The Sudbury Star is the City of Greater Sudbury’s daily newspaper.
There’s good news and bad news emerging from China when it comes to nickel production, says a mining analyst with a keen interest in Sudbury.
The bad news is Chinese nickel production is at a record high as the country imports cheap sources of laterite and converts it into low-percentage nickel, said Terry Ortslan. “Nickel pig iron (NPI) production we speak,” said the Montrealbased analyst. “And it’s not any mom and pop operation. It’s been very sophisticated, high-technology operations with big furnaces, and serious investments have gone into it.” The good news is the nickel being made in China is costing $6 or $7 a pound because of the cost of power to convert the ore and the cost of raw materials.
Because of the amount of stainless steel needed for expansion and development in China, nickel pig iron can only “contribute so much nickel to the whole equation. There will be more nickel needed in China and elsewhere,” and that could benefit Canadian producers such as Vale, said Ortslan. He has long been outspoken about the high cost of capital and operating costs at nickel operations in Sudbury, “but what we’re seeing now with the Chinese costs is they aren’t very low, as well,” he said.
That causes Ortslan to speculate on the need for “major expansion plans in the traditional areas” such as Sudbury where nickel is produced. Vale Ltd. has been focused on cutting costs at its operations around the world, including Canada, laying off 30 non-union employees this week in the latest round of belt-tightening.
Vale has also cut its $2-billion Clean AER (Atmospheric Emission Reduction) program in half by making the decision to reduce to operate one furnace instead of two at its Copper Cliff Smelter Complex.
In the part of Vale he calls “the traditional Inco” — operations in Sudbury, Manitoba and Voisey’s Bay — the solution isn’t to lay off 30 people, said Ortslan and he doesn’t see it as a signal of more job losses to come.
“I think they need to look at their next source of major ore, where increased production is going to come from, and we all know one thing,” he said. “Wherever it comes from, it’s not going to be low-cost.”
Orstlan, who once worked in Sudbury, repeated this week what he has been saying for years.
For long-term sustainability in the nickel mining industry in Sudbury, the ideal solution would be for Vale and Xstrata Nickel to merge.
That was certainly talked about in 2006 before Brazilianbased Vale purchased the former Inco.
For the rest of this article, please go to the Sudbury Star website: http://www.thesudburystar.com/2013/03/21/there-will-be-more-nickel-needed