30,000 mt/year (Ni Content) New Capacity of High Nickel Matte to be Added, Bearish on Nickel Prices

SHANGHAI, Nov 11 - Zhongwei shares issued an announcement last night that, in view of the company's continued optimism in the high nickel matte recovered from nickel laterite smelting, its wholly-owned subsidiary Zhongwei Hong Kong New Energy reached a supplementary agreement with RIGQUEZA to make additional investments in the joint venture PT.ZhongTsing New Energy. The two parties agreed to build a new laterite smelting project in Indonesia (Phase II) with an annual production capacity of 30,000 m of high nickel matte in metal content on top of Phase I project.

It is reported that the total investment in the Phase II project is approximately US$330 million. As a result of this capacity expansion, the production capacity of the joint venture has been increased from 30,000 mt/year of high nickel matte in nickel content to 60,000 mt/year.

As is known to all, under the explosive growth of the new energy vehicle industry, ternary cathode power batteries have become the mainstream power battery of new energy vehicles. According to statistics from the China Nonferrous Metals Industry Association, the domestic demand for nickel from ternary cathode precursors has grown from 79,000 mt in metal content in 2018 to 129,000 mt in metal content in 2020, an increase of 28%.

The rapid growth in demand is also manifested in the price of refined nickel, for example. As of November 11, the average SMM 1# refined nickel spot price stood at 146,300 yuan/mt, up 45,750 yuan/mt or 45.5% from November 12, 2018.

SMM believes that the new project is a bearish factor for nickel prices in the long run. But the near-term nickel prices will still stay congested.