| KALGOORLIE, Australia
KALGOORLIE, Australia Aug 4 Australia's no. 3
nickel miner, Western Areas, said on Monday a ban by
Indonesia of nickel ore exports was helping stoke strong
interest in a tender it is planning for future concentrate
With the ban starting to pinch world supply, metals refining
companies and trading houses were scrambling to secure
high-purity nickel concentrate for blending with lower grade
material to produce metal fetching price premiums, said Western
Areas's Executive Director David Southam.
Nickel sells for about $18,380 per tonne compared
with $13,900 immediately before the ban went into effect on Jan.
A 13,000-tonnes-per-year supply contract Western Areas holds
with Chinese metals refiner Jinchuan Group expires at the end of
Nickel is being driven, say analysts, on bets that China is
running short of the metal used to make stainless steel because
of Indonesia's ban. Until the ban, aimed at spurring a
value-added processing industry, Indonesia accounted for 15-20
percent of world supply.
However, nickel inventories are recently hitting record
highs as hidden stocks leave China following a fraud probe at
Qingdao's port, showing supplies are plentiful despite a halt to
shipments from Indonesia, which could squash further supply-side
Still, Southam said the company was already fielding
expressions of interest from a range of potential buyers and
also expects to see hefty competition emerging from nickel
smelters, commodity traders, other nickel producers, including
Jinchuan, and stainless steel companies.
Speaking on the sidelines of the Diggers and Dealers mining
forum, Southam said Western Areas was producing a
high-magnesium-bearing nickel concentrate commanding 90 percent
or more of the London Metal Exchange refined metal price.
He declined to name those showing interest in buying the
BHP Billiton , which already buys 12,000
tonnes of nickel in concentrate from Western Areas to feed into
its Australian smelter, is seen as a logical contender for the
additional material, following the closure of one of its own
mines last year due to earthquake damage.
Southam said there were signs the ban was working in
Indonesia's favour, with some Chinese nickel pig iron producers
already relocating to Indonesia to construct plants.
"As that happens, it is less likely that Indonesia would do
away with its ban," Southam said. "All indications so far are
that the ban is going to hold."
Other Australian miners are also benefiting. Sirius
Resources NL is in late-stage negotiations with a trio
of major nickel smelters to supply up to 26,000 tonnes of nickel
Sirius stock has risen more than six-fold in the two years
since it discovered the Nova nickel deposit in west Australia,
partly on expectations the concentrate would command a premium
from smelting companies when output begins in late 2016.
(Editing by Muralikumar Anantharaman)