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Mining & Resources

China is dominating the nickel market

20 May 2013, by Informa Insights

Jim LennonNew Caledonia holds 25% of the world’s known nickel reserves. We had the chance to speak to Jim Lennon, Chairman Commodities Research at Macquarie Securities about the main drivers for the current demand and New Caledonia’s most promising projects.

In your opinion, what factors have been the driving forces behind the laterite revolution to date?

Jim Lennon: The depletion of sulphide ores was one of the main drivers of the laterite revolution. It led to movement to build ferronickel, and HPAL nickel plants outside China, including New Caledonia. The booming Chinese nickel demand also has a big impact and the mid-2000s shortage of nickel which drove prices to levels that made it economic to process low-grade laterite ores from Indonesia and the Philippines

New Caledonia Nickel COnferenceIn what markets are we currently seeing the biggest demand for Nickel and what industries are driving the demand?

Jim Lennon: China is absolutely dominating demand, being virtually the ONLY growing market for nickel and stainless steel over the past decade.  India is gradually growing but from a low base.

Can you name two greatest challenges and the two most promising opportunities for New Caledonian Nickel exports in the medium term?

Jim Lennon: The major challenge for New Caledonia is to make the two projects (Vale Nouvelle-Calédonie (Goro) and Koniambo) work from a technical and economic perspective.  Both projects have suffered from massive capital cost over-runs.  Nickel prices have been depressed by the emergence of nickel pig iron in China that has over-supplied the nickel market.

[slideshare id=21473054&doc=jimlennonpresentationresolvingsupplychainconstraints-130519190004-phpapp01]

From an ore export perspective, the challenge is to find resources to continue the growth in exports to Korea (NMC) and also for the proposed joint venture between SMPS and Jinchuan in China.

You will be presenting in the 5th New Caledonian Nickel conference. What insights are you hoping to gain from your participation in the event?

Jim Lennon: Number one is to assess progress on the two massive Greenfield nickel projects which have only recently started commercial production. VNS and Koniambo have capacity to produce 60,000 tpa each, which is 7% of the global market.

Second is to assess the potential for SMSP to sharply expand ore exports to its two joint ventures in Korea and China.

Third is to assess the global nickel market outlook since this conference is not just a New Caledonian conference but a global conference with attendees from all over the nickel world.

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