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Indonesian onslaught wipes out Australia’s nickel industry

Kristie Batten | July 14, 2024 | 

BHP Leinster airport. Image: Kristie Batten

An influx of cheap nickel supply from Indonesia has all but killed off Western Australia’s long-running nickel sector.


Nickel prices halved in 2023, dipping below $16,000 per tonne in December as surpluses widened.

According to Benchmark Mineral Intelligence, Indonesia accounted for 49% of nickel production in 2023, up from less than 5% just eight years ago.

Nickel sector decimated

The impact on Australia’s nickel industry has been dramatic.

ASX 200 producer IGO paid A$1.1 billion ($744 million) for nickel miner Western Areas in mid-2022. Just 18 months later, the entire value of the acquisition had been written off and the Cosmos development project was suspended, resulting in the loss of 400 jobs.

Wyloo Resources, owned by Fortescue founder Andrew Forrest, paid A$760 million for Kambalda nickel producer Mincor Resources, and just seven months later, announced the suspension of operations.

A spokeswoman for Wyloo confirmed to MINING.COM that a joint feasibility study with IGO into a nickel sulphate plant had been paused.

In April, Canada’s First Quantum Minerals announced it would put its Ravensthorpe nickel laterite operation in WA’s southwest on care and maintenance.

The Savannah mine in WA and Avebury mine in Tasmania were also suspended after owners Panoramic Resources and Mallee Resources, respectively, collapsed.

BHP makes tough call

In February, BHP recorded a non-cash $3.5 billion impairment charge on its Nickel West division and reported negative EBITDA of $200 million, triggering a review into its future.

The worst was confirmed on Thursday when BHP announced it would “temporarily suspend” Nickel West – comprising the Kwinana nickel refinery, Kalgoorlie nickel smelter, Mt Keith and Leinster mines and West Musgrave development – from October.

The Kambalda concentrator, which relied on third-party ore, was suspended earlier this year.

More than 3,000 jobs will be lost though BHP will offer its 1,600 “frontline” employees the choice of redeployment or redundancy.

The decision will be reviewed by February 2027, and BHP has vowed to invest around $300 million per year to support a potential restart.

Once the suspension is complete, Australia will have just three operating nickel mines, IGO’s Nova and Forrestania and Glencore’s Murrin Murrin, though Forrestania and Nova are due to close within the next two years.

Prior to the decision, the Australian government’s Office of the Chief Economist was forecasting Australia’s nickel exports to decline from 161,000 tonnes in the 2023 financial to just 62,000 tonnes in the 2026 financial year.

Long history

Nickel was first discovered in the WA Goldfields in 1966, which led to the establishment of the town of Kambalda by Western Mining Corporation (WMC).

The Kambalda concentrator, Kalgoorlie smelter and Kwinana refinery were in operation by the end of that decade.

BHP acquired WMC in 2006 for $7.3 billion, and was initially extremely profitable, making more money than BHP’s world-class iron ore division in 2007, thanks to a surge in the nickel price to as much as $50,000/t.

The Global Financial Crisis reversed nickel’s fortunes and in 2014, the business was deemed as non-core and put up for sale.

Despite interest from Glencore, the sale was pulled after an acceptable price couldn’t be reached. The more than A$1 billion in closure liabilities and large capital spend required were said to be the sticking points.

Though it remained non-core, Nickel West was surprisingly left out of 2015’s demerger of South32. BHP was still keen to sell the division as recently as 2017 and it was slated for closure in 2019.

Electric era

The rise of electrification changed the outlook for Nickel West and BHP announced it would build a nickel sulphate plant in Kwinana, an industrial area south of Perth, the first and only facility of its kind in Australia.

With Tesla as its foundation customer, the plant produced its first crystals in late 2021.

BHP confirmed it had invested around $3 billion in Nickel West since the 2020 financial year.

Despite the hefty investment, Nickel West had been cashflow negative during that period and was expected to report an underlying EBITDA loss of roughly $300 million in the 12 months to June 30.

“Clearly, it’s not viable to continue operating under these significant and sustained losses,” BHP president Australia Geraldine Slattery told reporters.

The company will record an additional impairment of $300 million in its full-year results in August.

Political fallout

WA premier Roger Cook and federal resources minister Madeleine King both live near the Kwinana refinery and have been watching the review with interest.

At a conference in Perth in May, Cook urged BHP to reflect on the support of the WA government and community before considering “whether they’ll turn their back on WA in relation to the nickel industry”, while King criticized BHP for not investing more in the ageing facilities.

On Thursday, Cook described BHP’s decision as disappointing and pledged to support the workers impacted.

King acknowledged the nickel market conditions were beyond BHP’s control.

“I really am grateful that it’s a temporary suspension and not a more, I suppose, dead-end kind of closure, which would be even a worse situation,” she told local radio on Friday.

‘Devastating’

Kalgoorlie-Boulder, around 600 km inland from Perth, is the largest town in the WA Goldfields with a population of just under 30,000 people.

The City of Kalgoorlie-Boulder released a statement, describing the Nickel West news as “profoundly sad”.

“This decision is devastating, with significant impacts on the livelihoods of our residents and businesses, which will have far-reaching effects across the Goldfields,” it said.

Kambalda is about 60 km from Kalgoorlie and is home to around 2,500 people, while Leinster is a further 300km to the north. Wiluna, which supports the Mt Keith mine, is 585 km north of Kalgoorlie, on the edge of the Western Desert, and has a population of just 240.

Wiluna Shire president Peter Grundy said he was deeply concerned about the community impact.

“While this decision has been coming like a slow train across our red desert landscape, we are still shocked and disappointed by it,” he said.

“There is a knock-on effect with a decision like this – one that may get a small mention in a boardroom, but is as real as an oily, dusty, overdue invoice for some.”

BHP has established a A$20 million community fund though many estimate that won’t be enough.

Hope for Leinster?

Leinster, with a population of just 400 people, is run by BHP Nickel West.

Nickel West asset president Jessica Farrell said the company owned around 280 houses in the town and was hopeful they could be used for those workers supporting the care and maintenance process.

“We would continue to honour, obviously, the obligations of running that town,” she told reporters.

In a positive for the future of Leinster, the 200,000-ounce-per-annum Bellevue gold mine has recently opened and is already talking about expanding, while Liontown Resources’ A$1 billion Kathleen Valley lithium mine is due for firs production within weeks.

Customers and suppliers weigh impacts

Nickel West is also a supplier of sulphuric acid, which is produced as a smelter by-product.

Lynas Rare Earths has a contract with BHP for the supply of sulphuric acid to its Kalgoorlie rare earth facility until mid-2027. Lynas said BHP had affirmed its commitment to supply imported acid to the company.

The suspension of the nickel sulphate plant will impact battery customers including Tesla, Panasonic and Toyota.

IGO is the only remaining supplier of third-party ore to BHP. A spokesman for IGO said the company did not comment on contractual agreements but the closure would have no material impact.

Shares in junior Kambalda nickel explorer Lunnon Metals slumped by more than 12% on Friday to an all-time low. The company said it was considering alternative processing options to Nickel West, including the purchase or lease of the Kambalda concentrator or the development of a new facility.

The decision will also impact contractors and suppliers.

GR Engineering Services said the suspension of West Musgrave would impact its revenue by up to A$80 million in the 2025 financial year, while local airline Alliance Aviation Services, which operates 24 round-trip flights to Nickel West sites per week, reported an EBITDA impact of A$3-5 million per year over the next two financial years.

Other contractors and suppliers are likely to disclose impacts in the coming days.
The end of Australian nickel?

The nickel market is expected to remain in surplus until later this decade. Fastmarkets believes the market is oversupplied by up to 8% of demand.

Slattery said multiple options for Nickel West, including partial curtailment, were considered.

“Ultimately, this was less about the cost of running the business and more about the market outlook and anticipated extension of what is a structural low in the market,” she said.

BHP expects the market to remain in surplus for at least the next three years but was confident of an improvement beyond that timeframe.

“Now, of course, there’s uncertainty with that, but we’ve got sufficient conviction to maintain investment in the option of bringing the Nickel West business back into operation,” Slattery said.

The Nickel West suspension will narrow the nickel surplus but also cement Indonesia’s dominance.
Costly restart

If BHP decides to stick to nickel, it will have to go ‘all in’.

The West Musgrave nickel-copper project, acquired in last year’s A$9.6 billion takeover of OZ Minerals, has a large price tag of A$1.7 billion and is only partially built.

The concentrator, smelter and refinery are all nearly 60 years old and require investment.

In particular, the Kalgoorlie smelter requires a significant upgrade, one that is likely to cost upwards of A$500 million.

The restart will have to compete for capital with other large projects, including a potential new concentrator at the Escondida copper mine in Chile.

Even at full operations, nickel represents a tiny part of BHP’s business – around 1-2%.

(By Kristie Batten)

Rising demand for responsible rare earths is not lifting prices, says Lynas

Reuters | June 20, 2024 

Lynas’ C & L plant in Malaysia. Credit: Lynas Rare Earths Ltd.

Lynas Rare Earths, the world’s largest producer outside of China, said on Thursday that demand for responsibly produced rare earths was increasing but had not resulted in higher prices.


Rare earths are a group of 17 metals, some of which are used in permanent magnets for applications including motors for wind turbines, electric vehicles and drones. Western nations are building a supply chain separate to dominant producer China, but some have been struggling to find funding due to low prices.




Key quotes

“Governments are starting to take action on supply chain resilience and customer demand for responsibly produced rare earths is increasing but it’s not translating to price,” Lynas CEO Amanda Lacaze said at a rare earths conference in Tokyo.

“Demand growth has not been matched by price growth,” she said. “The idea that we will suddenly have a functioning market is I think unlikely.”
Why it’s important

Some miners of metals needed for the energy transition are calling for a green premium to be applied to responsibly produced metals, however others increasingly say that consumers are interested in the product, but not with a premium attached.

China also supplies most of the world’s rare earth magnets and supply from the country has grown, weighing on prices.
Context

Nickel miner Wyloo Metals, owned by Australian mining magnate Andrew Forrest, said in March that if the London Metal Exchange (LME) wouldn’t launch a green nickel contract, the industry would have to look for another trading venue.

The London Metal Exchange (LME) does not plan to launch a separate “green” nickel contract because the market is not large enough, but said its partner was developing an index price that will reflect demand for low carbon nickel.

Lithium miners have been publishing prices they have agreed for supply amid a push to increase price transparency.

Indonesia’s Nickel Industries says that consumers don’t want to pay a green premium, but rather want its nickel at a discount.

(By Melanie Burton and Yuka Obayashi; Editing by Stephen Coates)

Push for ESG price premiums may reshape global critical minerals markets



As low nickel prices force Australian miners to scale back production, some have called for an ESG premium on low-carbon production that would help Western producers compete with cheaper, but more polluting Indonesian metal.

But are customers willing to pay more for low-carbon nickel? Some analysts say yes — under certain conditions.

“If the market sees a benefit in paying a premium for certain supplies then it will,” Jim Lennon, managing director of commodities at Macquarie Group, told The Northern Miner in an interview. “A buyer would be willing to pay a premium if they can see an economic benefit in using that product, such as receiving a government subsidy or securing a sale of a ‘greener’ electric vehicle.”

The price of nickel has been on a downtrend since late 2022 when it was $33,575 per tonne ($15.23 per lb.). The price on Tuesday was $17,678 per tonne ($8.02 per lb) and in February dipped as low as $15,850 per tonne ($7.19 per lb).

The price doldrums have prompted Wyloo Metals and BHP (ASX: BHP) to suspend operations in Australia, with BHP announcing it would take a $2.5 billion impairment on its assets.

Given the devastation to its nickel sector, Australia has been the most vocal in creating new variable price brackets for low-carbon emissions nickel.

The idea for premium ESG pricing isn’t new. In fact, some experts argue that there’s already a premium.

Canada Nickel (TSX: CNC; US-OTC: CNIKF) CEO Mark Selby says people might be surprised to learn that price premia have already been paid for various North American products perceived as cleaner on Asian markets.

Selby notes that domestic premiums for certain materials have been sustained over several years, which might not be directly attributable to lower carbon footprints or ESG factors alone but could be influenced by a combination of factors, including local supply.

But this type of premium isn’t helping Australian nickel miners. And deliberately imposing an ESG premium would be a different story.

“The main challenge is defining what ‘ESG-compliant’ actually means,” Macquarie’s Lennon said.

It’s an obstacle that the London Metal Exchange (LME) is facing as it investigates and prepares for the potential emergence of premium pricing for low-carbon products on separate trading contracts.

Georgina Hallett, LME’s chief sustainability officer, says that there’s increasing interest from producers, consumers, and investors in establishing a price premium for metals produced with lower carbon footprints. However, defining what constitutes ‘low carbon’ or ‘green’ metals isn’t easy due to the lack of a standardized, universally accepted framework for measuring and verifying the environmental impact of metal production processes.

“The aim is to build a robust framework that supports the gradual introduction of sustainability-linked pricing mechanisms while ensuring broad market participation and avoiding undue disruption,” Hallett said. “By taking a step-by-step approach, the LME hopes to align the interests of various stakeholders and drive meaningful progress toward the integration of sustainability into the global metals market.”

Free market forces

Lennon suggests that establishing a special low-carbon contract for metals on the LME is unnecessary. This is because the prices for different products are already determined by normal market activities, such as supply and demand. Just like prices for different metal shapes and origins adjust based on market conditions, the prices for products with various ESG qualities would naturally adjust in the same way.

“Exchanges don’t need necessarily to get involved since they can focus on ‘objective criteria for delivery (shapes, metal purity, etcetera) and leave the market to decide on ‘subjective’ factors such as value-in-use of different products/shapes and ESG,” Lennon said.

From an exchange perspective, like the LME, there is also a risk of damaging liquidity if they were to introduce multiple contracts. Compared with large commodity derivative markets, nickel is not particularly liquid and dividing this liquidity could reduce the usability of the market for some participants.

Lennon says markets will ultimately determine the outcome. Currently, nickel prices vary significantly between products depending on supply and demand.

Today’s primary nickel products that are LME deliverable include metal rounds, pellets, cut cathode, and full plate cathode. When delivered to LME warehouses, each product is assigned a warrant associated with it. When buyers want to take delivery from the LME, they are often willing to pay LME brokers a premium for warrants of a particular material shape or origin.

Similarly, other non-LME deliverable products, including intermediates (concentrates, mattes, MHP, MSP, etc.) or finished products (ferronickel, nickel pig iron, nickel sulphates, nickel chlorides, etc.) also sell at varying discounts or premiums to LME base prices. Lennon said these premiums/discounts can change dramatically due to changes in supply and demand.

For example, nickel pig iron was selling at a premium to the LME price at the start of 2022 and then had fallen to a discount of 40% to the LME by the first half of 2023.

“Product type, ESG, and country of origin are all important properties and presumably were factors that led major automakers to agree to term supply contracts with BHP and Vale in recent years. ESG was no doubt a factor in these negotiations,” Lennon said.

Canada Nickel’s Selby emphasized the importance of provenance tracing rather than setting up a formal two-tiered pricing system.

He points out that imposing a pricing mechanism before the market is ready can lead to inefficiencies, such as a benchmark that does not accurately reflect market conditions. He suggests letting the market sort it out.

“We will continue to observe the distinction between Western-supplied, clean, green nickel and the high-carbon, less ESG-compliant nickel from China and Indonesia,” he said. “As for the necessity of a formal pricing mechanism, it’s typically better if such mechanisms emerge naturally in the marketplace before establishing a formal platform for trading them.”

Aussie nickel rout

An increase in supply from Indonesia has cratered nickel prices, as the southeast Asian nation boosted production of refined and semi-refined nickel, mainly on the back of an export ban on raw ore, which led to massive investment from China in new processing plants, according to Lennon.

Indonesia has become the dominant nickel producer, accounting for 55% of global supply, up from 7% in 2015, according to Bank of America data.

Higher-cost Australian supply can’t compete.

Australia’s federal resources minister Madeline King responded to the raft of nickel suspensions by adding nickel to the country’s critical minerals list, enabling industry access to part of the A$4 billion ($2.6 billion) federal funding earmarked for critical energy transition minerals exploration and development.

“Prices paid for Australian minerals need to recognize the high ESG standards the Australian industry adheres to and the fact that Australian workers enjoy good working conditions and the highest safety standards.”

At PDAC she noted that Canada and Australia have agreed to jointly advocate for robust ESG credentials to be built into global, transparent and traceable critical minerals supply chains.

Laying foundations

The LME has been considering introducing a premium for green or sustainable metals since it released a 2020 white paper on the topic, Hallett noted.

In 2021, the LME collaborated with Metalshub, a digital metals procurement platform which facilitates buyers’ access to the physical metal that meets specific attributes, including carbon intensity and other ESG criteria. The LME said that low-carbon nickel, classified as producing 20 tonnes of carbon dioxide or less per tonne of nickel, could already be traded on Metalshub’s system.

The platform aims to allow market participants to specify and search for metals that meet specific sustainability standards, thereby fostering the emergence of a market-driven definition of ‘green’ metals.

Hallett says the critical missing component to formalizing a new price bracket is doing the less sexy but foundational work around how one measures emissions the same way across the industry to create an equal playing field for products in the value chain included in that new contract.

The LME has initiated several measures to promote sustainability within the metals market. One of the key initiatives is the development of metal-specific measurement methodologies, in collaboration with metal industry associations, to standardize measuring carbon emissions across different metals.

However, the LME is taking a deliberate approach to implementing a low-carbon pricing mechanism for nickel and other metals, given the still-evolving market for low-carbon metals.

“Our approach remains one of cautious optimism and pragmatic progression,” Hallett says. “We are committed to leading the industry towards a more sustainable future, understanding that real change is achieved not by rushing but by thoughtful, collective action.”

Amid nickel glut, Indonesia’s next president vows to keep ‘downstreaming’ policy

Reuters | March 13, 2024 |

Prabowo Subianto (Image: X)

Indonesia’s incoming president, Prabowo Subianto, has pledged to continue predecessor Joko Widodo’s nickel “downstreaming” policy but faces the task of reducing oversupply while pushing to strengthen the processing industry, his advisers say.


Prabowo, said by independent pollsters to have won the Feb. 14 election, has said he will pursue the effort to extract more value from Indonesia’s vast resource wealth by halting exports of key raw materials and developing domestic processing instead.

The policy drew investments of billions of dollars from smelting firms, most of them Chinese, and boosted Indonesia’s exports.

But it led to an oversupply of processed nickel that caused a drop of 45% in prices last year, squeezing producers in Australia and elsewhere, although they have since recovered to stand up about 12% in 2024.

Experts advising Prabowo are discussing ways to stem a further decline in prices while still generating more jobs and boosting value-addition, members of his campaign team said.

“We must control supply so prices can be underpinned,” Erwin Aksa, a campaign vice-chair, told Reuters, adding that current conditions are likely to drive investors to avoid new projects.

“If there is too much oversupply and those smelters stop their operations, that would impact the whole supply chain,” he added.

Prabowo himself has not publicly detailed his nickel strategy, but told a Feb. 6 rally, “We are determined to guard Indonesia’s wealth. We want to manage and control this wealth, so the value-add can be enjoyed by all Indonesian people.”

Indonesia produced about 1.4 million tons of primary nickel last year, or about 40% of global output, data from the International Nickel Study Group showed.

“Indonesia is flooding the nickel market with low-cost supply, and we don’t think it’s going to stop anytime soon,” said S&P Global Ratings, which predicts the country will add 300,000 metric tons of smelting capacity this year.

S&P Market Intelligence expects the oversupply to continue beyond 2025, as Indonesia has excess capacity for an intermediate product, nickel pig iron (NPI).
Taking stock?

Some of Prabowo’s advisers have called for a moratorium on new smelters, allowing time to take stock of reserves and improve governance.

Last year, a miners’ association warned that reserves of high-grade nickel ore could be depleted in about six years. Recently, a government official said overall nickel ore reserves were sufficient for 30 years.

No decision has been made on a possible moratorium, however, said Eddy Soeparno, another vice-chair of Prabowo’s campaign team, while adding, “It is good to take a pause and give the policy an overview.”

Prabowo will push for further processing of NPI, helping to ease oversupply, said another campaign official, Anggawira, who goes by one name.

The main challenge was building domestic industries to consume the nickel, he said.

“When the nickel is cheaper, that would make our industries more efficient,” added Anggawira, who also chairs the Association of Indonesian Energy, Mineral, and Coal Suppliers.

(By Fransiska Nangoy; Editing by Tony Munroe and Clarence Fernandez)

Wyloo says industry will turn from LME without green nickel

Reuters | March 13, 2024 

Wyloo owner Andrew Forrest. Credit: World Economic Forum

Nickel miner Wyloo, owned by Australian mining magnate Andrew Forrest, said that if the London Metal Exchange (LME) doesn’t launch a green nickel contract, the industry will have to look for another trading venue.


Forrest had told Australian media last month that the LME should classify its contracts into clean and dirty to give customers more choice. Wyloo is set in May to shutter two nickel mines in Australia that it bought last year for $504 million.

The LME said that low carbon nickel, which it classifies as producing 20 tonnes of carbon dioxide or less per tonne of nickel, could already be traded on its partner MetalsHub’s system.

“Wyloo has been contacted by several parties seeking to develop a green nickel premium, so there is clearly demand for greater transparency and differentiation between clean and dirty nickel,” Wyloo CEO Luca Giacovazzi told Reuters.

“As the world’s largest metals exchange, the LME should be leading in this area,” he said.

“If the LME is to continue to set the standard for ethical metal supply practices, it cannot afford to take no action, or the industry will look for an alternative marketplace.”

Calls for a nickel price that reflects strong environmental and governance standards have grown from high-cost producers such as Australia, where low prices have forced miners to shutter operations due to a flood of Indonesian supply, most of which is produced using coal.

(By Melanie Burton; Editing by Michael Perry)

GREENWASHING

LME partner Metalshub plans for ‘green’ nickel price

Reuters | March 6, 2024 | 

The London Metal Exchange (LME) does not plan to launch a separate “green” nickel contract because the market is not large enough, but said its partner was developing an index price that will reflect demand for low carbon nickel.


Calls for a nickel price that reflects strong environmental and governance standards have grown from high-cost producers such as Australia, where low prices have forced miners to shutter operations due to a flood of Indonesian supply, most of which is produced using coal.

“Market participants have expressed concern that there remains significant market debate as to how to define ‘green’,” the LME said in a statement.

“Further, that an LME contract representing a narrower sub-segment of the market would not attract sufficient stocks and trading volumes to be viable.”

The LME sees limited appetite for contracts for segments of the nickel market, so-called class 2 materials, such as nickel sulphate, matte and other materials. Its nickel contract, so called class 1 refined nickel, has a purity of 99.8 pct and above.

Last week, Australian mining magnate Andrew Forrest, chairman of Fortescue, said the LME should classify its nickel contracts into “clean” and “dirty” to give customers more choice.

Canada this week joined Australia in calling for robust ESG credentials to be built into global supply chains for critical minerals, Australia’s resources minister, Madeleine King, who is visiting Canada this week, said in a joint statement.
Green specs

While the market is not yet liquid enough to accommodate a green premium, MetalsHub has moved to build an index price that reflects consumer demand for green nickel.

The LME has classified low carbon nickel as that for which a single ton can be produced for 20 tons of carbon dioxide equivalent (C02e) or less, it said. Currently, the carbon footprint for a ton of LME nickel varies from 6 tonnes to more than 100 tons of C02e.

Already, any class 1 nickel on the Metalshub platform, which counts Outokumpu and Aperam among its users, can be listed with specific ESG credentials, including its carbon footprint, which allows buyers to filter for carbon intensity.

“This functionality is in place today and there is no need to split the LME contract to assess a ‘green’ premium,” Metalshub managing director Frank Jackel told Reuters.

From this month, Metalshub will start reporting monthly data that includes trades of low carbon carbon nickel, the LME said.

As traded volumes increase, it plans to publish a low carbon index price that could eventually grow to become a “green” nickel premium index reflecting additional sustainability metrics, the LME said.

“CO2 footprint and ESG performance will play an important role and it gives producers the opportunity to market their products with a premium if the market is willing to pay it,” Jackel said via email, adding that Metalshub was keen to work with Australian miners.

(By Eric Onstad and Melanie Burton; Editing by Clarence Fernandez)

Global producers call for LME to introduce green premium for cleaner nickel

Calls for a differentiation between higher and lower-quality nickel come as Indonesian dominance continues to drive a price crisis in the industry.

Annabel Cossins-Smith

March 7, 2024

Andrew Forrest has been pushing the London Metal Exchange (LME) to formally distinguish between poor-quality nickel and cleaner supplies. 

Credit: Sean Gallup/Getty Images.

Mining companies have called for a green price premium to be introduced for sustainably produced nickel traded on the LME as the global sector scrambles for recovery.

Australian mining major BHP and metals magnate Andrew Forrest, the Australian billionaire that owns miner Wyloo Metals, have been pushing the LME to formally distinguish between poor-quality nickel and cleaner supplies.

“We have got to differentiate between dirty nickel and green nickel. The LME must differentiate between dirty and clean. They are two different products, they have two vastly different impacts,” Forrest told reporters at a briefing in Australia.

The move comes as the sector tries to combat an ongoing price crisis arising from an abundance of low-quality, cheap supplies from Indonesia. However, now miners in the country are looking to list their metal as high quality.

On Tuesday, Chinese-Indonesian nickel producer PT CNGR Ding Xing New Energy applied to have its metal supply listed as a ‘good delivery brand’ on the LME for the first time in history, sparking discomfort among western producers.

The LME is likely to approve the request as part of its recovery plan for the nickel market, which is also still reeling from a price crash in 2022.

Last month, BHP chief executive Mike Henry said on an earnings call with reporters that it would “seem sensible” to see a price premium for sustainably sourced nickel. A spokesperson for the miner has said that “an increasingly well-known range of ESG [environmental, social and governance] and responsible sourcing challenges currently exist” in Indonesia.

The Australian market in particular has suffered. Several major miners have suspended or pulled out of nickel operations as a direct result of the drawn-out price slump and subsequent poor profits. Last month, BHP announced plans to shut down its nickel operations in Western Australia citing a lack of hope that prices will recover sufficiently in the short and medium term.

In January, miner First Quantum announced that it will cut production at its Australian nickel mine and slash its workforce amid poor profits. Mining giant Glencore also announced last month that it will sell its entire stake in the Koniambo Nickel SAS joint venture in New Caledonia, which has never turned a profit despite funding interventions from the French Government.

Global miners are now worried that Indonesia’s low-cost nickel supply will wipe out rivals within the next few years and could eventually account for more than three-quarters of the world’s high-quality nickel, if listing on the LME is to go ahead.

The LME told the Financial Times it supports the industry on “several sustainability measures to ensure transparency throughout the supply chain”. It added that low-carbon nickel is listed on its Metalshub platform and “the transaction data supports identification of a credible ‘green premium’ to the LME price”.

Column: Nickel producers fear growing Indonesian pricing power

Reuters | March 6, 2024 | 

Statue of President Jokowi at Mandalika International Street Circuit. (Stock Image)

An Indonesian nickel producer has for the first time ever applied to have its metal listed as a good delivery brand on the London Metal Exchange (LME).


Indonesia has rapidly emerged as the new powerhouse of global nickel production but until now has not produced the metal in the high-purity form traded on either the LME or the Shanghai Futures Exchange.

That will change if PT CNGR Ding Xing New Energy gets the official nod for its “DX-zwdx” brand of full-plate nickel cathode.

It is likely to do so since the LME is fast-tracking new nickel listings as part of its recovery plan after the market meltdown in 2022. The policy appears to be paying off for the exchange with stocks and trading volumes rising.

For many other nickel producers, however, it marks an ominous moment in the transformation of Indonesia’s growing production dominance into exchange pricing power.

The reaction is building in the form of growing calls for a premium “green” nickel contract.

LME nickel price, stocks, volumes and MOI
Stocks booster

Ding Xing New Energy has the capacity to produce 50,000 metric tons a year of Class I refined nickel having mastered the technology of converting Indonesia’s relatively low-grade ore into pure metal form.

Many others, mostly Chinese operators, are now building out similar new processing capacity in both Indonesia and China.

The LME has already approved four new Chinese brands with another application pending. They bring a collective 91,600 metric tons of annual Class I metal capacity.

Rebuilding stocks liquidity is part of the LME’s pathway to restoring confidence in its nickel contract after the suspension of trading two years ago.

LME registered stocks have been trending upwards since the start of the year, hitting a near two-year high of 73,992 tons at the end of last week. The volume of Chinese metal in LME storage rose from zero in August to 7,884 tons at the end of January.

Rising inventory has been accompanied by greater trading activity on the LME contract. Volumes surged by 74% year-on-year over January and February. Open interest is also creeping back up towards levels seen before the market suspension.

The previous price divergence between Class I nickel and Class II products such as ferronickel has been closing as refiners like Ding Xing convert surplus in the Class II segment of the market into exchange-traded form.

But will the LME contract become a market defined by Indonesian metal, or in the case of the newly-listed Chinese brands, metal derived from Indonesian mines?

Princing power

Indonesia’s mined nickel production has jumped from under 800,000 tons in 2020 to 2.03 million tonnes in 2023, when it accounted for 55% of global output.

What happens in Indonesia already shapes nickel’s pricing landscape.

LME three-month nickel is on a bit of a roll right now, up by over 7% on the start of the year at a current $17,590 per ton.

Underpinning the rally is Indonesia’s backlog of new mine licence approvals, a bureaucratic logjam that threatens to curb smelter production.

But the price bounce comes after a year of sliding prices, which was also down to Indonesia’s supply surge.

Indonesian officials do not hide their ambition to convert that market influence into explicit pricing power.

A price of around $18,000 per ton is about right, opens new tab for Indonesia, according to Septian Hario Seto, deputy coordinating minister for the mining sector. It’s high enough to allow most local producers to make a healthy margin but low enough to keep nickel in the electric vehicle battery chemistry mix.

That price, however, isn’t right for many non-Indonesian producers. The last few months have brought a slew of closures and writedowns in the face of low prices. Class II producers have to date borne the brunt of Indonesian oversupply and have been particularly hard hit.

Fracturing the market

Australian iron ore magnate Andrew Forrest is the latest industry figure to call on the LME to introduce a “green” premium contract to complement its existing product.

Forrest’s Wyloo Metals will be shuttering its Australian nickel operations in May to low prices.

A “green” contract would be a way of differentiating Australian nickel from Indonesian nickel, which is cheaper but comes with a higher carbon footprint due to the processing route from ore to metal.

The LME today issued a notice to members saying that it has no current plans either to launch a new parallel contract or to change the specifications of the existing one.

It would risk fracturing the London market again just as it is showing signs of recovery. Moreover, “the LME believes the market for ‘green’ nickel is not yet large enough to support vibrant trading in a dedicated green futures contract.”

A green nickel market?

This cuts to the heart of the “green” premium debate.

Producers carrying the extra costs of tight environmental compliance should not be put out of business by those with lower thresholds. There is a strong case that such metal should be priced at a premium.

But there can be no premium if buyers aren’t prepared to pay one for “clean” metal, a choice that ends up with the ultimate buyer of a new electric vehicle.

Some big consumer brands pay up extra for low-carbon aluminium. Austrian copper producer Brixlegg charges a green premium, opens new tab on its recycled low-carbon metal.

But these are still outliers in the global aluminium and copper markets and nickel is some way behind the broader “green” premium debate.

Is there a market for green nickel? If there is, the LME thinks “it is most effectively conducted through digital spot trading platforms” such as LME partner Metalshub.

Metalshub has been operating a physical procurement metals trading platform since 2016 and already calculates a weekly European Duty Paid Nickel Briquette Premium.

The company will start reporting monthly on the number of transactions and market value of its Class I nickel trade, including a subset of brands with a registered carbon footprint lower than 20 tons of CO2 per tonne of metal.

The idea is that if there are enough transactions, Metalshub could calculate a “green” nickel index, which could then be the basis of a futures product.

It all depends, though, on how many buyers are prepared to pay up for low-carbon, high-ESG nickel.

(The opinions expressed here are those of the author, Andy Home, a columnist for Reuters.)

(Editing by Marguerita Choy)

Related: Indonesia and China killed the nickel market

Canada teams up with Australia to fend off China in EV battery space

Naimul Karim
Mon, March 4, 2024 

CANADA-ENVIRONMENT-AUTOMOBILE-INNOVATION-DISCOVERY

Canada has inked an agreement with Australia to work together in developing the minerals needed for the energy transition away from fossil fuels, as both look to reduce their dependence for raw materials on China and pivot more towards friendlier nations.

The non-legally binding agreement means the two nations will work together to extract these minerals responsibly, improve transparency, build partnerships, conduct joint research and development programs and share industry growth models.

The joint statement said that Canada and Australia share a “like-minded” approach to the development of these minerals and will work together to develop these minerals in a “clean” and “fair” manner.

Canada is looking to build a battery industry as it expects the world to gradually shift away from fossil fuels within the next three decades. Batteries require minerals such as lithium, nickel and graphite, so the government has looked to boost its mining sector in recent years.

It also introduced a policy in 2022 that made it more difficult for foreign companies, especially “non-like-minded” nations, to purchase stakes in Canadian miners involved in producing these critical minerals. For instance, in 2022, it ordered three Chinese companies to divest its shares from three Canadian lithium companies.

Despite this policy, some Canadian junior miners have inked deals with Chinese companies in the last year. Montreal-based SRG Mining Inc. agreed to sell 19.4 per cent of the company to Carbon One New Energy Group Co. Ltd; Vancouver-based Solaris Resources Inc. inked an agreement with Zijin Mining Group Co. Ltd. to receive $130 million by way of a private placement of common shares; and Vancouver-based Osino Resources Corp. agreed to be bought by Yintai Gold Co. Ltd. for $368 million.

The completion of all three agreements will depend upon the federal government’s approval based on the Investment Canada Act.

Australia miners have a big presence in Canada. For example, North American Lithium Inc., the only major lithium producer in Canada, is owned by Sayona Mining Ltd. and Piedmont Lithium Inc., both of which are listed in Australia.

Perth-based Wyloo Metals Pty Ltd., which is run by Australian billionaire Andrew Forrest, bought Canadian junior miner Noront Resources Ltd. in 2022. Wyloo is looking to build a nickel mine in Ontario’s Ring of Fire region.

Melbourne-based BHP Group Ltd. has agreed to invest $14 billion in Saskatchewan to build one of the world’s biggest potash mines. Another Australian mining giant, Rio Tinto Ltd., inked a memorandum of understanding with Canada last year to look for ways in which the miner can contribute to the country’s low-carbon battery industry during the next decade.

“We will also work together with like-minded partners to respond to changing geopolitical realities so they do not negatively impact our pursuit of these goals,” a statement from Natural Resources Canada said.

Mining giant Rio Tinto eyes Canada in hunt for top-tier lithium property


Naimul Karim
Mon, March 4, 2024


rio-tinto-0304-ph

Mining giant Rio Tinto Ltd. “would love” to produce lithium in Canada, given the right project, says chief executive Jakob Stausholm.

Rio doesn’t currently produce lithium, but Stausholm, speaking at one of the world’s largest mining conventions in Toronto on March 3, said the miner is keen on building a lithium business and is on the hunt for a top-tier property. He said he believes lithium is more likely to dominate the battery market in the future than other metals such as nickel and cobalt.
Volatile market

“We would like to grow lithium, but what’s clear is that lithium is abundant in this world,” Stausholm said at the Prospectors & Developers Association of Canada convention. “And, therefore, you have seen a very volatile (market). Sometimes very high prices, and now prices have gone down so far.”

Lithium is expected to play a key role in the energy transition away from fossil fuels since it’s used to build batteries for electric vehicles (EVs). Several miners are exploring lithium projects in Canada, but there is just one major company — North American Lithium Inc., which is owned by Sayona Mining Ltd. and Piedmont Lithium Inc. — producing the mineral in the country.

The metal’s price rose manyfold in 2022 and early 2023 on the expected rise in EV demand. But prices have plummeted in the past year due to an increase in supplies, subdued Chinese demand and a poor EV market. The price of lithium carbonate is down more than 70 per cent from the same time last year.

Rio in 2023 dipped its toes into Canada’s lithium exploration industry by signing two agreements. In July, it signed an option agreement for about $115.7 million with Longueuil, Que.-based Azimut Exploration Inc., giving it the opportunity to own at least 75 per cent of the Corvet and Kaanaayaa lithium properties in the Eeyou Istchee James Bay region.

An option agreement doesn’t necessarily mean Rio will own the properties, and the company must fulfil several conditions. For instance, to acquire 50 per cent of Azimut’s properties, Rio must spend at least $14 million over four years to explore the projects. To secure an additional 20 per cent, Rio will need to spend an additional $100 million over five years on exploration.

The deal allows the mining giant to spend a few million dollars to test the lithium projects owned by Azimut and assess the financial viability of building mines at the locations.

A month earlier, Rio inked a similar deal with Montreal-based Midland Exploration Inc. to explore 10 lithium properties in the James Bay region, covering a surface area of about 1,000 square kilometres.

Both deals come after Rio entered a memorandum of understanding with the federal government last year to look for ways in which the miner can contribute to Canada’s low-carbon battery industry over the next decade.
Cutting carbon emissions

Aside from the projects in Canada, Rio is actively trying to develop three other lithium projects in Argentina, Serbia and the United States. But lithium continues to be a relatively small segment of Rio’s business. It’s currently more focused on its aluminum and iron-ore businesses in Canada and has made a few investments recently to reduce its carbon emissions.

For example, the company is trying to reduce the amount of heavy fuel oil consumed in the production of iron ore pellets and concentrates by installing an electric boiler in its Canadian operations.

In December, Rio also entered the aluminum recycling industry through a $700-million investment in Brampton, Ont.-based Matalco Inc. Producing secondary aluminum is more energy efficient than producing primary aluminum, but Stausholm believes the way forward is a combination of both.

In June, Rio announced it would invest $1.4 billion to expand its aluminum smelter in Quebec by adding new pots that it said would reduce its carbon emissions by 290,000 tonnes per year — equivalent to removing 63,000 vehicles from the road.

Despite these investments, Stausholm doesn’t think capital markets are properly rewarding companies focused on low-carbon strategies. However, he said the steps taken by Rio will create a difference in the coming decades, if not in the near future. Rio is trying to stay a step ahead of the game by “futureproofing” its assets, he said.

Stausholm said Canada is at least a decade ahead of other Western nations in terms of measures to reduce carbon emissions due to its reliance on hydropower. But he said he hasn’t seen a place where “people are so serious about addressing climate change like in China.”

Nevertheless, Canada and the U.S. are looking to reduce their reliance on China for metals and other raw materials and pivot towards friendlier nations.

Mining giant Rio Tinto dips toes in Canadian lithium projects


Critical minerals sector is 'not healthy,' says Barrick


Canada 'decade or two' ahead in climate change battle: Rio Tinto

In 2022, Canada prevented Chinese companies from investing in three lithium Canadian miners after it announced a policy that made it harder for “non-like-minded” nations to invest here.

Stausholm didn’t specifically comment on that issue, but said politicians serve their societies and companies serve the countries in which they operate, and “we are a global company” with major businesses in China and other nations.

• Email: nkarim@postmedia.com

Exclusive-BHP sets tentative sales deals for Canadian potash, not interested in Cobre Panama



Updated Mon, March 4, 2024 

Small toy figure and mineral imitation are seen in front of the BHP logo in this illustration


By Rod Nickel

WINNIPEG, Manitoba (Reuters) -BHP has signed non-binding sales agreements for all potash production from both phases of the Canadian mine it is building, and will look to convert those into firm offtakes within 12-18 months, a senior executive told Reuters.

BHP Chief Commercial Officer Ragnar Udd also said the company is not interested in acquiring the idled Cobre Panama copper mine from First Quantum Minerals.

Australia-based BHP's entry into selling potash is expected to shake up the global fertilizer market, which producers in Canada, Belarus and Russia dominate. Fertilizer is a key input for farmers to boost yields of crops such as corn.

BHP expects to begin production at Jansen, Saskatchewan in late 2026, ramping up to 4.35 million metric tons annually. A second phase approved by BHP will boost yearly output to 8.5 million tons, expanding global supply by roughly 10%.

BHP plans to sell potash to distributors, rather than directly to companies that re-sell the fertilizer to farmers, Udd said, declining to name the companies.

BHP has not previously disclosed the sales agreements or how it will market its potash.

Selling to distributors reflects the fact that BHP does not own a potash distribution network and allows it to focus on what it is best at - production, Udd said in an interview.

"A lot of the feedback we've had from customers is how thrilled they are to be seeing a new reliable, stable form of supply coming in from an industry player that's well-known," Udd said.

BHP will turn tentative sales into binding contracts - typically lasting one year - as production comes online, with the first likely in late 2025 or early 2026, Udd said.

BHP will provide stiff competition to Nutrien, Mosaic, Belaruskali and Uralkali. The company's entry may initially be "quite destructive" to prices, said Humphrey Knight, principal analyst of potash and phosphates at consultancy CRU.

Selling to distributors runs counter to how BHP usually operates, controlling much of the supply chain itself, Knight said.

The U.S. is the prime market for Canadian potash due to its proximity, but it has been difficult to penetrate for another producer, Germany's K+S AG, Knight said.

Udd said he would not give specifics about BHP's U.S. plan but said it is "quite comfortable" with its ability to compete there.

BHP, best-known for mining iron ore, copper, nickel and metallurgical coal, is not interested in acquiring First Quantum's Cobre Panama, one of the world's largest open-pit copper mines, which was forced to shut down in December after Panama's top court ruled that its contract was unconstitutional.

"Honestly, while we're always looking for opportunities, I think that's a situation best left for Panama and others," Udd said.

(Reporting by Rod Nickel in Winnipeg; additional reporting by Divya Rajagopal in Toronto, Editing by Franklin Paul)

Nickel faces existential moment with half of mines unprofitable

Bloomberg News | February 26, 2024 |

A nickel briquette. Image from Sherritt International

Many of the world’s biggest nickel mines are facing an increasingly bleak future as they wake up to an existential threat: a near limitless supply of low-cost metal from Indonesia.


With roughly half of all nickel operations unprofitable at recent prices, the bosses of the largest mining companies last week sounded a warning that there was little prospect of a recovery.



The potential collapse of nickel mining from Australia to New Caledonia comes at a time when western governments are scrambling to secure the supply chains needed to decarbonize the global economy. But in an ironic twist, Indonesia’s coal-fired nickel output is pricing out greener metal that’s so far failed to command a market premium.

Wresting control of strategic metals from China has become a focal point of Joe Biden’s administration. Yet while US officials have dashed around the world looking to strike deals for materials such as cobalt and copper, the heaviest reverse has come in Chinese-backed Indonesian nickel, a key component of electric vehicles.

Indonesia now accounts for more than half of world supply, with the potential to reach three-quarters of all production toward the end of the decade.

“There is a serious structural challenge as a result of Indonesian nickel,” said Duncan Wanblad, chief executive officer of Anglo American Plc, after his company took a $500 million writedown on its nickel business last week. “They don’t seem to be letting up anytime soon.”

Traditionally, nickel has been split into two categories: low grade for making stainless steel and high grade for batteries. A huge Indonesian expansion of low-grade production led to a surplus, and, crucially, processing innovations have allowed that glut to be refined into a high-quality product.

Commodity markets have always been susceptible to cyclical volatility, especially when sudden supply and demand imbalances get a push from wider macro upswings or downturns. But what’s happening in nickel right now is different, with the entire industry undergoing a structural shift that has upended forecasts and models.

For BHP Group, the world’s biggest miner, nickel is a rounding error, contributing mostly losses to profits that routinely break $30 billion a year. Yet in recent years the company has championed the metal, seeing it as a key growth market that will help offset its retreat from fossil fuels.

Instead it’s turned into a disaster.

This week CEO Mike Henry conceded that the company will have to make a decision on whether to shutter its flagship nickel business in Australia within the next few months. Having already written down the business’s value by $2.5 billion, Henry said he expects the market to remain in surplus until at least 2030.

That means the pain is likely just starting.

Macquarie Group Ltd. calculates that about 250,000 tons of annual production — equivalent to about 7% of the total — has been taken out of the market by closures, with another 190,000 of planned output delayed.

Combined with economic slowdowns in China and the US and the choppy adoption of EVs, nickel has been pummeled. The price fell 45% last year, and is currently hovering around $17,000 a ton. According to Macquarie, at $18,000 a ton 35% of production is unprofitable, while at $15,000 a ton that jumps to 75%.

Anglo’s CEO Wanblad, who is reviewing nearly all the company’s mines in bid to cut costs, said that he will give the miner’s nickel business time in the face of the Indonesian threat.

“Our nickel business will undergo a fulsome review in terms of holding its head above water and making a viable profit,” he said. “I’m not giving up on the guys to come up with a plan that might help them readjust themselves into a position where they can function effectively.”

Glencore Plc, which has already moved to shutter its nickel operations on the islands of New Caledonia, is one of the world’s biggest producers with sprawling businesses in Canada and Australia. At current prices, that business will make just $500 million this year, with CEO Gary Nagle expecting prices to remain depressed.

“We see continuing strong production growth out of Indonesia,” Nagle said. “We do not expect significant price recovery in the short to medium term.”

With more than half a decade of oversupply ahead, more mines are likely to close before things get better. Should the market finally rebalance, that will leave Indonesia and China with even more market share then they already have.

Still, Indonesia’s rapid expansion has drawn criticism. Much of its production comes from coal-powered energy, giving it higher emissions per ton than rival producers, and its rapid expansion is eroding rainforests.

With little prospect of a near term recovery, western miners are pinning their hopes on state aid in the short term and a push toward customers — such as carmakers — demanding “greener” nickel in the future and being willing to pay more for it.

BHP this week called for the London Metal Exchange to expand its responsible sourcing policy to include environmental due diligence, helping to differentiate production from Indonesian and Chinese supply.

Still, as conceded by Glencore, so far buyers of nickel are unwilling to pay more.

“Right now there is not much of a premium in the market,” Nagle said.

(By Thomas Biesheuvel)

Fortescue’s Forrest urges LME to separate ‘clean’ nickel contracts

Reuters | February 26, 2024 

Andrew Forrest. (Image by Mines and Money, Flickr).

The London Metal Exchange (LME) should classify its nickel contracts into “clean” and “dirty” ones to give customers more choice, Australian iron ore magnate Andrew Forrest said on Monday.


The comment by Forrest, chairman and founder of Fortescue Metals Group, is part of a push by miners and Australian lawmakers to save the country’s nickel industry after prices collapsed amid a jump in cheaper supplies from Indonesia.


Nickel, a key ingredient in electric vehicle batteries, is typically produced to higher environmental and regulatory standards in Australia than in Indonesia. That has Australian producers calling for a green premium.

“If you’ve got dirty nickel in your battery systems, then you want to know about that because you don’t want to propagate that and you want the choice to buy clean nickel if you can. So the London Metal Exchange must differentiate between clean and dirty,” Forrest told Australia’s national press club.

In an emailed response to Reuters, an LME spokesperson said the exchange “drives and supports the metals and mining industry on several sustainability measures to ensure transparency throughout the supply chain to consumers”.

The LME, the world’s biggest market for industrial metals, has linked up with German online platform Metalshub, which in 2022 developed a price index for class 1 nickel briquette premiums. Briquettes are solid forms of nickel obtained by compressing the metal’s powder or flakes.

“Low-carbon nickel can already be listed on Metalshub today and the transaction data supports identification of a credible ‘green premium’ to the LME price,” the spokesperson added.

Australia’s nickel industry is shedding hundreds of jobs. Forrest’s private investment arm Wyloo Metals said last month it would put its Western Australian nickel operations on care and maintenance at the end of May due to low prices. It bought those assets last year for $504 million.

(By Melanie Burton; Editing by Edwina Gibbs and Jan Harvey)

From green hype to bailouts, the nickel industry has imploded

Bloomberg News | February 3, 2024 | l

Abandoned Kaula-Kotselvaara nickel mine in Russia. (Reference image by Alexander Novikov, Wikimedia Commons.)

Just 18 months ago, the world’s biggest mining company was in a nickel frenzy. BHP Group, to much fanfare, had struck a deal with Tesla Inc. to supply it with the crucial ingredient for electric vehicles. It was about to go toe-to-toe with Australian billionaire Andrew Forrest for control of one of the globe’s most prospective mines.


For BHP, nickel offered a bright spot. Its management had earmarked the material as a key pillar of growth, a future-facing commodity that would help offset its exit from fossil fuels and let it tap into new demand driven by the world’s race to decarbonize.

Yet things have quickly soured for BHP and other miners. The nickel market has been thrown into chaos after a flood of new supply from Indonesia — the result of huge Chinese investment and major technological breakthroughs. Mines across the world are at risk of closing, others are asking for state bailouts or going bust. BHP, for one, is now weighing up the future of its flagship Nickel West mine in Australia.

Until recently, many of the industry’s biggest names couldn’t have been more bullish about the prospects for nickel. The once-boring metal, traditionally used to make steel stainless, is a crucial ingredient for electric vehicle batteries. A supply shortage stretching for years to come was forecast and mining companies jumped at a great opportunity to burnish their green credentials.

Traditionally, nickel has been split into two categories: low grade for making stainless steel and high grade for batteries. A huge Indonesian expansion of low-grade production led to a surplus, but processing innovations have allowed that glut to be refined into a high-quality product that’s hitting the battery market.

As a result, prices for the metal have crashed over 40% from a year ago, adding to hurdles in a market that is also wobbling from weak demand and persistent concerns about China’s economy. Macquarie analysts estimate that more than 60% of the global industry is losing money at current prices.

The scale of the collapse has left some in the industry questioning if there’s a future for most nickel mines outside of Indonesia. It’s also adding to concerns among US and European policymakers about China’s control over key commodities, with its companies leading much of the Indonesia’s production.

“After watching the tide go out on the nickel world for over a year – with the halving of its metal price – we’ve got some high-cost assets exposed now,” said Tom Price, head of commodities strategy at Liberum Capital Ltd. He added that mines in Western Australia and the French territory of New Caledonia are likely to be the most vulnerable.

In New Caledonia — the South Pacific island chain that was once seen as the future of nickel production — the French government has been forced to step in to keep mines and plants operating that are essential to the territory’s economy. Officials have been meeting with key shareholders of three processing plants to hammer out a rescue deal, with no breakthrough so far.

The situation has been equally bleak in Australia.

In addition to BHP’s review of nickel assets there, Panoramic Resources Ltd. is suspending a key mine after entering voluntary administration late last year, when it failed to find a buyer or partner. An IGO Ltd. site will be shuttered, as will some operated by tycoon Andrew Forrest’s Wyloo Metals Pty Ltd. and First Quantum Minerals Ltd.

Producers in Western Australia are also turning to officials for help. At a crisis meeting at the end of last month, miners asked the federal government to provide tax credits for downstream processing.

But even with production pullbacks starting to bite, they’re unlikely to provide imminent support to nickel prices, according to Allan Ray Restauro, an analyst at BloombergNEF. He said, “The flood of supply from Indonesia is projected to continue to exert downward pressure on prices in 2024.”

That’s because Indonesian production — which already accounts for half of global supply — may prove more resistant to output cuts. The Southeast Asian nation has emerged as a global nickel hub after billions of dollars of investment in efficient plants that benefit from inexpensive labor, cheap power and readily available raw materials.

Still, the country’s rapid expansion has drawn criticism. Much of its production comes from coal-powered energy, giving it higher emissions per ton than rival producers, and its rapid expansion is eroding rainforests.

Producers such as BHP have instead trumpeted that buyers paying a premium for so-called green nickel would help lift prices. So far, however, there has been little evidence of that.

The company conceded late last year that automakers remain happy to buy Indonesian nickel, suggesting there will be little relief for miners elsewhere any time soon.

‘What can stop these mine and project closures? A sustained lift in nickel prices, obviously,” said Liberum’s Price. “Typically, only a nickel demand recovery can achieve that.”

(By Thomas Biesheuvel)

From green hype to bailouts, the nickel industry has imploded

Bloomberg News | February 3, 2024 |

Abandoned Kaula-Kotselvaara nickel mine in Russia. (Reference image by Alexander Novikov, Wikimedia Commons.)

Just 18 months ago, the world’s biggest mining company was in a nickel frenzy. BHP Group, to much fanfare, had struck a deal with Tesla Inc. to supply it with the crucial ingredient for electric vehicles. It was about to go toe-to-toe with Australian billionaire Andrew Forrest for control of one of the globe’s most prospective mines.


For BHP, nickel offered a bright spot. Its management had earmarked the material as a key pillar of growth, a future-facing commodity that would help offset its exit from fossil fuels and let it tap into new demand driven by the world’s race to decarbonize.

Yet things have quickly soured for BHP and other miners. The nickel market has been thrown into chaos after a flood of new supplies from Indonesia — the result of huge Chinese investment and major technological breakthroughs. Mines across the world are at risk of closing, others are asking for state bailouts or going bust. BHP, for one, is now weighing up the future of its flagship Nickel West mine in Australia.

Until recently, many of the industry’s biggest names couldn’t have been more bullish about the prospects for nickel. The once-boring metal, traditionally used to make steel stainless, is a crucial ingredient for electric vehicle batteries. A supply shortage stretching for years to come was forecast and mining companies jumped at a great opportunity to burnish their green credentials.

Traditionally, nickel has been split into two categories: low grade for making stainless steel and high grade for batteries. A huge Indonesian expansion of low-grade production led to a surplus, but processing innovations have allowed that glut to be refined into a high-quality product that’s hitting the battery market.

As a result, prices for the metal have crashed over 40% from a year ago, adding to hurdles in a market that is also wobbling from weak demand and persistent concerns about China’s economy. Macquarie analysts estimate that more than 60% of the global industry is losing money at current prices.

The scale of the collapse has left some in the industry questioning if there’s a future for most nickel mines outside of Indonesia. It’s also adding to concerns among US and European policymakers about China’s control over key commodities, with its companies leading much of Indonesia’s production.

“After watching the tide go out on the nickel world for over a year – with the halving of its metal price – we’ve got some high-cost assets exposed now,” said Tom Price, head of commodities strategy at Liberum Capital Ltd. He added that mines in Western Australia and the French territory of New Caledonia are likely to be the most vulnerable.

In New Caledonia — the South Pacific island chain that was once seen as the future of nickel production — the French government has been forced to step in to keep mines and plants operating that are essential to the territory’s economy. Officials have been meeting with key shareholders of three processing plants to hammer out a rescue deal, with no breakthrough so far.

The situation has been equally bleak in Australia.

In addition to BHP’s review of nickel assets there, Panoramic Resources Ltd. is suspending a key mine after entering voluntary administration late last year, when it failed to find a buyer or partner. An IGO Ltd. site will be shuttered, as will some operated by tycoon Andrew Forrest’s Wyloo Metals Pty Ltd. and First Quantum Minerals Ltd.

Producers in Western Australia are also turning to officials for help. At a crisis meeting at the end of last month, miners asked the federal government to provide tax credits for downstream processing.

But even with production pullbacks starting to bite, they’re unlikely to provide imminent support to nickel prices, according to Allan Ray Restauro, an analyst at BloombergNEF. He said, “The flood of supply from Indonesia is projected to continue to exert downward pressure on prices in 2024.”

That’s because Indonesian production — which already accounts for half of global supply — may prove more resistant to output cuts. The Southeast Asian nation has emerged as a global nickel hub after billions of dollars of investment in efficient plants that benefit from inexpensive labor, cheap power and readily available raw materials.

Still, the country’s rapid expansion has drawn criticism. Much of its production comes from coal-powered energy, giving it higher emissions per ton than rival producers, and its rapid expansion is eroding rainforests.

Producers such as BHP have instead trumpeted that buyers paying a premium for so-called green nickel would help lift prices. So far, however, there has been little evidence of that.

The company conceded late last year that automakers remain happy to buy Indonesian nickel, suggesting there will be little relief for miners elsewhere any time soon.

‘What can stop these mine and project closures? A sustained lift in nickel prices, obviously,” said Liberum’s Price. “Typically, only a nickel demand recovery can achieve that.”

(Reporting by Thomas Biesheuvel).

Chiefs of Ontario ask provincial government for year-long moratorium on mine claims staking

Amanda Stutt | January 26, 2024 | 

Esker camp in Ontario’s Ring of Fire. 

Credit: Noront Resources

The Chiefs of the Canadian province of Ontario this week issued a statement calling for a 365-day moratorium on the Mining Lands Administration System (MLAS), beginning January 24.


The move follows an exponential rise in the number of mining claims being staked over the past year on First Nations territories – some as high as 30% — the highest annual number of mining claims staked in Ontario over the last six years, according to the Chiefs of Ontario.

The Chiefs said the increase in claims led to an “insurmountable” administrative burden for First Nation communities responsible for reviewing and responding to the mining claims.

“In accordance with Resolution 23/30S, which was passed at the Fall Chiefs Assembly 2023, the Chiefs of Ontario are calling on the Government of Ontario to declare a territory-wide moratorium on the Mining Lands Administration System (MLAS) for 365 days,” Ontario Regional Chief Glen Hare said in the statement.

“Mining claim-staking continues to grow at a pace that far outstrips the ability for First Nations to respond and directly impacts our inherent, treaty, and constitutionally protected rights.”

Hare said a 365-day moratorium will give First Nations communities the time required to assess the impacts of the MLAS, the effects of the mine claims currently being staked, and develop a process “whereby meaningful and fulsome engagement and consultation can be integrated into the MLAS processes.”

In 2022, the Anishinabek Nation were unsuccessful when they made a similar request. The Ministry of Mines declined, stating a moratorium on mining was not considered an appropriate way to resolve the concerns.

Under the current MLAS system, prospectors can stake a mining claim online, and are not required to engage or consult with First Nations – even if the area in which the claim is staked is within their territories.

As a result, Chiefs of Ontario said, the area of land that has been staked is automatically removed from Treaty and Crown land that First Nations may have otherwise had access to add to reserve land, convert into parks, or is land that is currently undergoing land settlements via claims negotiations.

This week, Wyloo Metals said it is looking ahead to development at its Eagle’s Nest project in Ontario’s Ring of Fire, seen as highly prospective for nickel, copper, platinum and palladium, despite resistance to the project voiced by Indigenous leaders.
Gitxaala v. British Columbia

In April 2023, British Columbia’s Gitxaała Nation launched a legal challenge against the provincial government’s “free entry” mineral claim staking regime.

BC’s current Mineral Tenure Act also permits anyone with a free miner certificate to acquire mineral claims online through an automated system in First Nations’ territories, without their consultation or consent.

While critics challenge the system, the industry argues it violates prospectors’ intellectual property by giving notice that it expects to find mineralization in a given area before any security of tenure is granted.

A September 2023 Supreme Court decision declared that B.C.’s current online mineral claim system breaches the Crown’s duty to consult.

The court gave the province 18 months to design a new system that incorporates consultation — which the Chiefs of Ontario said sets an important precedent for First Nations in other provinces.

Wyloo Metals CEO gives update on Ring of Fire mining projects, though First Nations resistance continues

Some First Nations still opposed to development as need for critical minerals grows

Kristan Straub, CEO of Wyloo metals, says mining can be done in a sustainable way within the Ring of Fire.(Marc Doucette/CBC)

January 23, 2024

CBC Indigenous: As the demand for critical minerals grows, the CEO of the main company involved in northern Ontario’s Ring of Fire says it’s developing a nickel deposit that could be producing minerals for two decades.

Wyloo Metals CEO Kristan Straub gave the update Tuesday in a speech to business leaders in Thunder Bay, where he outlined the company’s plans for the Ring of Fire and discussed how his company is engaging with First Nations in the region now and into the future.

“[Eagle’s Nest] is Canada’s best opportunity for a new nickel sulphide deposit,” Straub said.

Straub was speaking about Wyloo’s Eagles Nest site, approximately 500 kilometers northeast of Thunder Bay. Of all the company’s mining hopes in northern Ontario’s Ring of Fire mineral deposit, he said this site is where it is choosing to develop first. It’s the most promising discovery and the mining project closest to production in the region.

Eagle’s Nest would produce 15,000 tons of nickel annually for an expected 20 years, said Straub.

Wyloo metals, (formerly known as Ring of Fire Metals and Noront Resources) is an Australian-based mining giant ultimately controlled by billionaire Andrew Forrest. The company holds the majority of established mining claims in the region, which it says contains minerals worth around $90 billion.
Thousands protest mining exploration on Indigenous land in Ontario

WATCH | Protest against mineral development draws thousands to Queen’s Park: 4 months ago – Duration 2:01

Thousands of Indigenous people people gathered at the Ontario Legislature to demand a face-to-face meeting with Premier Doug Ford. They say the province has allowed thousands of mining applications without their knowledge or consent.

Click on the following link to view the video:

https://www.cbc.ca/news/canada/thunder-bay/wyloo-metals-ceo-update-1.7092369

The province considers nine First Nations to be within the Ring of Fire– and Wyloo has promises for them. Straub said the company is aiming for a workforce composed of at least 50 per cent Indigenous employees, and plans to award millions of dollars of contracts to local, Indigenous-owned businesses willing to collaborate.

Two of those First Nations — Webequie and Marten Falls — have signed memorandums of understanding with Wyloo, and they are both leading an environmental assessment on a proposed road to the Ring of Fire, Straub said. Ontario approves environmental assessment terms of reference for 3rd and final road to Ring of Fire
Consultations continue as 2 First Nations work toward road to Ring of Fire in northern Ontario

The Northern Road Link project would connect two other proposed roads: one is an access road that will connect the community with the provincial highway system to the south. The second project is the so-called “Northern Road Link” that would lead to a proposed Ring of Fire mining site known as Eagle’s Nest.

The Northern Road Link is being touted as a critical lifeline. For prospectors, it would provide a pathway to minerals needed to build the electric vehicle batteries that are hoped to fuel Canada’s green economy.

For Webequie and Marten Falls, it’s hoped to bring wide-scale economic development and better access to goods and services.

“Webequie and Marten Falls are definitely the two closest First Nations in a nearby framework, and those are the two that we continue to work with,” said Straub. “The First Nations that are in the region around, we’ll look to build the support and the collaboration with them. Ultimately that’s their decision whether they partner in or not.”

While other First Nations say they respect Webequie and Marten Falls’ position, many aren’t willing to go along with development just yet.
Resistance from some First Nations in northwestern Ontario

There’s been pushback surrounding mining in the Ring of Fire and how consultations with Indigenous communities are handled, with recent rallies led by members of the First Nations Land Defence Alliance at Queen’s Park.

Last summer, 10 First Nations from Treaty 9 filed a lawsuit against Ontario and the federal government to fundamentally change the way resources and land management decisions are made in the region. That case is early on in the court process.

The Ojibways of Onigaming are the latest nation to join the Land Defence Alliance. Elected Chief Jeff Copenace said they signed on for strength in numbers he hopes will protect their lands and waters.

“We’re not going to stand by idly and let you destroy our lakes as our young people are dying,” said Copenace. “If you’re not going to help save our lives… then you can’t have access to land and waters.”

https://www.cbc.ca/news/canada/thunder-bay/wyloo-metals-ceo-update-1.7092369

Like many northern Ontario First Nations, Onigaming has declared a state of emergency as youth suffer from mental health issues, addiction and suicide. Copenace said he can remember at least 32 community members who have died over just the past 2.5 years– which is felt heavily by the reserve of 490. Inside the battle over Ontario’s Ring of Fire
Mining claims jump in northern Ontario’s Ring of Fire as EV battery interest grows
First Nations leaders demand equal partnership in Ottawa’s ‘broken’ regional assessment for Ring of Fire

Onigaming plans to develop a youth crisis center and recreation multiplex, in hopes it will help struggling community members. The recreation center will also provide a much-needed space to hold the community’s many funerals.

“We’ve been doing them in the school and we just made a decision this past year not to do them in the school anymore because of how heavily we’re traumatizing the children,” said Copenace.

Responding to the state of emergency means there is little bandwidth left for resource negotiation, he said. “It’s impossible for us to come to the table because we’re always having funerals, because we’re always dealing with young people that are suicidal,” said Copenace.

ABOUT THE AUTHOR

Michelle Allan, Reporter

Michelle Allan is a reporter at CBC Thunder Bay. She’s worked with the CBC’s Investigative Unit, CBC Ottawa and ran a pop-up bureau in Kingston. She won a 2021 Canadian Association of Journalists national award for investigative reporting. You can reach her at michelle.allan@cbc.ca.