Indonesia ban to boost nickel price — BNC

HARARE - Mwana Africa’s Zimbabwean unit Bindura Nickel Corporation (BNC) says Indonesia’s ban on exports of unprocessed nickel ore may benefit the group through firmer global prices.

Indonesia is a major nickel producer and it accounted for 20 percent of the commodity’s global production last year.

The Asian country — previously the world’s top exporter of nickel ore, effectively halted all but processed metal shipments in January in an effort to compel miners to build smelters.

Batirai Manhando, BNC’s managing director, told a financial analysts briefing on Wednesday that if Indonesia’s ban remaied, global demand would surpass supplies, leading to firmer nickel supplies.

“The effect of the ban cannot be overstated, and we will undoubtedly  benefit from this phenomenon as a producer,” he said.

He added that the group expects the nickel price — currently ranging between $16 420 and $17 000 per tonne on the London Metal Exchange — to rise to around $20 000 per tonne by next year. “There will be a deficit of nickel next year and we can see a sustained higher price,” he said. He also added that the group was going to boost production by producing higher volumes of nickel in the coming year at the cost of reducing their grade, to maximise the benefit of the Indonesian ban.

“We managed to increase the mill tonnage. The strategy involves increasing the tonnage but you will see that the grade will be going down. This is because our life of mine grade is at 1,05 for the 10-year life of mine.

“Last year, we posted very good grades in excess of 1,5 percent but now we are focusing on pushing volumes resulting in the grade slightly going down. We will compensate by increasing the volumes,” he said.

A report released early this year by AfrAsia Zimbabwe Holdings Limited (AZHL) stated that nickel prices were going to be pushed upwards benefitting nickel producing countries that include Zimbabwe, Australia, Canada and Philippines.

“Zimbabwe and other nickel producing countries will benefit from the firming nickel prices as global supply outlook is likely to remain tight as long as the nickel ore ban remains in place in Indonesia and the Russia-Ukraine tension continues,” the report said.

In total, nickel prices advanced 23 percent this year as tensions in Ukraine raised the prospect of export sanctions against Russia, the home of GMK Norilsk Nickel, the world’s biggest producer of the refined metal. “So, any disruption in supply from these two countries will push prices up,” said the report.

Last year, Zimbabwe’s nickel production went up 56 percent from 7 899 tonnes in 2012 to 14 058 tonnes, earning $158 million, according to Chamber of Mines. Meanwhile, BNC’ Trojan Mine performed well in the half year to September 30, 2014.

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