Steel Recovery Boosts Nickel

PERTH, Sept. 7 -- The nickel price is expected to rise by about 9 per cent in the 2010 financial year amid signs of recovery in China's stainless steel market, Minara Resources chief executive Peter Johnston says.

    "Nickel demand and production in 2009 decreased 20 per cent and we're expecting a rebound of about 9 per cent in 2010," Mr Johnston told a business function in Perth.

    The nickel price is now about $US18,300, which compares with a high of about $US55,000 a tonne at the height of China's steelmaking boom in 2007 and a 2008 low of $US8900 as it curtailed steel production.

    Mr Johnston said the dip was "aberrant" and unlikely to be repeated. "I didn't think it would last," he said.

    However, London Metal Exchange nickel stockpiles are at the highest levels since they began being recorded in 1990, indicating nickel price volatility is set to continue in the short term.

    Mr Johnston said China's nickel consumption was showing sign of recovery, but a rebound in Europe and the US was needed also.

    "Europe worries me -- it's very soft," he said. "Japan is also extraordinarily soft. There are some signs East Asia and the US might be improving.

    "If it's just a China story, the industry will remain vulnerable."

    He also said any nickel miner who believed they could develop a processing plant for laterites -- the most technically challenging variety of nickel -- for less than $4 billion was kidding themselves.

    The vast majority of the world's nickel -- 70 per cent -- resides in laterite ores.

    "I would suggest with BHP's experience with Ravensthorpe (in WA) and particularly Vale's experience with Goro (in New Caledonia), you would need about $4bn to start a nickel laterite plant," he said.

    "Anyone who thinks they can do it cheaper is mistaken and I've got the scars to prove it."

    Minara, formerly the Andrew Forrest-chaired Anaconda Nickel, endured years of problems processing laterites at its Murrin Murrin project in WA.

    (Source: Australian Associated Press)