2011 was an interesting year for the Devil's metal
By Patrick Whiteway
Twenty-eleven was an eventful year for nickel, the steely grey metal that is so essential to high end stainless steels and finds a myriad of modern applications from rechargeable batteries to jet engines. The world of nickel had everything a mine engineer could ask for in 2011: Prices gyrated, supply and demand increased over 2010 and the organization that represents companies that mine and refine this 'envrio-metal,' the Nickel Institute, suffered a humiliating defeat in the courts of Europe.
2011 began with the price of nickel hovering above US$11 a pound and ended the year significantly lower at US$8.49. Demand from stainless steel producers in China, which use 25% of all nickel mined on the planet, continued to grow, although at a much slower pace than was anticipated at the beginning of the year by the most bearish of analysts. Meanwhile, nickel producers continued to build supply, thus dragging prices downward.
From where this mine engineer sits, the top nickel stories of 2011 were as follows:
1. Human health and environment classificaitons where upheld in Europe. In July, the European Court of Justice rendered a final decision on a case brought before it by the Nickel Institute. The decision neutered the industry's argument that Europe's reclassification of a wide range of nickel compounds is unlawful. The only winners in this very costly debacle were the over-priced lawers in London and Toronto. The millions wasted could have been used to increase our understanding of how nickel compounds impact human and environmental health;
2. Nickel laterite operations failed to meet expectations. Nickel laterite operations such as Sherritt International's Ambatovy project in Madagascar and Vale's Goro project in New Caledonia, for example, struggled to meet production and capital expenditure targets;
3. 'Social licence to operate' issues slowed new mine building in the developed world. Nickel developments in Canada encountered social challenges with Cliffs Natrual Resources and Noront, two companies in the so-called 'Ring of Fire' nickel-chromium development in northern Ontario, running into "social licence to operate" snags;
4. Supply and demand headed toward imbalance. Nickel prices fell over the 12-month period due to an increase in supply and a slower than anticipated increase in demand brought on by a slumping global economy;
5. Carbon taxes began their inevitable rise to prominence. Australia approved a carbon tax in October and authoritarian China, which is home to the environmental disaster that is nickel pig iron production, signaled it would bring in a carbon tax within the next five years;
6. The new kid on the block made waves. The world's largest metals trader, Glencore Inc., went public in June and signaled its interest in nickel by increasing its grip in Minera, operator of the Murrin Murrin mine, a profitable nickel laterite operation in Western Australia;
7. Cash-rich majors modernized existing operations. Norilsk announced major capital expenditures in Russia and Xstrata and Vale both announced major capital investment plans at their existing nickel operations in Canada: Xstrata announcing it will spend $200 million at Reglan mine in northern Quebec and Vale to spend an equal amount on the Clarabelle concentrator in Sudbury.