World Primary Nickel Production - International Nickel Study Group

INTERNATIONAL NICKELSTUDY GROUPOutlook for Global Nickel Market in 2007-2008“2007 China International Nickel and CobaltIndustry Forum”Ningbo, People's Republic of ChinaSven TollinChief Statistician, INSG7-9 November 2007

Overview of the presentation‣ INSG Information‣ World Nickel Ore Production‣ World Primary Nickel Production, Usage and Balance‣ Prices and Stocks‣ First Use of Primary Nickel‣ Primary Nickel Usage in the Stainless Steel Sector‣ Nickel Developments‣ World Primary Nickel Production, Usage and Balance2005 to 2008‣ Conclusions2

INSG (1)‣Headquarters/Secretariat - Lisbon, Portugal‣Co-located with International Lead & Zincand Copper Study Groups, with significantcost savings and synergies‣Membership and Contributions from 15Countries and the European Community‣Meetings twice a year, held mainly inApril/May and October, usually in Lisbon3

INSG (2)‣An Autonomous International GovernmentalOrganization‣Membership by both producing and usercountries‣Significant role for industry representation‣Small Secretariat with professional staff oftwo, plus shared Secretary-General, Economist& Administrative Officer4

INSG (3)‣Member Countries decide on Group’s work‣Industry Advisors have major influence‣Avoids politicization‣Close contact with key industry associations,including Nickel Institute, ISSF‣Very strong support from Non MemberCountries and Individual Companies5

Member CountriesAustralia Greece Norway Germany(Assoc. Member)Cuba Portugal FinlandEC Italy Russian FederationJapan Sweden NetherlandsFrance Brazil United Kingdom6

Objectives (1)‣to collect and publish improved statisticsmonthly on nickel markets - includingproduction, usage (consumption), trade,stocks, prices and other statistics such asrecycling‣to publish other information on nickel, suchas data on industry facilities, environmentalregulations and end use markets7

Objectives (2)‣to provide a forum for discussions on nickelissues of interest to nickel producing andusing (consuming) countries and theirindustries, including environmental issues‣to undertake economic analysis of nickelmarkets and related topics8

Statistics• Extensive range of statistics producedmonthly• Coverage includes mine production,primary nickel, nickel-bearing scrap• Production, usage (consumption), stocks,trade• Usage (consumption) data is particularlywell regarded9

Economic andEnvironmental issues‣ Legislative: advising governments on impact ofexisting and new legislation on the nickel market‣ Nickel Recyclingenvironmental impact: waste, primary resourceseconomic (market) impact: supply of nickel units from scrap‣ Economic: studies on nickel supply and demand;country studies; trade issues; potential CommonFund for Commodities projects to promote nickel10

World Nickel OreProduction1800in 1000 tonnes16001400120010008006001990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 200811

World Nickel OreProductionin 1000 tonnesOceania22.6%1996(1,051.2)Africa6.6%Oceania18.5%2006(1,469.6)Africa5.4%Europe25.5%Asia14.3%America31.0%Europe23.4%Asia19.0%America33.6%12

World Primary NickelProduction1600in 1000 tonnes1400120010008006001990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 200813

World Primary NickelProductionin 1000 tonnesAfrica5.2%1996(956.2)America25.3% Asia19.3%Africa4.1%2006(1,362.0)America23.8% Asia22.3%Oceania12.2%Europe38.1%Oceania12.2%Europe37.6%14

World Primary NickelUsage (consumption)1600in 1000 tonnes1400120010008006001990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 200815

World Primary NickelUsage (consumption)in 1000 tonnes1996(942.5)Europe39.0%2006(1,399.1)Europe35.2%Asia38.5%Oceania0.2%Africa2.6%America19.7%Asia48.7%America12.9%Oceania0.2%Africa3.0%16

World Primary NickelBalance1400in 1000 tonnes120010008006004002000-2003358912414 3256116326-41 -59-58 -40-18-371990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006BALANCE PRIMARY NICKEL PRODUCTION PRIMARY NICKEL USAGE17

LME prices and stocks6000050000Prices (Cash, US$/tonne)Stocks (tonnes)400003000020000100000JFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJAS2000 2001 2002 2003 2004 2005 2006 200718

First Use of Primary Nickelin 2006CoinageFerrous 2%8%Plating9%Others6%Ni alloys11%Stainless64%Source: Eramet Ni Research19

High volatility inprimary nickel usage is dueto the Stainless Steel sector• 2005:63.7% ≈ 790 000t+ 135 000t, +17%• 2006:66.3% ≈ 925 000t• 2007:down20

Nickel DevelopmentsNickel Prices / New CapacityAnnual Avg. Price USD40000350002000/2010s30000250002000015000100005000PastSLN 1875Inco Sudbury1902Falco 1928Rustenburg 1928Noeilsk 1933Nicaro 194250sSherritt 1954Hanna 1954Outokumpu 1956Larco 1956Moa 1959Inco Thompson 1961Morro 196270sImpala 1969Bindura 1969Empress 1969WMC 1970Falcondo 1971Botsw ana 1973Nonoc 1974QNI 1975PTAT 197580sCMSA 1982Codemin 1982Tocantins 1982Kavadarci 1982Kosovo 1983Punta Gorda 198690sAnaconda 1999Caw se 1999Bulong 1999Loma Niquel 200001930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 201521

New World Primary RefinedNickel Capacity in 2006• World nickel refined capacity in 2006 increased byover 77 000 tpa, or over 5%, compared with 2005’sfigure, according to INSG data• Most were brown-field expansions• World total refined capacity was over 1.53 Mtpa in2006• World capacity utilization was over 88%• The figures above exclude nickel pig iron productioncapacity in China, which could be considerable22

Refined Nickel Capacityby Country2006: ≈ 1.5MtNew committed developments:≈ 0.5MtAUSTRIA0%BRAZIL2%AUSTRALIAZIMBABWE 9%2%VENEZUELA1%UK3%UKRAINE1%SOUTH AFRICA2%SERBIA &MONTENEGRO0%CANADA11%RUSSIAN FED.22%CHINA P.R.9%COLOMBIA4%CUBA3%NEWCALEDONIA4%NORWAY6%DOM. REP.2%FINLAND4%FRANCE1%FYROM1%GREECE2%INDONESIA2%JAPAN11%AUSTRALIA15%SOUTH AFRICA2%RUSSIAN FED.4%NEWCALEDONIA12%MADAGASCAR12%NewproducingcountryBRAZIL31%JAPAN7%KOREA REP.6%CANADA3%CHINA P.R.6%FYROM2%Newproducingcountry23

World Primary NickelProduction 2005 to 2008in 1000 tonnesArea20052006% change2007% change2008% changeAfrica55.556.11.056.71.160.05.8America307.6324.25.4335.33.4341.41.8Asia271.0303.612.0384.126.5410.56.9Europe485.2512.45.6525.62.6544.03.5Oceania177.4165.7-6.6168.41.6213.326.7Total1296.71362.05.01470.17.91569.26.724

World Primary NickelUsage 2005 to 2008in 1000 tonnesArea20052006% change2007% change2008% changeAfrica32.042.031.327.5-34.537.134.9America174.1180.43.6168.4-6.7174.23.4Asia590.8681.815.4721.55.8787.59.1Europe447.2492.010.0414.9-15.7464.712.0Oceania2.82.92.83.03.93.00.0Total1246.91399.112.21335.3-4.61466.59.825

World Primary NickelBalance 2005 to 2008in 1000 tonnesArea20052006% change2007% change2008% changeProduction1296.71362.05.01470.17.91569.26.7Usage1246.91399.112.21335.3-4.61466.59.8Balance49.7-37.1134.8102.726

Conclusions (1)• The nickel market has become very volatile• Primary nickel usage down by 5% in 2007, butcould increase by 10% in 2008• Primary nickel projects are starting to comeinto production and up to 0.5Mt have beenidentified as committed• Primary nickel production is estimated tosteadily increase, by 8% in 2007 and a further7% in 200827

Conclusions (2)• Sufficient primary nickel units should beavailable in, at least, the short to medium term• China will remain the most important market• Developments in nickel pig iron might becomea surprise factor in the future.28

INTERNATIONALNICKEL STUDY GROUPMany thanks for yourkind attention!Sven Tollinsven.tollin@insg.orgChief StatisticianRua Almirante Barroso,38 - 5th, 1000-013Lisbon, Portugalphone: (351) 21 356 7030fax: (351) 21 356 7039insg@insg.org29