicle demand, but it turns out progress is being made in an effort to turn Indonesia’s vast amounts of laterite nickel ore into nickel usable for batteries via HPAL processing. If Tsingshan is able to successfully and economically produce HPAL nickel for EVs as anticipated, others will copy and the market will be well supplied for EV battery demand, suggesting the nickel rally many were betting on may not end up materializing.”
The big unknown is not If. That’s the wrong question to be asking here IMO. I think it is more of a “when and at what cost” issue. There’s what’s going to happen in the market and how that impacts things then there’s how this development ultimately impacts Amur. If Tsingshan is successful we would need to see what that means for the price of nickel going forward. The $14,000/tonne Tsingshan/HPAL prediction seems optimistic to me. If they are as little as 10% out, better still 15% that puts us in the $7/lb. to $7.50/lb zone. I suspect that range is well within Amur’s comfort zone.
Interesting times ahead and not for the faint of heart.
we need more relevant information
Look at the nickel price over the past 4 to 5 months, it has dropped by almost $2/lb. That moves the goal posts. I suspect Amur has had to go back to the drawing board given the current uncertianty in the market. Whether this turns out to be an exercise in incorporating 2018’s drill results to improve things, a pencil sharpening exercise or a fundamental rethink remains to be seen.
Never a dull moment with Amur/nickel.
Nothing we don’t know already but worth a read anyway.
“Current technology dictates that 811 cathodes need to be produced in an inert environment as to prevent any reaction with the atmosphere. Therefore, any new cathode plant producing this material will need to build a new, dedicated, inert atmosphere, production line specific to 811.”
Nickel sulfate output is expected to increase rapidly in the next two years, with the supply of raw materials said to be adequate for production in the near term because most refineries will be able to call on existing stocks until 2020, chief analyst of Chinese research organization Antaike Xu Aidong said at Antaike’s Battery Materials Conference in Shaoxing, China in July.
Global nickel sulfate production totaled about 540,000 tonnes in 2017 and Xu forecasts the total to rise by about 100,000 tonnes this year, which equates to demand of about 20,000 tonnes of nickel briquette.
Fastmarkets assessed the price of Chinese nickel sulfate at 25,200-25,600 yuan ($3,615-3,673) per tonne on Tuesday, down from 25,400-25,700 yuan per tonne a week prior, mainly due to the decline in the London Metal Exchange three-month nickel price as well as slight oversupply.
Note that the Goldman Sachs forecast is earlier than the CRU report, which says "The market will watch closely if the planned HPAL projects in Indonesia can be delivered at a lower capex and avoid problems which have plagued the commissioning of other projects. Nonetheless, these developments have increased the uncertainty surrounding the long-term view on nickel prices. "
Todays Market View - Glencore highlights major deficit in nickel (proactiveInvestors)
Nickel prices look set to rise as premiums rise as market tightens and Glencore endorses prospects for nickel (see nickel comment in commodities section)
Just when we were thinking that nickel prices were unrealistically low from a slightly longer term perspective;
Glencore reports the market doesn’t realise how strong demand is for the metal.
Nickel premiums are rising despite a pullback in LME for the 3-month metal price indicating to us and to Glencore that the market has got this one wrong.
The situation represents a ‘disconnect’ in our minds between real demand for metals and the short-futures prices which are manipulated by CTAs and other funds in the market.
While many macro funds play commodities based on broad economic fundamentals we think they are missing much of what is happening in the real world, on the ground.
Smart traders like Glencore who are in touch with the reality of physically trading and delivering commodities can see this disconnect more than anyone, and is in close touch with the reality of physical supply vs demand.
News today is that a group is to invest $70m into the development of a new nickel mine in Indonesia. The consortia is made up of GEM (a battery recycler) Tsingshan Group, Brunp Recycling, PT Indonesia Morowali Industrial Park and Hanwa Co Ltd. The project is for 50,000tpa of nickel and 4,000tpa of cobalt and will be able to produce 50,000tpa of nickel hydroxide intermediates, 150,000tpa battery-grade nickel sulfate, and 20,000tpa battery-grade
Gencore reckons the market doesn’t realise the strength of demand for the metal and haven’t grasped the magnitude of the global deficit even as stockpiles dwindle.
Worldwide consumption is expected to outstrip supply by 124,000t next year after a shortfall of 178,000t in 2018 with subsequent deficits in the prior two years. Demand remains strong for traditional stainless steel, while innovative electric-vehicle battery consumption is rapidly growing.
Glencore note “demand is much stronger than most market participants recognise, and the deficit is much higher than people think”, noting a substantial fall in global inventory since 2015. “There is very limited supply-side response excluding Indonesia. That will not change soon”.
Nickel has lost about 9% this year, closing at the lowest since December this week, as trade-war concerns hurt metals and investors tracked early efforts by a major Chinese producer to develop new technologies that could drag prices lower. That drop has come even amid sustained enthusiasm for the potential jump in demand for nickel given its use in electric-vehicle batteries.
“As evidenced by substantial inventory draws, nickel producers are unable to service demand,” said Glencore, which listed nickel operations in North America, Australia, Africa and New Caledonia. “The need for new supply will only become more pressing if EV-battery demand meets expectations.”
Holdings of nickel have been shrinking this year. Stockpiles tracked by the London Metal Exchange contracted for a 14th straight month in October, and are the lowest level since 2013. In China, the Shanghai Futures Exchange reports holdings of 14,385t, down from more than 100,000t in 2016.
Glencore is not alone in its enthusiasm for the outlook for nickel. In a mid-October report, Goldman Sachs Group Inc. said that it expected the metal to average $17,250/t next year, while only averaging about $13,570/t in 2018.
A brief introduction
I already said this, but at what cost?
There is no research of recycling, but if you can recycle, imagine all nickel from used batteries that come back to the market, the doubt is the recycling price . We have already companies doing this.
“Recycling: a new life for Ni
Similar to other metals, nickel is fully recyclable. Because nickelcontaining
products have value, an infrastructure for gathering and
processing these materials exists. While society is more likely to see
metal recycling today as an environmental activity, it has existed for
thousands of years as a profitable economic activity. In most countries,
the economics of gathering, sorting, preparing, transporting and
using scrap metal employs more people and is of greater economic
importance than the mining and refining of ores.
Nickel is one of the most valuable common non-ferrous metals, along
with aluminium, copper, lead and zinc (Al, Cu, Pb, Zn). Given its value
as a commodity, the commercial motivation to use nickel effectively in
the first place is very strong. There is a similarly compelling incentive for
recovering and recycling nickel effectively at all stages of the production
and use cycle.
Recycling efficiencies are calculated based on a set of widely agreed
and accepted recycling indicators, which are reviewed on a regular basis
in the nickel industry. The global efficiency of recycling nickel from endof-life
products for the reference year 2005 was calculated to be at 63%.
Losses that occur after use mainly relate to nickel-containing materials
ending up in landfills and so called “non-functional recycling”, i.e., nickel
that ends up in other material streams such as carbon steel where the
outstanding properties of nickel are not further exploited. Depending
on the region and the specific end uses, nickel-recycling efficiencies can
vary greatly. In the case of nickel-containing stainless steel, very high
recycling efficiencies can be reached.”"
Nickel is a natural resource,
which cannot be consumed.
It is fully recyclable again and
again without loss of quality,
contributing to the Circular
Economy (CE) model.
Source: Nickel institute
Could this be the case with nickel too?
You get a bit bored with articles like these after a while, especially when the comments made come from an American. What this guy is really saying is “we are top dogs and if anybody is going to manipulate the market it’s us”. Having said that are the Chinese doing anything different to what we or the Americans have done in the past? That’s what the dominant individual, company, trading power does after all, it exploits its dominant position.
The issue with iron ore had more to do with a massive increase in supply leading up to the American sub-prime financial crash in 2007/08 was it not? Balance in the market to massive over supply post 2008 could only result in one thing. If the Chinese dictated price during that period can you blame them? That’s precisely what anybody, company or country would have done in a similar position.
As for nickel you just need to look at the history of this metal to see where the current problem emanates from. The below presentation by RNC gives you a few pointers and is well worth a read not only for the recent history but for RNC’s predictions for the future. Huge new HPAL plants, the development of NPI and a collapse in demand all within the space of several years, a potent mix don’t you think?
At one time the LME and SHFE had stock levels equivalent to 30% of annual global consumption of nickel and that’s before you add in the stocks in private warehouses used for the carry trade in China or the Qingdao scandal. What other base metal has displayed the same characteristics?
Markets usually correct fairly quickly when there is an imbalance of supply and demand. That’s what happens in a normal market. We haven’t had a normal market these past 10/15 years in fact we’ve had an extremely abnormal market made even more so by the expectation that EVs will solve everything. The huge increase in the price of cobalt helped keep an awful lot of HPAL plants going, churning out nickel that nobody wanted.
I don’t really take much notice of what’s going on with Amur at the moment, there’s not really an awful lot to add to their story. They have a load of nickel, its sulphide and the grades are reasonably good that’s not going to change much if at all going forward. It’s what’s going on in the nickel market that’s of greater interest to me and I certainly don’t think the price is being manipulated.
As an aside the next time you see or hear an American whinging about the Chinese stealing their technology read this:-
No other country has exploited its dominant market position as fully or as completely as America.
A quick reminder of the Qingdao scandal.
Is it a coincidence that stocks of nickel in the LME started to rocket in 2014?
You might find these links of interest.
The above links are based on Senate committee investigations into Goldmans not the opinions of a pissed off mining “entrepreneur”.
If China as the presentation says " In many, many commodities, China has very quickly 2002-2008
added 2-3X the capacity the market requires for many semi processed materials
I think it is exactally what they are trying to do, with Indonesia NPI/HPAL/Tsingshan
I think you’re right but the issue for Amur is at what cost. If Tsingshan can master HPAL its not necessarily a problem for Amur if in doing so their break even is $7/lb+. Its also not just a case of mastering HPAL but the time it will take for them to build HPAL processing plants.
Of greater concern, IMO, is the amount of class 1 nickel currently being used to make stainless steel that can be substituted with NPI. I strongly suspect that all the NPI lines Tsingshan has been building in Indonesia over the last 2 - 3 years has been with the specific intention of swapping class 1 for NPI. If that is the case then the boost nickel is expecting to get from the growth in EVs is going to be an awful lot less significant than many people expect.