Does nickel have a continued bleak future? Many miners and analysts seem to think so, while Rio Tinto still clings to its hopes to open a controversial massive nickel laterite deposit in Sulawasi, Indonesia and apparantly hasn’t yet given up hope on its nickel projects in Minnesota and Michigan.
The world’s largest miner, BHP-Billiton, may soon be leaving the nickel business in disgust after having to close, cancel and scale back a number of major nickel projects.
- On December 22, BHP sold its 40% stake in a $2 billion nickel project in the Philippines.
- Earlier in the month, BHP sold its enormous Ravensthorpe nickel project, costing roughly 1,800 workers their jobs. Ravensthorpe, initially criticized by investors for its steep price tag, was closed only months after opening. In July the company sold its associated Australian Yabulu refinery. BHP took a more than $4 billion “write-down” on Ravensthorpe and Yabulu and made only $340 million by selling Ravensthorpe. CEO Marius Kloppers says the decision to open Ravensthorpe “wasn’t one of our best.”
- In August, the company canned hundreds of workers at the world’s largest open cut nickel mine.
- And, in fall of 2008, BHP ended a joint venture arrangement in its Indonesian Gag Island nickel project.
The Age is reporting that BHP will sell additional nickel projects in in Colombia and Australia, with nickel-hungry China expected to be a major suitor.
Respected industry analyst, Barry Sargeant, certainly doesn’t expect much out of the nickel market, especially with new Chinese capabilities to produce “nickel pig iron” from low-grade ores:
Nickel, infamous for owning possibly the most volatile pricing history among commodities, has done it again during the latest cycle, enticing four mining majors to splash out nearly US$50bn cash on acquisitions that have unequivocally ended in huge pools of tears. The disaster is consistent with the evolution in nickel prices, which summarily collapsed from close on US$25.00/lb in mid-2007 to around US$5.00/lb, recovering recently to levels around US$8.00/lb.
LSMN
Eve Divine
doncorvette
