Nickel Closest Thing to a True ‘War Metal’ – by Stan Sudol

This column was originally published in Northern Life, Greater Sudbury’s community newspaper on February 23, 2007

The metallic “Achilles heel” for any military and navel production has always been nickel

Sudbury was definitely going to be “nuked” by the Russians. At least that was our conclusion back in 1976 when I worked at CVRD Inco’s Clarabell Mill for a year.

During one graveyard shift, a group of us were talking about Cold War politics and atomic bombs. We all agreed that if there ever was a nuclear war between the Americans and Russians then there must have been one Soviet “nuke” with our community’s name stenciled on it. We all laughed a little nervously, but there was also some pride in knowing Sudbury was important enough to get blown-up in the first round of missiles.

Access to strategic materials has always affected the destinies of nations. The Romans conquered Britain in AD 43 to control valuable tin deposits in Cornwall. Combining tin with copper produces bronze, a more valuable and militarily important alloy. Ancient Chinese metallurgical expertise with iron and steel allowed the Middle Kingdom to become a dominate military and economic force during the prosperous Han dynasty.

There has always been a largely ignored umbilical cord link between Sudbury’s strategic nickel mines and the U.S. military-industrial complex. Originally, it was American money and entrepreneurs who built the Sudbury mines and smelters.

However, when the Sudbury deposits were first discovered during the building of the Canadian National Railway, the metal everyone was interested in was copper. When it was realized that there were significant quantities of this “useless” metal called nickel in the ore, the entire enterprise was almost abandoned.

Then two important events occurred: first, an economical way of separating the nickel from the copper was found and more importantly the discovery that adding nickel to steel greatly increased their combined strength. Further tests in Washington, D.C., in 1890 confirmed that nickel-steel alloys were the best material to use for armor plate – a metallurgical equivalent to the atomic bomb.

The age of the dreadnaughts had arrived and these advanced ships were clad in nickel-steel. As Europe and America rebuilt their navy, the demand for nickel skyrocketed and the Sudbury mines exploded with activity. During the First World War, Sudbury was the key source of this strategic metal.

The Second World War was a mechanized war that utilized more technically advanced equipment than ever before in order to win. Thousands of pounds of nickel were used in the mighty flying B-29 Superfortresses, while the war in the Pacific was primarily an amphibious battle requiring rugged engines with many nickel alloy parts able to withstand the corrosive effects of salt water.

Nickel-hardened armor plate for tanks, nickel alloys for anti-aircraft guns and ordnance, and even lightweight and tough portable bridges used in the invasion of Germany all required this essential metal. In total, the Inco mines supplied an astonishing 95 percent of the Allies needs for this vital metal and played a significant role in the final victory.

“Given the chance, Hitler would willingly have traded the whole Silesian basin, and thrown in Hermann Goering and Dr. Goebbels to boot, for a year’s possession of the Sudbury Basin,” Maclean’s journalist James H. Gray aptly wrote in an Oct. 1, 1947 article about Sudbury.

After the war, there was a small decline in nickel use but the expanding North American economy, the rebuilding of war-shattered Europe, the Korean War and the start of the cold war continued to put pressure on this vital commodity.

A 1954 U.S. Department of Defense report stated that nickel was, “the closest to being a true ‘war metal.’ It deserves first priority among materials receiving conservation attention.”

During the 1950s, the U.S. government gave Falconbridge a $40 million subsidy to help develop their nickel mines and ensure diversity of supply from then predominant supplier International Nickel.

Before the Thompson, Man., nickel deposits were discovered in 1956, the only other major reserves of this metal outside of the Sudbury Basin were in the Soviet Union and Cuba. Fidel Castro nationalized previously-owned American nickel mines during the Cuban revolution of 1959.  From the early 1950s to the early 1970s, chronic nickel shortages plagued industrial and military production. The 1969 Sudbury Basin strikes, during the Vietnam War, paralyzed industrial production in Britain.

The fall of the Berlin Wall in 1989 signaled the end of the Cold War and caused the former Soviet Union to flood the world with cheap nickel and significantly reduced capital investment in new mines.

Global military expenditures declined, further exasperating the oversupply of nickel. The metal hit its lowest level ever, if you factor in inflation, in October and December of 1998 when the London Metal Exchange (LME) price for nickel dipped to 1.76 a pound (US).

In 2003, the invasion of Iraq in March and the unexpected Inco strike from June to August caused the nickel glut to finally disappear. Four years later, the American wars in Iraq and Afghanistan are consuming billions of dollars worth of military hardware that cannot be build without vast quantities of nickel. The announcement to increase troop deployments in Iraq will only require more weapons production. In 2007, the American military budget will equal the weapons expenditures of all other countries in the world combined.

In an aggressive speech at the Munich Conference on Security Policy in early February, Russian President Putin blasted the United States for inflaming global tensions with the Iraq war and the inclusion of former Soviet satellite nations in NATO. Russia is increasing military expenditures – financed by enormous revenues from oil and gas – in order to reassert that country’s former global influence. It is the world’s largest producer of natural gas and number two in oil production.

Russia also has no problems using its new status as an energy superpower to bully neighbouring Ukraine and Belarus over the price of gas and most of Europe is worried about their over dependence on that country’s oil and gas supplies.

Many political pundits and policy analysts feel we are entering a new cold war and strategic resources will be one of the key sources of conflict.
Iran’s insistence on developing an atomic bomb is further fueling a volatile region and starting an “arms race” throughout the Middle East, while the Japanese have quietly expanded their navy and are building one of East Asia’s biggest and most advanced fleet of submarines.

For the past decade China has seen double-digit defense growth and the recent decision to shoot down its own satellite may start an arms race in space. Many feel official Chinese statistics on military purchases are significantly understated and they are also rapidly expanding their navel capacities. In addition, China has been circling resource rich African and Latin American countries like a hungry shark buying and investing in resource projects and elbowing out American competitors.

The metallic “Achilles heel” for any military and navel production has always been nickel. There are currently no nickel mines in the United States while China does have some domestic production.

Jack Lifton, in a column on resources investor.com recently wrote, “An economic war has already begun over the control of the supply of industrially necessary metals and materials with which to establish or maintain a high standard of living. This war is between the United States and the PRC….” (People’s Republic of China)

In reference to the current shortages of nickel, CVRD boss Roger Agnelli said in Rio de Janeiro last month, “Mines coming on line are merely replacing old mines that are winding down. Even with new mines, overall production won’t rise much.” The LME cash price of nickel reached another new record on Monday, hitting $19.44 a pound or $42,865 a metric tonne.

Sudbury still contains the largest source of this strategic metal – depending on how you define the Norilsk, Russia deposits – in the world. Many geologists have felt that Russian nickel statistics from Norilsk have always been inflated.

Consistent discoveries throughout the Basin over the past decade, the current frenzy of exploration activities – one of the “hottest” regions in North America – and the possibility that Xstrata’s Nickel Rim South development may become one of the richest mines in Canadian history all indicate an enormous resource yet to be tapped.

We seem to be going back to the future.

Stan Sudol is a Toronto-based executive speech writer and communications consultant who writes extensively about mining issues. stan.sudol@sympatico.ca

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