UPDATE 1-Australia's Western Areas leads Australia nickel miners up

Tue Jul 22, 2014 4:20am EDT

Related Topics

* Rising nickel outlook, output gains boosts Australia's Western Areas

* Panoramic Resources also up

* ANZ bank revises up nickel price forecasts 20-30 pct (Adds ANZ comment, other company reaction)

By James Regan

SYDNEY, July 22 (Reuters) - Australian nickel miner Western Areas Ltd jumped to a 26-month high on Tuesday after reporting better-than-expected output of the metal, whose price soared this year following an Indonesian ban on ore exports.

Australia's fourth-largest miner of nickel, used in stainless steel manufacturing, produced 28,686 tonnes nickel in the year ended June 30, beatings its guidance for 27,000 tonnes by about 6 percent.

Nickel prices have risen by more than a third this year, after Indonesia's introduced a January ban on exports of nickel ores, breathing new life into a dormant market for refined metal.

The ban has taken its greatest toll on the Chinese nickel pig iron market, which in 2013 accounted for 470,000 tonnes, or 23 percent of world metal supply.

Western Areas shares closed up nearly 4 percent, and have more than doubled this year, while shares in fellow Australian miner Panoramic Resources, which is forecasting near-record output of between 20,000 and 21,000 tonnes of nickel in fiscal 2015, have trebled this year.

Australia & New Zealand Bank calculates the Indonesian ban has created a structural market deficit, with China possibly closing over 300,000 tonnes of nickel pig iron capacity, cutting global nickel supply by at least 14 percent.

"This would swing the nickel market into a substantial supply deficit in 2015 for the first time in five years," ANZ said in a client note on Tuesday.

The bank on Tuesday lifted its nickel price forecasts by between 20 and 30 percent over the next three years.

Among other miners, Sirius Resources NL, which is in talks with a trio of major nickel smelters to supply up to 26,000 tonnes of concentrate a year, has seen it stock gallop more than sixfold in the two years since its unearthed its Nova deposit in Australia.

Australia's biggest producer, BHP Billiton is anticipating a 10 percent fall in production to around 90,000 tonnes in fiscal 2015 after it was forced to close one of its mines due to earthquake damage.

BHP production data scheduled for release on Wednesday should show fiscal 2014 production in line with the previous year's output of 103,000 tonnes. (Reporting by James Regan; Editing by Richard Pullin)

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