Recording date: 24th July 2023

Nickel continues rangebound in $20,500-$21,500 range with LME inventories remaining low at 37-38,000 tonnes

After nickel price move off the $20,000 range about 10 days ago, sulphate prices actually softened a little as the big surge in June ores for NMC cathodes in China hasn’t continued through yet for July /August  - so sulphate discounts retraced some of the narrowing we’ve seen in last few weeks. On NPI front, NPI prices surprisingly actually ticked up about 2%.  Thought we would see sulphate discounts narrow pretty fully before NPI started moving higher but good to see  

Not lots of news, but couple of key pieces of news

Nickel refining capacity - The London Metal Exchange has approved nickel produced by China’s Zhejiang Huayou Cobalt Co. for delivery under its new fast track registration system for its new refinery in China.  Huayou, GEM, CNGR all building refineries in Indo/China and will follow down a similar path.

This is key piece in “great convergence” which will allow market clearing mechanism to move from NPI/matte discounts back to LME price.   Should see ~200ktpa of capacity come online by end 2024 and nearly 100ktpa of LME deliverable nickel produced in 2023.

This scale of numbers given that given current annualized surplus is estimated by INSG in 100-200kt range which in  May fell by 1/4 to 144kt annualized form ~200ktpa annualized.  I still believe that these figures are overstated as don’t see large inventories in market and wouldn’t see discounts reducing if these inventories available to market.

Poseidon Nickel – comment from subscriber online that wanted thoughts on this announcement.  Last week mentioned their exploration at success at other past producing mine – Emily Ann/Maggie Hays

Poseidon was restarting Black Swan/Silver Swan operations – one of few nickel mills in Western Australia and mine operated for short period of time in 2008-2009 – now announced last week deferring restart until 2024 for following reasons: 

Western Power has advised grid power will be available from late 2024 · Additional metallurgical testwork will be conducted to confirm recovery assumptions for the disseminated serpentinite ore · Decision made to defer the restart of Black Swan due to project related factors and external market conditions

From release quote: “These project related factors together with the continuing tightness in the WA labour market, the lack of the availability of Kalgoorlie FIFO accommodation ….”

Highlights 4 key issues:

Availability of infrastructure– no grid power until end 2024, (could use generators, but much more expensive

Availability of people and ability to support them – talks about fly in fly out – most of Western Australia with a few exceptions is massive fly in, fly out operation.  Is expensive, and highly competitive 

Importance of nickel concentrate grades - Release talks about certain ore feed producing only 5-6% nickel concentrate with high mgO content – big plus of deposits like Crawford is ability to produce much higher grade nickel concentrate.  Most nickel concentrates are only 10-15% nickel 

Parallel project design – need to integrate resource/mine design/mineralogy/metallurgical testing so always understand how feed will perform. Is good they found out now rather than in operation, but would have been better if found before putting FS out last year.