In 2009, one major issue seriously hamstrung the once galloping metal nickel.
That issue, the health re-classification in the European Union of more than one hundred nickel compounds has spread like a wild fire around the globe, thanks to the United Nation’s Globally Harmonized System (GHS).
As a result, 117 water soluble compounds of nickel – known as the devil’s metal - are now labeled in many countries as carcinogens, mutagens and reproductive toxicants (or CMRs for short).
This has had an immediate negative impact on the metal and the ability of prices to crawl out of the hole they fell into during the 2008 financial crisis. The health re-classification has created significant uncertainties in the minds of the all-important end users of nickel and its compounds.
Human health concerns could affect fully two-thirds of the 1.3 million tonne-per-year demand for nickel with food and water contact applications being affected most.
The world's major nickel producers are convinced that European regulators, led by the Danish Environmental Protection Agency, overstepped their own procedures in making the re-classifications. The industry insists that the best available scientific knowledge is on their side and therefore the re-classifications are unjustifiable.
Hazard symbol for toxic chemicals
Acting on the precautionary principle and the desire to protect the health of European citizens, however, the Danes were undeterred. On September 25 the European Commission moved forward with the 30th and 31st Adaptation to Technical Progress, or ATP (since re-named the 1st ATP). Nickel producers subsequently followed through on their threat to launch legal challenges in order to impede progress of the market-damaging re-classification. This action could not stop the GHS however and the classifications have spread around the world.
Expected to cost the industry millions of Euros, the legal squabbles will not be resolved quickly and could drag on for months into 2010. It may be years before they are settled.
Meanwhile, to add insult to injury, a leading international scientific body, the International Agency for Research on Cancer (IARC) in May reaffirmed its cancer classification for nickel compounds.
As 2009 comes to a close, the once-galloping nickel market is seriously hobbled.
Since prices peaked at about US$24 per pound in 2007, they languished in the $4 to $8 per lb. range for most of 2009, closing today, the last day of the year, at $8.37. This will have a predictable impact on the bottom line of the world’s leading nickel producers which include: Norilsk Nickel of Russia, Vale Inco of Brazil, BHP Billiton of Australia and the U.K. and Xstrata Nickel of Switzerland.
Perhaps because of the stigma attached to CMRs, demand for nickel, especially in Europe which normally accounts for 40% of demand, has not recovered from the downturn caused by the financial crisis of 2008.
Norilsk Nickel, the world’s largest producer of the devil's metal said demand was significantly lower (down about 5%) for household products and various architectural products that contain nickel.
Non nickel-containing substitutes in these applications (mainly ferritic stainless steels) could be irreversible and will hurt demand for nickel in 2010 and beyond.
Top 10 Developments in 2009In my opinion, the top ten developments in the nickel industry in 2009 were as follows:
1. On September 25, 2009, the European Union brings the 30th and 31st ATP into affect (re-classifying 117 nickel compounds as CMRs) and the nickel-producing industry challenges the classifications in court.
2. In May, the International Agency for Research on Cancer (IARC) re-affirmed its ‘carcinogenic in humans’ classification for nickel compounds.
3. In July, Vale Inco workers go on strike in Sudbury, Ontario and Voisey’s Bay, Labrador, seriously affecting supply. The strike remains unresolved.
4. In China, where state intervention in the economy is massive, nickel and stainless steel production continued to grow.
5. The world's largest mining company, BHP Billiton sells the Ravensthorpe nickel mine near Perth, Australia (which it spend $1.2 billion to develop) to First Quantum Minerals, a junior Canadian company, for just $350 million. The operation could produce between 28,000 and 39,000 tonnes of nickel per year when it is restarted.
6. Cash-rich Chinese companies move into Canada, snapping up junior properties at bargain prices.
7. The United Nation's Copenhagen Climate Change conference failed to create a carbon trading scheme.
8. Cliffs and Noront engage in a bidding war for a major chromite deposit in northern Ontario.
9. China detains two Rio Tinto iron ore executives on suspicion of stealing state secrets.
10. Former Inco executives successfully promote an undeveloped nickel property in northwestern Quebec. China’s largest nickel trading company, Ningbo Sunhu, pays $21.8 million for a 15% interest in Royal Nickel.
1. The 1st Adaptation to Technical Progress (ATP) enters into force in the EU:
2. The International Agency for Research on Cancer (IARC) maintains its 'carcinogenic in humans' classification for nickel compounds:
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