LME Nickel Stocks



A curiosity, environmental impact of nickel mining…

Indonesia, the Philippines, New Caledonia, Canada, Australia, and Russia are the largest producers of nickel, the majority of which is exported to other countries such as the United States and Japan (4, 6). The tropical nickel producing regions of the world are global biodiversity hotspots, and the destruction of native vegetation and contamination of large swaths of land from mine wastes has garnered international attention. In Indonesia, there is competition between the interests of nickel mining and its tropical rainforests, leading to a loss in biodiversity as global demand outweighs environmental concerns (7). In New Caledonia, an increase in nickel mining has led to habitat reduction and fragmentation causing serious risks to native species and an overall loss of biodiversity (8–10).

In 2017, Philippines Environment and Natural Resources Secretary Regina Lopez ordered the closure of 23 mines and suspended operations at another five mines, mainly nickel producing mines, to fight environmental degradation from the industry. The move was supported and upheld by President Rodrigo Duterte, and was described by Secretary Lopez as a social justice issue (11). Unfortunately, environmental contamination from nickel mining is not uncommon, and has been documented in Canada (12), northwest Russia and Finland (13–15), and Cuba (16), amongst other places. The most common issues of environmental contamination are emissions of acid rain-causing sulfur dioxide to the atmosphere, acid mine drainage (17) and heavy metals contamination in soil and water.

The use of recycled metals does reduce the overall impact of mining and processing nickel, but increasing global demand will continue to drive land use changes that benefit the mining industry. After the closure of mines in the Philippines, its nickel production dropped from 347,000 metric tons in 2016 to an estimated 230,000 metric tons in 2017; however, during that same period Indonesia’s production doubled from 199,000 to 400,000 metric tons (4). It is difficult to address problems such as this on a global scale and exact any tangible changes. However, change can be made on a personal level. As with all limited resources, it is best to reduce consumption first, reuse materials whenever possible, and recycle when the first two options are no longer possible.

Philippines and Indonesia are prone to natural hazards















Meanwhile, Korean battery makers SK Innovation (KRX:096770) and LG Chem (KRX:051910) announced they are working on nickel-cobalt-manganese 811 cathode/cells for electric vehicles, but pushed back commercial production during the third quarter, highlighting the difficulties of using new chemistry for batteries.


“Signs are emerging that Indonesian President Joko Widodo may come under increasing criticism for cozying up to China and its cashed-up companies when the campaign for the 2019 legislative and presidential elections begins in earnest next year.”

I forgot to mention the political risk…


“Meanwhile, the shift to zero-carbon transport accelerated during the conference. An additional five companies joined The Climate Group’s corporate leadership initiative EV100 and pledged to electrification of their fleets by 2030. British telecommunications giant BT Group, European energy company E.ON, logistics company Schenker AG, Canadian Ontario Power Generation (OPG) and New Zealand’s Genesis Energy, have all signed up to the initiative, which aims to make electric transport ‘the new normal’ by 2030.”



Interesting article on Indonesia/China.

You never know what black swan event is just around the corner. I’ve worked in Indonesia a lot and I can tell you now there’s no love lost for the Chinese.

Recent events at Grasberg go to show just how precarious ownership in Indonesia can be.

TDT :sunglasses:


Indonesia will hold a presidential election in April. Both Credit Suisse and Bank of America Merrill Lynch believe incumbent President Joko Widodo will remain in office. But OCBC’s Ling pointed out that the campaign has just started, and cautions that there may be market or business uncertainty as the vote draws near.




I posted this on another BB sometime ago.

I’m in Tertiary Minerals (AIM Epic code: TYM). They have fluorspar licenses in Norway, Sweden and the USA. They’re waiting on a final decision from the Swedish Authorities to mine fluorspar at their Storuman prospect.

TDT :sunglasses:


As China goes, so goes industrial metals.

That’s the message from anxious investors rolling out of a rough 2018, when Trump trade tensions, Federal Reserve rate hikes, a strong dollar and an economic slowdown in China all combined to push the London Metal Exchange Index to its first annual loss since 2015. Five metals have fallen by 13 percent or more, led by zinc, which has lost more than 20 percent.

Bulls are betting that shrinking supplies will help boost prices after a year described by brokerage Marex Spectron as “horrid,” and they’re hopeful China will support stimulus measures early next year. Others aren’t as convinced following weak import data from the Asian giant in November.

“The base metals will track China, and I wish I had a better story,” said Rob Haworth, who helps oversee about $164 billion at U.S. Bank Wealth Management in Seattle. “Growth there is slowing and is likely to continue. The caveat would be if China does decouple from Fed tightening, and engages in meaningful stimulus.”

The best bet for 2019 is copper, says Hui Shan, a strategist at Goldman Sachs & Co. LLC.

The pace of decline of visible copper reserves in China this year suggests the Asian country’s demand for the red metal has risen 5 to 6 percent in 2018, according to estimates by JPMorgan Chase Bank NA. That’s above a consensus earlier in the year for 2 to 3 percent gains.

“Chinese copper demand is not as bad as people think,” said Natasha Kaneva, the head of metals strategy in the global commodities group at JPMorgan. Overall, the bank kept a bullish bias on the base metals complex into year-end 2018 and first half in 2019.

Still, Kaneva said, If the U.S. Federal Reserve boosts rates every quarter in 2019 that could lead the bond yield curve to invert and “risky assets will have a difficult time appreciating in that environment.”


Money managers are cautious. Since early March when the trade war got underway, they’ve cut net-bullish bets across a spectrum of 18 commodities by about 63 percent from the year’s high, according to U.S. government data. In copper they have been net bearish for most of the past five months.

Some markets will have a harder time rallying, including aluminum, where supplies are rising. The market is poised to record its first surplus in seven years in 2019, with the outlook for alumina, the raw material to make the refined metal, also improving, according to estimates by Texas-based Harbor Intelligence.

Citigroup is also bearish on zinc as it expects supplies to rise with higher smelter production, it said in a report.


Societe Generale SA estimates global copper mining output will increase 1.6 percent next year, below the 10-year average of 3.4 percent, and says a lack of adequate investments will likely lead to a supply lag by 2018/19 and onwards.

The International Monetary Fund forecasts world gross domestic product growth at 3.7 percent this year and next, including slower growth for U.S. and China in 2019 at 2.5 percent and 6.2 percent respectively, while India’s will expand 7.4 percent.


“We are constructive on base metals mainly because we think a lot of the negative news have been priced and the valuation is attractive,” said Shan, the Goldman Sachs strategist.

“We expect the current pessimism weighing on metals – whether it is the trade war, the dollar strength, or the worries about sharp growth slowdown in China – to ease next year,” she said.

On Monday, the Bloomberg Industrial Metals Subindex, tracking aluminum, copper, nickel and zinc, fell 0.4 percent at 9:14 a. in New York, bringing this year’s slump to 18 percent. LME copper for three-month delivery slid 0.5 percent, for a year-to-date loss of 16 percent.


Amid a major push towards fully electric and plug-in hybrid vehicles, China wants its own firms to take 80 percent of the fast-growing market by 2025, with two local champions among the world’s leading new-energy vehicle companies. Chinese companies should also dominate in smart, connected vehicle technology.



For nickel, long-term fundamentals were already looking tight even without the added pressure of EVs. The metal has endured several “wilderness years” of low prices and underinvestment, with the net result that the market will start to need additional supply as early as 2023.
The additional demand from EVs and energy storage creates a widening supply gap that will need investment in the near term to plug. Yet with financiers still nursing wounds from the last cycle of nickel projects, the current appetite for investment remains tepid at best.
What does this mean for the EV revolution? The path ahead is by no means easy. Most of the world’s carmakers have or are in the process of adopting so-called ternary batteries that contain nickel and cobalt as part of their electrification strategies.
With potentially tight markets down the road for both metals, prices could escalate – something that could easily scupper the downward trend in battery costs, and therefore slow the march of EVs.
With the current crop of battery technology, achieving vast increases in EV sales by 2030 is going to be very challenging indeed.



Who can put this article here, please?


Hits the nail on the head.

VW’s electric car plans ‘not sufficient’ to hit EU emission rules

VW may have to step up electric car plans to meet EU CO2 targets

Next year will be interesting. Minimum 3.34m EV’s worldwide. Anything higher will be a bonus.

TDT :sunglasses:


Fulfilling a forecast supply deficit of 200,000 tonnes per annum (not incl. the EV impact) would require ~ 10 new average size nickel mines.

By 2040, world nickel demand will stand at 3.93 Mt of which about one third will be attributed to EV batteries.

The nickel market will begin to need additional nickel from unidentified resources from 2025.

In 2025 the deficit will increase to 200 kt, rising to 700kt by 2035 and more than 2Mt by 2040.

Source: Wood Mackenzie Ltd. Global nickel short-term outlook September 2018.

2019 and 2020 may be fairly pedestrian but after that things should start to heat up. Swapping out NPI for class 1 will satisfy the near to immediate term but after that its either Tsingshan and their HPAL project in Indonesia or the price goes up.

Interesting time lines here.

From discovery to production on Voisey’s Bay and Eagle it took 12 years. Amur was awared its certificate of discovery in 2009. If they follow the same time line as Voisey and Eagle they’ll go into production in 2021.

Ignore Nova, that one isn’t normal.

TDT :sunglasses:


A requirement for a higher energy density for new EV battery projects has been removed from the official regulations on automobile industry investment published by the country’s National Development and Reform Commission (NDRC) on its website.

The energy density threshold was removed from the final version of the regulations on Tuesday December 18 owing to the fact that current technology is not developed enough to support an EV battery reaching such a high-energy density, according to market participants.

“The extent to which a Chinese EV battery can reach a high-energy density depends on the development of technology and innovation,” a battery producer said.

“Progress is decided by the [EV battery] market, not policy,” he added.

According to the consulting draft of the regulation, published by the NDRC in July 2018, EV batteries were required to be no less than 300Wh per kg per unit, and 220Wh per kg for each battery system respectively.

This change could also signal the government will alter its policy of increasing the minimum energy density of batteries produced by EV manufacturers in order to receive a subsidy in 2019, according to some market participants.

“The Chinese government might not necessarily further raise the requirement of the driving range and energy density for EV manufacturers to get a subsidy next year,” Vicky Zhao, Fastmarkets MB battery raw materials research analyst, said.

To be eligible for the subsidy in 2018, EVs must have a minimum driving range of 150km, up from a minimum of 100km in 2017, according to the new subsidy policy launched on February.

To achieve a high-energy density and longer driving range, the EV manufacturers and battery producers need to shift to a nickel-rich nickel-cobalt-manganese (NCM) battery, which will reduce the amount of cobalt in batteries.

As a direct result, buying interest for cobalt sulfate, a key material in NCM batteries, has fallen, pressuring the spot cobalt sulfate price in the domestic Chinese market since mid-April.

Fastmarkets MB assessed the Chinese cobalt sulfate price at 65,000-68,000 yuan ($9,430-9,865) per tonne on December 19, falling almost continuously from its record high of 145,000-150,000 yuan per tonne on April 11.

However, cobalt sulfate demand improved in the fourth quarter on some consumers’ expectations that the Chinese government might not raise the threshold for the EV subsidy in 2019.

The Chinese cobalt sulfate price has stabilized in December, mostly underpinned by active inquires as a result of stockpiling for the Chinese New Year holiday during February 4-10.

“It is still too early to say how much support the removal of the requirement for higher energy density in this regulation could give to the spot cobalt sulfate price,” a second battery material producer said.

The removal of the requirement could also be positive for new investment.

“So far, no battery producers in China can reach the required energy density [specified in the draft of the regulation],” Zhao said.

“Therefore, it is very hard to attract new investment in the lithium-ion battery industry or encourage battery producers to expand their businesses,” Zhao added.

High-energy density will remain a trend in future
Although the NDRC removed a requirement for a higher energy density for new EV battery projects in its regulations, the Chinese government will continue to encourage the adoption of EVs with higher energy density, according to market participants.

The aim of removing the regulatory requirement on energy density is to encourage new investment in the EV battery industry, given the current bottleneck in technologies, according to Zhao. She added that the general trend will still be for EV batteries with higher energy density.

“The government will just pause the requirement. However, the whole EV battery industry is still heading towards a trend for a higher energy density,” a third battery materials producer said.


“…electric cars in Europe in 2030 to meet the previous emissions targets. To meet the new CO2 targets, however, that would need to increase to 1.8 million electric vehicles — or 45% of its total sales.”

VW will really need to up their game.

TDT :sunglasses:


Interview: Scotiabank’s Rory Johnston on ‘volatile’ 2018 for commodities and outlook for 2019

Rory Johnston is a commodity economist covering energy and metals markets in Scotiabank’s Economics Department. His research includes the Scotiabank Commodity Price Index (a monthly assessment of developments affecting the prices of major Canadian export commodities), contributions to Scotiabank’s Global Outlook (the department’s flagship quarterly forecast), as well as notes on various topics of interest to the Canadian commodity sector. He recently spoke to The Northern Miner about his outlook for 2019.

The Northern Miner: In your latest commodity note in mid-October, you said that you believe the U.S.-China trade war will be “long-lived and remain a slow-burn drag on industrial commodity sentiment through to the 2020 U.S. presidential election.” Why don’t we start there?

Rory Johnston: The important thing to note here is that the impact of the trade dispute on metals prices and the market are above and beyond what the impact has been on physical demand so far. The market is betting that the trade dispute will slow global growth and will lead to less demand. We haven’t seen that yet, but we might see some mild slowing in 2019.

We don’t believe that the trade dispute will intensify further due to the political costs for the White House of a final tranche of traded goods being heavily tilted toward consumer items, like iPhones. We don’t think it’s going to accelerate but it won’t be solved either. It seems relatively popular in the U.S., politically, even if it’s causing consumer prices to rise. Standing up to China on trade holds fairly broad bipartisan support, so even with the Democrats controlling the House, it doesn’t seem likely that it will be materially rolled back any time soon. I think this will likely come up as an issue in the next presidential elections, frankly. If it was raised, it would be raised as a broader question on the U.S. position on trade and cooperating within the global system, more so than at this stage right now.

TNM: The U.S. China trade dispute has dented the outlook for base metals demand.

RJ: The world was running quite hot — demand and economic growth were extremely strong. But it can’t be sustained. Both Canada and the U.S. are growing above potential, in terms of the natural run-rate of the economy, which is why we see inflation rising and banks beginning to tighten interest rates to slow the economy, which is running a bit too hot relative to where it should be in the long term. And Canada and the U.S. are experiencing that right now. So we expect that growth will slow slightly. The peak of that growth is likely behind us now for this cycle, so that will moderately weigh on all commodities next year, but not materially so, we’re talking a slight easing off on the gas pedal.

TNM: What are your price forecasts for some of the base metals? I believe you’ve said recently that copper prices will average US$3 per lb. in 2019 and $3.25 per lb. in 2020.

RJ: Generally the story on copper is that the market right now is underpricing it relative to its fundamentals. It’s not extremely tight at the moment. No one is really scrambling for copper right now, but the entire market knows there will be significant supply deficits coming down the line, with the penetration of higher-tech manufacturing, buildouts of power grids, not to mention the pickup in the electric vehicle (EV) story and it all bodes extremely well for copper.

So copper demand is going to keep chugging along at a very strong pace, and the supply isn’t really there in the early 2020s. There are some projects but not nearly enough to fill the gap. We think prices need to rise above US$3 per lb. to provide the incentive to finalize investment decisions and break ground and start the timeline to get a new copper mine from development to production, which typically takes roughly seven or eight years. We need investment and at these prices, we’re probably not going to see that investment. So we see prices moving higher in the early 2020s, we could very easily see US$3.50 per lb. copper if not US$4.00 per lb. in the early 2020s — 2022 to 2024 — that’s when prices are really going to start picking up, based on the long-term outlook where we see mines coming online and the trend rate for demand, which we think is going to be relatively robust. We don’t see a global recession in our outlook, so the big question is when will the market really wake up to the knowledge of those deficits and when will current pricing begin to reflect that supply gap in today’s market. We haven’t seen that yet.

TNM: What about zinc?

RJ: It’s been the perennial best performer for the last couple of years. We finally saw it lose some of its momentum in February, as we started seeing more mines coming online, and demand slowing on the back of weak real estate and construction activity in China. We think zinc likely has one more bounce in it before it capitulates to higher supply. The reason for that is the mines are coming on stream but new supply hasn’t worked itself into the refined metal market yet. The result is we have lots of ore but not a lot of metal, and that’s further driven by all of the environmental policies in China, which are pulling back capacity utilization at a bunch of different smelting facilities around the country for environmental reasons. So you need a pickup in that capacity to build, and that will begin to happen next year, and I think we’ll see the zinc price pop up one last time in 2019. After that, we think prices will gradually come back to US$1.20 per. lb. to US$1.15 per lb. longer term.

Another one of the big ones that have changes coming down the line is nickel. It was doing quite well — it was really picking up through the beginning of the summer. There were lots of deficits for a while and those were slowly eating away at the market, and we saw inventories come down very quickly, so prices started to outperform. We had this giant boost from the EV battery story, which pushes prices even higher, before eventually being hit back down beginning in July.

The sentiment around the trade story has hit nickel pretty hard because it’s very much a stainless steel market at the moment as opposed to an EV story, and a lot of the stainless produced in China is affected by the tariff situation and the trade dispute, so there was a bit of a hit. The EV story was also cooling a little bit, and, finally, the biggest change for nickel has been Chinese investment in Indonesia and nickel capacity there. We expect between 100 and 200 kilo-tonnes of new Indonesian mine supply coming on stream over the course of the next two or three years. So that will take the nickel market that was in deficit and move it more into balance in the next couple of years. So we see nickel going to US$7.00 per lb. by 2020, but it will likely move down with all these new mines in Indonesia. They have very firm timelines, and they have already started putting bricks and mortar in the ground and the Chinese government’s capacity to invest in these projects and get them done quickly — that’s really going to bring that supply to market very quickly.

TNM: Let’s talk about gold next. As you’ve said in your reports, prices have fallen on the back of rising real yields, a stronger U.S. currency, rising interest rates and bearish sentiment. You are forecasting gold to average US$1,300 per oz. in 2019?

RJ: Gold is underperforming primarily on the back of a stronger U.S. dollar. Our outlook for 2018 had initially factored for a weakening of the U.S. dollar, which was supposed to support the price of bullion, providing the counterweight to the bearish pressure of rising rates. Political risk also has seemingly ceased to support gold as the market numbs to the volume of risk in the headlines today.

TNM: Do you think that rising real interest rates will present the harshest headwinds to gold through 2020?

RJ: The main thing driving gold will be the question of rates and the U.S. dollar. People think the Fed might be slowing its interest rate increases and the market probabilities of futures hikes are shifting lower. So the bearish driver is the bullish driver and vice versa. The dollar is holding gold prices back, and we think it’s going to flip as rates continue to rise and the dollar eventually begins to fall. It will be more structural in the longer term — the rising current account and fiscal deficits have a strong relationship with the dollar’s long-term prospects and those are pointing decidedly down.

The Fed is increasing interest rates, and what has happened over the last month or so, as some signs of slowing have begun to emerge, is that people are questioning whether the Fed is going to raise rates as quickly as before, or whether it will be a slower pace of tightening. The fast pace of hikes is what was previously holding gold back, so any weakening in the interest rate path is a positive for gold. We’re also more bearish on the dollar than the market is currently, so we think yields will present headwinds for gold and a falling dollar will present tailwinds.

TNM: Any comments on the bulks — iron ore?

RJ: Iron ore is now trading at roughly where we expected — at US$67 per tonne right now and the story on bulks is long-term lower cost, high-quality ore from Brazil and Australia continuing to come to market, displacing the lower grade product, primarily in China. And even though there’s not a tonne of action on the benchmark 62% Fe ore in China, there’s a lot of action between the higher grade and the lower grade ore, as you’ve had environmental cuts in China, a premium for the higher grade ore (65%) has risen and the discounts for the lower quality ore (58%) have also risen. We see iron ore sitting at around US$65 per tonne and then falling to US$60 per tonne on a longer-term basis.

TNM: Were there any surprises this year?

RJ: It was a very volatile year and all the trade concerns kept things interesting, particularly on stuff like copper. We still believe the market continues to underprice copper on a fundamental basis, in large part because copper is often viewed as the bell weather of the global economy. The market is increasingly bearish on global economic growth, and bidding copper down as an expression of that view. We disagree with that thesis, which is why we see copper jumping over the next two years and even higher later on.

We’re at a very bearish point, and at moments like this you see volatility rise, and we think that that will likely remain the case. Copper didn’t react to some fairly major news on the mine supply side and things like labour disputes that would typically move the benchmark price up or down a fair bit — but we didn’t see that. What you did see was prices react to a trade story later that week, which I think really points to the fact that the macro story is driving prices rather than commodity-specific fundamentals.


“The forecast for 2019 would be next year among the five hottest years ever recorded,” says one of the Met Office scientists. Scientists expect the global average temperature next year to be around 1.1 ° C above pre-industrial levels.