Presentation: Nickel - The necessity of higher prices [pdf ... - Hatch
Presentation: Nickel - The necessity of higher prices [pdf ... - Hatch
Presentation: Nickel - The necessity of higher prices [pdf ... - Hatch
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<strong>Nickel</strong>: <strong>The</strong> <strong>necessity</strong> <strong>of</strong> <strong>higher</strong> <strong>prices</strong><br />
Robert Cartman – <strong>Hatch</strong> Beddows
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
Contents<br />
<strong>Hatch</strong> and <strong>Hatch</strong> Beddows<br />
Short-term Ni <strong>prices</strong><br />
Long-term Ni <strong>prices</strong><br />
Conclusions<br />
2
HATCH<br />
<strong>Hatch</strong> services and sectors<br />
S<br />
E<br />
R<br />
V<br />
I<br />
C<br />
E<br />
S<br />
SECTORS<br />
© <strong>Hatch</strong> Associates Limited, 2009
HATCH<br />
Global reach and resources<br />
8000 people<br />
3400<br />
Canada<br />
• Calgary, Alberta<br />
• Hamilton, Ontario<br />
• Montreal, Quebec<br />
• Sorel-Tracy, Quebec<br />
• Sudbury, Ontario<br />
• Mississauga, Ontario<br />
• Niagara Falls, Ontario<br />
• Vancouver, British Columbia<br />
USA<br />
• Boston, Massachusetts<br />
• Buffalo, New York<br />
• Millburn, New Jersey<br />
• Monroeville, Pennsylvania<br />
• New York, New York<br />
• Pittsburgh, Pennsylvania<br />
• Pleasanton, California<br />
• San Francisco, California<br />
• Seattle, Washington<br />
South America<br />
• Ant<strong>of</strong>agasta, Chile<br />
• Santiago, Chile<br />
• Lima, Peru<br />
• São Paulo, Brazil<br />
• Belo Horizonte, Brazil<br />
• Vitoria, Brazil<br />
700<br />
Europe<br />
• London, England<br />
• Moscow, Russia<br />
170<br />
South Africa<br />
• Johannesburg<br />
• Richards Bay<br />
600<br />
(Yellow indicates regional hub)<br />
India<br />
• Delhi<br />
China<br />
• Beijing<br />
• Shanghai<br />
120<br />
Australia<br />
• Brisbane<br />
• Gladstone<br />
• Mackay<br />
• Melbourne<br />
• Newcastle<br />
2300<br />
• Perth<br />
• Sydney<br />
• Townsville<br />
• Whyalla<br />
• Wollongong<br />
© <strong>Hatch</strong> Associates Limited, 2009
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
<strong>Hatch</strong> counts many <strong>of</strong> the world’s major mining and steelmaking companies<br />
and financial institutions among its core client base<br />
Mining<br />
Alcan<br />
Alcoa<br />
Anglo American<br />
Assmang<br />
BHP Billiton<br />
De Beers<br />
ENRC<br />
Falconbridge<br />
Impala Platinum<br />
Lonmin<br />
Newmont Mining<br />
Norilsk<br />
Placer Dome<br />
QIT<br />
Rio Tinto<br />
SUAL<br />
Vale Inco<br />
Xstrata<br />
Steel<br />
ArcelorMittal<br />
BlueScope Steel<br />
Celsa<br />
CMC<br />
Tata/Corus Group<br />
Evraz Group<br />
Gerdau Group<br />
Mechel<br />
Metalloinvest<br />
Metinvest<br />
Nucor<br />
POSCO<br />
Ruukki<br />
Severstal<br />
Shougang<br />
TMK<br />
U.S. Steel<br />
voestalpine<br />
Financial institutions<br />
ADB<br />
Bank <strong>of</strong> America<br />
Bear Stearns<br />
CIBC<br />
Citibank<br />
Commonwealth Bank<br />
Credit Lyonnais<br />
CSFB<br />
Deutsche Bank<br />
EBRD<br />
HSBC<br />
IFC<br />
JP Morgan Chase<br />
Mellon Bank<br />
NM Rothschild & Sons<br />
RBS<br />
UBS Warburg<br />
World Bank<br />
5
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
Contents<br />
<strong>Hatch</strong> and <strong>Hatch</strong> Beddows<br />
Short-term Ni <strong>prices</strong><br />
Long-term Ni <strong>prices</strong><br />
Conclusions<br />
6
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
<strong>The</strong> LME Ni price has shown great volatility in the last 5 years, driven by a<br />
number <strong>of</strong> key factors<br />
LME Ni price ($/tonne)<br />
Drivers <strong>of</strong> short-term Ni price<br />
60,000<br />
50,000<br />
Supply / Demand balance<br />
Stockpiles, strikes, natural disasters<br />
Stainless production, financial crises / recession<br />
40,000<br />
30,000<br />
Expectations<br />
Alloy surcharge mechanism<br />
Speculation<br />
20,000<br />
Dollar weakness<br />
10,000<br />
Against Ni-producing countries<br />
0<br />
Input costs<br />
Aug 04<br />
Feb 05<br />
Aug 05<br />
Feb 06<br />
Aug 06<br />
Feb 07<br />
Aug 07<br />
Feb 08<br />
Aug 08<br />
Feb 09<br />
Aug 09<br />
Oil price, sulphuric acid<br />
Source: MB, <strong>Hatch</strong> Beddows<br />
7
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
Ni supply has moved in line with <strong>prices</strong>. Cutbacks in 2008 reflect the fact<br />
that <strong>prices</strong> moved below marginal cost for some producers<br />
kt<br />
1,600<br />
Global nickel mine<br />
production (contained Ni)<br />
$’000/<br />
tonne<br />
40<br />
Key nickel cutbacks 2008 / 2009<br />
Xstrata<br />
Falcondo operations in Dominican Republic<br />
suspended indefinitely (29kt)<br />
1,200<br />
30<br />
Mine closures in Canada (17kt)<br />
BHP Billiton<br />
Closure <strong>of</strong> Ravensthorpe, now up for sale<br />
(14kt)<br />
800<br />
20<br />
Vale<br />
Onca Puma project repeatedly suspended<br />
(58kt)<br />
Global mine cutbacks (90kt)<br />
400<br />
10<br />
Norilsk<br />
Suspension <strong>of</strong> Australian operations (47kt)<br />
0<br />
2004 2005 2006 2007 2008<br />
0<br />
Antam<br />
Cutback <strong>of</strong> Indonesian operations (7kt)<br />
Russia Canada Australia<br />
Indonesia New Caledonia Others<br />
Source: INSG, MB, <strong>Hatch</strong> Beddows<br />
8
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
Despite some cutbacks, Ni oversupply will act as a drag on upward<br />
movements in the Ni price in the short term<br />
125<br />
LME Ni stocks (kt)<br />
$’000/<br />
tonne<br />
60<br />
Ni stocks vs. LME Ni price<br />
100<br />
50<br />
40<br />
75<br />
30<br />
50<br />
20<br />
25<br />
10<br />
0<br />
2004 2005 2006 2007 2008 2009<br />
0<br />
3 4 5 6 7 8 9 10<br />
No. weeks consumption<br />
Source: MB, LME, INSG, <strong>Hatch</strong> Beddows<br />
9
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
Ni demand is dominated by stainless steel production. This has fallen<br />
since a 2006 peak <strong>of</strong> 28.4Mt<br />
Ni demand by end-use<br />
Global stainless steel production<br />
Plating<br />
12%<br />
Foundry<br />
3%<br />
Other<br />
6%<br />
Stainless<br />
steel<br />
57%<br />
kt<br />
30,000<br />
25,000<br />
20,000<br />
15,000<br />
10,000<br />
Non-ferrous<br />
14%<br />
5,000<br />
Alloy steel<br />
8%<br />
0<br />
2004 2005 2006 2007 2008<br />
Europe China Other Asia Americas Africa<br />
Source: ISSF, <strong>Hatch</strong> Beddows<br />
10
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
<strong>The</strong> production <strong>of</strong> Ni-containing grades <strong>of</strong> stainless steel has fallen even<br />
faster than overall stainless steel production<br />
Mt<br />
30<br />
25<br />
20<br />
15<br />
10<br />
5<br />
0<br />
6.03<br />
Global stainless steel production<br />
by series (2004-09)<br />
6.44<br />
16.09 15.35<br />
6.95<br />
18.58<br />
8.18<br />
16.23<br />
7.28<br />
15.39<br />
6.60<br />
14.47<br />
2.31 2.38 2.67 3.23 2.95 2.60<br />
2004 2005 2006 2007 2008 2009f<br />
200 300 400 Other<br />
750<br />
700<br />
650<br />
600<br />
550<br />
500<br />
450<br />
400<br />
350<br />
300<br />
250<br />
200<br />
150<br />
100<br />
50<br />
Index <strong>of</strong> Cr and Ni <strong>prices</strong><br />
(Q1 2001 = 100)<br />
0<br />
Q1 2001 Q3 2003 Q1 2006 Q3 2008<br />
Cr<br />
Ni<br />
Source: ISSF, MB, <strong>Hatch</strong> Beddows<br />
11
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
<strong>The</strong> supply / demand balance for nickel has an effect on nickel <strong>prices</strong>,<br />
although 2007 shows that other factors matter<br />
Supply / Demand balance for finished Ni<br />
LME Ni price ($/tonne)<br />
kt<br />
120<br />
60,000<br />
100<br />
80<br />
50,000<br />
60<br />
40,000<br />
40<br />
20<br />
30,000<br />
0<br />
20,000<br />
-20<br />
-40<br />
10,000<br />
-60<br />
0<br />
2004<br />
2005<br />
2006<br />
2007<br />
2008<br />
2009<br />
Aug 04<br />
Feb 05<br />
Aug 05<br />
Feb 06<br />
Aug 06<br />
Feb 07<br />
Aug 07<br />
Feb 08<br />
Aug 08<br />
Feb 09<br />
Aug 09<br />
Source: <strong>Hatch</strong> Beddows<br />
12
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
<strong>The</strong> previous alloy surcharge mechanism <strong>of</strong> stainless steel producers<br />
helped to create a speculative cycle<br />
Previous alloy surcharge mechanism<br />
Mar ’06 = $14,893/t<br />
Apr ’06 = $17,932/t<br />
Effect <strong>of</strong> previous<br />
alloy surcharge mechanism<br />
LME Ni price<br />
rises sharply<br />
May ’06 = $21,065/t<br />
Jun ’06 = $20,747/t<br />
Jun ’06<br />
surcharge<br />
Increase<br />
in<br />
demand<br />
for<br />
LME Ni<br />
Buyers’<br />
expect<br />
future<br />
price<br />
rises<br />
Jul ’06 = $26,569/t<br />
Jul ’06<br />
surcharge<br />
Buyers bring<br />
forward purchases<br />
Aug ’06 = $32,748/t<br />
Source: LME, <strong>Hatch</strong> Beddows<br />
13
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
<strong>The</strong> weakening <strong>of</strong> the US dollar has helped to drive the Ni price <strong>higher</strong><br />
140<br />
Indexed dollar value vs. LME Ni price<br />
$’000/<br />
tonne<br />
60<br />
Effect <strong>of</strong> $ weakness on Ni <strong>prices</strong><br />
Priced in dollars<br />
120<br />
Aug ’04 = 100<br />
50<br />
No US production <strong>of</strong> Ni<br />
Ni Production in non-$ countries<br />
100<br />
40<br />
Ni Production in countries with ‘floating’ FX rate<br />
80<br />
60<br />
30<br />
Dollar weakness<br />
Falling revenues for Ni producers<br />
Need to increase $ price <strong>of</strong> Ni to compensate<br />
40<br />
20<br />
Conclusion<br />
20<br />
10<br />
Visible correlation, r = -0.6<br />
Large movements driven more by short-term<br />
market conditions<br />
0<br />
0<br />
Aug 04<br />
Jan 05<br />
Jun 05<br />
Nov 05<br />
Apr 06<br />
Sep 06<br />
Mar 07<br />
Aug 07<br />
Jan 08<br />
Jun 08<br />
Nov 08<br />
Apr 09<br />
Sep 09<br />
$ / RUB $ / CAD LME Ni (RHS)<br />
Source: Oanda, <strong>Hatch</strong> Beddows<br />
14
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
As a major component <strong>of</strong> production costs, the rise in oil <strong>prices</strong> over<br />
recent years has also fed through to Ni <strong>prices</strong><br />
100%<br />
Ni mining and processing costs, 2009<br />
$/bbl<br />
160<br />
Ni and oil price<br />
$’000/<br />
tonne<br />
60<br />
80%<br />
140<br />
120<br />
50<br />
60%<br />
100<br />
40<br />
80<br />
30<br />
40%<br />
60<br />
20<br />
20%<br />
40<br />
20<br />
10<br />
0%<br />
Russia Australia Canada Indonesia China NPI*<br />
Fuel<br />
Maintenance / Overheads<br />
Source: Company reports, EIA, <strong>Hatch</strong> Beddows<br />
* via EAF<br />
Labour<br />
Raw materials<br />
15<br />
0<br />
0<br />
Jan 01 Mar 03 May 05 Jul 07 Sep 09<br />
Oil Ni
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
<strong>Nickel</strong> <strong>prices</strong> have been influenced by a range <strong>of</strong> factors over the last 5<br />
years<br />
LME Ni price ($/tonne)<br />
60,000<br />
50,000<br />
• Supply / Demand<br />
• Input costs<br />
• Dollar weakness<br />
• Speculation<br />
• Supply / Demand<br />
• Input costs<br />
• Dollar weakness<br />
40,000<br />
30,000<br />
20,000<br />
10,000<br />
0<br />
Aug 04<br />
Oct 04<br />
Dec 04<br />
Feb 05<br />
Apr 05<br />
Jun 05<br />
Aug 05<br />
Oct 05<br />
Dec 05<br />
Feb 06<br />
Apr 06<br />
Jun 06<br />
Aug 06<br />
Oct 06<br />
Dec 06<br />
Feb 07<br />
Apr 07<br />
Jun 07<br />
Aug 07<br />
Oct 07<br />
Dec 07<br />
Feb 08<br />
Apr 08<br />
Jun 08<br />
Aug 08<br />
Oct 08<br />
Dec 08<br />
Feb 09<br />
Apr 09<br />
Jun 09<br />
Aug 09<br />
Source: <strong>Hatch</strong> Beddows<br />
16
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
Contents<br />
<strong>Hatch</strong> and <strong>Hatch</strong> Beddows<br />
Short-term Ni <strong>prices</strong><br />
Long-term Ni <strong>prices</strong><br />
Conclusions<br />
17
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
Long-term Ni <strong>prices</strong> have averaged just under $14,000/tonne in real terms<br />
(2008 $)<br />
Long-term Ni <strong>prices</strong> ($/tonne)<br />
Drivers <strong>of</strong> long-term Ni price<br />
40,000<br />
30,000<br />
Nominal<br />
Real (2008 <strong>prices</strong>)<br />
Supply / Demand<br />
Long-term stainless production<br />
Long-term Ni availability, investment vs. exploitation<br />
20,000<br />
Long-term<br />
real average<br />
Supplier / Consumer power balance<br />
Consolidation in Ni, stainless industries<br />
Backward / Forward integration<br />
10,000<br />
0<br />
1900<br />
1908<br />
Source: USGS, LME, <strong>Hatch</strong> Beddows<br />
1916<br />
1924<br />
1932<br />
1940<br />
1948<br />
1956<br />
1964<br />
1972<br />
1980<br />
1988<br />
1996<br />
2004<br />
18<br />
Technology<br />
Reduction in marginal costs <strong>of</strong> mining, processing<br />
Greater accessibility <strong>of</strong> ores<br />
Processing <strong>of</strong> by-products<br />
Substitution<br />
Non-nickel stainless, Li-ion batteries
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
Long-term stainless steel production has risen at a CAGR <strong>of</strong> 4.5% since<br />
1965<br />
kt<br />
30,000<br />
Stainless steel production<br />
Mt<br />
30<br />
Stainless steel production<br />
by series, 2001-09<br />
25,000<br />
25<br />
20,000<br />
20<br />
15,000<br />
15<br />
10,000<br />
10<br />
5,000<br />
5<br />
0<br />
1965<br />
1969<br />
1973<br />
1977<br />
1981<br />
1985<br />
1989<br />
1993<br />
1997<br />
2001<br />
2005<br />
2009<br />
0<br />
2001 2002 2003 2004 2005 2006 2007 2008 2009<br />
300 400 200 Other<br />
Source: Vale, ISSF, <strong>Hatch</strong> Beddows<br />
19
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
Stainless steel production is forecast to continue rising in order to meet<br />
the expected growth in consumption by the developing world<br />
50<br />
Per capita consumption <strong>of</strong> stainless steel vs<br />
income per capita for selected countries, 1997-2008<br />
40<br />
Taiwan<br />
Kg per capita<br />
30<br />
20<br />
South<br />
Korea<br />
Japan<br />
10<br />
China<br />
Malaysia<br />
0<br />
0 10 20 30 40 50 60<br />
$’000 per capita, 2008 (PPP)<br />
Source: Vale, IMF, <strong>Hatch</strong> Beddows<br />
20
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
Long-term stainless steel production will move toward 40Mt by 2020.<br />
Further substitution is possible but most <strong>of</strong> this has already taken place<br />
kt<br />
40,000<br />
35,000<br />
Stainless steel production<br />
0<br />
Percentage point shift from 300-series<br />
Appliances<br />
& Catering<br />
Industrial<br />
applications ABC Tubemaking Transport<br />
0-1%<br />
1-5%<br />
30,000<br />
-20<br />
5-10%<br />
25,000<br />
20,000<br />
-40<br />
5-10%<br />
10-15%<br />
Change 2001 - 2008 Potential future change<br />
15,000<br />
80%<br />
300-series ratio<br />
10,000<br />
5,000<br />
0<br />
2001<br />
2002<br />
2003<br />
Source: ISSF, <strong>Hatch</strong> Beddows<br />
2004<br />
2005<br />
2006<br />
2007<br />
2008<br />
2009<br />
2010<br />
2011<br />
2012<br />
2020<br />
21<br />
60%<br />
40%<br />
2001 2003 2005 2007 2009<br />
% 300-series<br />
2020
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
Long-term Ni supply fluctuates between waves <strong>of</strong> investment, followed by<br />
exploitation<br />
Mt<br />
2.0<br />
Investment<br />
phase<br />
Ni production, mined<br />
Investment<br />
phase<br />
Investment<br />
phase<br />
$’000/<br />
tonne<br />
40<br />
Long-term real Ni <strong>prices</strong> (2008 $)<br />
Investment<br />
phase<br />
Investment<br />
phase<br />
Investment<br />
phase<br />
1.5<br />
30<br />
1.0<br />
20<br />
0.5<br />
10<br />
0.0<br />
0<br />
1965<br />
1969<br />
1973<br />
1977<br />
1981<br />
1985<br />
1989<br />
1993<br />
1997<br />
2001<br />
2005<br />
2009<br />
1965<br />
1969<br />
1973<br />
1977<br />
1981<br />
1985<br />
1989<br />
1993<br />
1997<br />
2001<br />
2005<br />
2009<br />
Source: INSG, USGS, LME, <strong>Hatch</strong> Beddows<br />
22
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
<strong>The</strong> next wave <strong>of</strong> investment could add another ~500kt <strong>of</strong> capacity<br />
Ore type<br />
Capacity<br />
2010<br />
2011<br />
2012<br />
2013+<br />
Ambatovy<br />
Barro Alto<br />
Eagle (?)<br />
Fenix (?)<br />
Gladstone (?)<br />
Goro<br />
Koniambo<br />
Nonoc (?)<br />
Nunavik<br />
Onca Puma<br />
Ramu<br />
Shevchenko<br />
Tagaung Taung<br />
Vermelho (?)<br />
Weda Bay (?)<br />
Laterite<br />
Laterite<br />
Sulphide<br />
Laterite<br />
Laterite<br />
Laterite<br />
Laterite<br />
Laterite<br />
Sulphide<br />
Laterite<br />
Laterite<br />
Laterite<br />
Laterite<br />
Laterite<br />
Laterite<br />
60kt<br />
36kt<br />
10kt (?)<br />
23kt<br />
63kt<br />
60kt<br />
60kt<br />
40kt (?)<br />
12kt<br />
52kt<br />
31kt<br />
22kt<br />
23kt<br />
46kt<br />
60kt<br />
Source: Company reports, <strong>Hatch</strong> Beddows<br />
23
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
A small nickel supply deficit is expected for 2009 and 2010 before a return<br />
to surplus<br />
Supply and demand <strong>of</strong> finished Ni<br />
Supply / Demand balance for finished Ni<br />
kt<br />
1,500<br />
forecasts<br />
kt<br />
120<br />
forecasts<br />
100<br />
1,400<br />
80<br />
60<br />
1,300<br />
40<br />
20<br />
1,200<br />
0<br />
1,100<br />
-20<br />
-40<br />
1,000<br />
-60<br />
2001<br />
2002<br />
2003<br />
2004<br />
2005<br />
2006<br />
2007<br />
2008<br />
2009<br />
2010<br />
2011<br />
2012<br />
2001<br />
2002<br />
2003<br />
2004<br />
2005<br />
2006<br />
2007<br />
2008<br />
2009<br />
2010<br />
2011<br />
2012<br />
Supply<br />
Demand<br />
Source: <strong>Hatch</strong> Beddows<br />
24
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
<strong>Nickel</strong> is increasingly being extracted from lateritic ores<br />
<strong>Nickel</strong> production by ore type<br />
<strong>Nickel</strong> resources by ore type<br />
100%<br />
80%<br />
Sulphides<br />
27%<br />
60%<br />
40%<br />
20%<br />
Laterites<br />
73%<br />
0%<br />
Source: <strong>Hatch</strong> Beddows<br />
1992<br />
1993<br />
1994<br />
1995<br />
1996<br />
1997<br />
1998<br />
1999<br />
Sulphides<br />
2000<br />
2001<br />
2002<br />
2003<br />
Laterites<br />
2004<br />
2005<br />
2006<br />
2007<br />
2008<br />
2009<br />
25<br />
Sulphides<br />
Laterites
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
Laterite resources are mainly found in countries that require large<br />
spending on infrastructure<br />
Source: <strong>Hatch</strong> Beddows<br />
26
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
Lateritic ores need to be subdivided into limonites or saprolites in order<br />
to understand the respective mining and processing costs<br />
% content<br />
Depth<br />
Ni<br />
Co<br />
Fe<br />
MgO<br />
Oxides<br />
High Fe, low MgO, low SiO 2<br />
Limonite<br />
0.8 – 1.5<br />
0.1 – 0.2<br />
40 – 50<br />
0.5 – 5<br />
Processing – Dependent on<br />
presence <strong>of</strong> clay minerals.<br />
Typically hydrometallurgy<br />
(HPAL, Heap, Caron)<br />
5.5m<br />
Transition<br />
zone<br />
1.5 – 4<br />
0.02 – 0.1<br />
25 – 40<br />
5 – 15<br />
Silicates<br />
10m<br />
Saprolite<br />
1.8 – 3<br />
0.02 – 0.1<br />
10 – 25<br />
15 – 35<br />
Low Fe, high MgO, high SiO 2<br />
Processing – Pyrometallurgy.<br />
End product (FeNi, matte)<br />
dependent on mineralogy<br />
Bedrock<br />
0.3<br />
0.01<br />
5<br />
35 – 45<br />
Source: Mick Elias, <strong>Hatch</strong> Beddows<br />
27
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
Summary <strong>of</strong> nickel ores and their pros and cons<br />
<strong>Nickel</strong> ore<br />
Sulphides<br />
Laterites<br />
Limonites<br />
Saprolites<br />
• High mining costs<br />
• Underground mining<br />
• Low mining costs<br />
• Surface mining<br />
• Low mining costs<br />
• Surface mining<br />
• Low processing costs<br />
• Proven technology<br />
• Often associated with<br />
valuable by-products<br />
(Cu / Pd / Pt)<br />
• High processing costs<br />
• Unproven technology<br />
• Protracted startup<br />
• Expensive materials <strong>of</strong><br />
construction<br />
• High acid consumption<br />
• Falling processing costs<br />
• Proven technology<br />
• Large-scale operations<br />
• Vulnerable to energy<br />
costs<br />
• Slag disposal<br />
Source: <strong>Hatch</strong> Beddows<br />
28
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
Mining and processing costs will depend on a variety <strong>of</strong> factors. It is<br />
too simplistic to categorise as laterites vs. sulphites<br />
Resource<br />
Higher grade = better<br />
>1.5% ≈ saprolite<br />
Saprolite = proven<br />
processing technology<br />
Larger size = better<br />
Lower capex per tonne<br />
Ore mineralogy<br />
Inputs<br />
Merchant vs. captive<br />
Hydroelectricity vs. fossil fuels<br />
Hydrocarbons<br />
Labour availability / skills<br />
Project management<br />
Project phasing<br />
Project team continuity<br />
New technologies<br />
Infrastructure<br />
Power / Acid / Lime plants<br />
Content <strong>of</strong> clay minerals<br />
Lower = better<br />
Magnesium content<br />
Lower = less acid consumption<br />
in hydrometallurgy<br />
SiO 2 / MgO ratio<br />
Impacts on choice <strong>of</strong> end-product<br />
Transportation<br />
Road / Sea / Air<br />
Conveyors / Pipelines<br />
Difficulty <strong>of</strong> terrain / climate<br />
Accommodation<br />
Permits / Compensation<br />
Source: <strong>Hatch</strong> Beddows<br />
29
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
Contents<br />
<strong>Hatch</strong> and <strong>Hatch</strong> Beddows<br />
Short-term Ni <strong>prices</strong><br />
Long-term Ni <strong>prices</strong><br />
Conclusions<br />
30
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
Conclusions<br />
Short-term – Higher Ni <strong>prices</strong> through 2010, falling thereafter<br />
Supply deficits for 2009 / 2010<br />
Stainless production to begin rebound in 2010<br />
New supplies to arrive, mainly from 2011<br />
Long-term – Rise in real <strong>prices</strong> but will it be temporary?<br />
Greater importance <strong>of</strong> laterites<br />
Rise in production costs<br />
Need for technological developments in processing limonites<br />
31
METAL BULLETIN 25 TH INTERNATIONAL FERROALLOYS CONFERENCE, 2009<br />
Your contacts for further information<br />
<strong>Hatch</strong> Beddows Strategy Consulting<br />
<br />
<br />
9 Floor, Portland House, Bressenden Place, London SW1E 5BH<br />
+44 20 7906 5100 (switchboard)<br />
Robert Cartman<br />
Senior Consulting Analyst<br />
<br />
Fax<br />
Mobile<br />
<br />
+44 20 7906 5119<br />
+44 20 7963 0972<br />
+44 7813808240<br />
rcartman@hatch-europe.com<br />
<strong>Hatch</strong> Beddows is a member <strong>of</strong> the HATCH GROUP <strong>of</strong> companies<br />
32
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