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Demand to Return to the Nickel Market in 2010

January 12, 2010

LONDON, January 12 /PRNewswire/ –

– Roskill Information Services

– Nickel: Market Outlook to 2014 (12th Edition, 2010)

The fallout from the financial crisis that afflicted the world economy
has seen nickel prices fluctuate wildly. LME prices peaked at just over
US$52,000/t in May 2007, on the back of strong demand and low stocks, but had
fallen by over 80% by the end of 2008, as demand collapsed. By the fourth
quarter of 2009, however, prices had recovered to US$18,500/t.

The fall in nickel prices has been largely due to a collapse in demand.
Data for the first nine-months for 2009 shows nickel consumption at the world
level has declined by 9% year-on-year, as end-users aggressively cut
inventories. Output of nickel has also declined sharply. For the first three
quarters of 2009, nickel mine production fell by 18% year-on-year, while
primary production was down by 6%. Producers responded quickly to the fall in
demand, with around a quarter of all production suspended during the first
half of 2009.

While both demand and production of nickel declined in 2009, stocks at
the LME built up steadily. At the end of December 2009, official stocks at
LME warehouses totalled in excess of 150,000t. To put this into perspective,
when nickel prices surged to above US$50,000/t, LME stocks totalled 4,700t.

Nickel demand driven by China

The nickel market overall has seen strong growth in demand. For the
period 2000 to 2006, when demand peaked, consumption at the world level
increased at an annual average rate of 3.8%. Although consumption increased
across the world, China exhibited the largest growth. Between 2000 and 2009,
its domestic demand is estimated to have risen by an annual average rate of
almost 25%. This phenomenal growth has seen China become the world’s largest
consumer of nickel. In 1995 China accounted for a modest 4% of world
consumption, increasing to almost 30% in 2008.

Demand for nickel is predominantly driven by stainless steel production,
which accounts for around two-thirds of total nickel consumption. Production
of crude stainless steel began falling as early as the third quarter of 2007.
In 2008, output fell by 7% year-on-year, while the first three quarters of
2009 have seen production of crude stainless steel decline by around 15%,
year-on-year.

The fall in production of stainless steel, however, has only taken place
in developed economies. Emerging markets such as China and India have seen
domestic output rise. The first three quarters of 2009, saw Chinese
production rise by almost 20% year-on-year, while for the year, China is
forecast to produce 8-9Mt.

At the world level, crude stainless steel production in 2009 is forecast
to decline to around 25Mt. However, 2010 is expected to see an increase in
demand and production, as world GDP recovers. Production of crude stainless
steel is forecast to rise by around 8% in 2010.

New HPAL capacity to enter the market

In the first half of 2009, around a quarter of all production from 2008
was suspended – placed on care & maintenance. Major producers such as Norilsk
Nickel, BHP Billiton, ValeInco and Xstrata have all had to curtail
production, while strike action at ValeInco’s operations in Canada has also
limited output.

While most of the major nickel producers have cut output in order to
stabilise prices, BHP Billiton has sold nickel assets, appearing to distance
itself from the nickel market. The company sold its Ravensthorpe mine and
Yabulu refinery in 2009.

The Ravensthorpe situation has attracted a lot of interest, as it is the
first major nickel laterite production facility in a decade. Laterite
projects have been a source of frustration in recent years, as the technology
has not proved 100% efficient. The main extraction techniques are high
pressure acid leaching (HPAL) and heap leaching. The HPAL technology has
received much criticism in recent years, owing to its high cost and the
wear-and-tear hot acid can cause to plant and equipment.

Even though some HPAL projects have had technical difficulties, however,
there are nickel deposits that are able to use the technology successfully.
The Moa Bay and Murrin Murrin deposits, in Cuba and Australia respectively,
produce nickel on a regular basis, and new projects such as Goro, Vermelho
and Ambatovy are due to come on-stream in the next few years. Given that
around 70% of total world reserves are laterite deposits, it is not
surprising that the vast majority of all announced future projects are based
on laterites.

Nickel prices to remain stable throughout 2010

Although global demand for nickel has fallen for three consecutive years,
a recovery in the global economy should follow through to see consumption of
increase in 2010. Roskill forecasts nickel consumption will increase by
around 7% in 2010.

The rise in demand for nickel in the coming years is primarily due to an
increase in demand for stainless steel. Stainless steel production, the
largest end-use for nickel, is forecast to reach 27Mt in 2010 (an 8% increase
year-on-year), and almost 30Mt in 2011.

As demand for nickel increases across the globe, production is likely to
follow suit. A market surplus of around 75,000t is forecast for 2010, as
output of primary nickel increases to 1.4Mt.

Given the market surplus forecast to develop between 2010 and 2012,
nickel prices are expected to be stable. The annual average price in 2010 is
forecast to around US$20,000/t, and expected to rise in both 2011 and 2012.
The average price between 2010 and 2012 is forecast at just over US$22,000/t.

Nickel: Market outlook to 2014 (12th Edition, 2010) is available at
GBP3500 / US $7000 / 5600 Euros from Roskill Information Services Ltd, 27a
Leopold Road, London SW19 7BB, England.

    Table of Contents

    1         Summary                                                     1

    2         History, properties, occurrence and resources of nickel     9
    2.1       History                                                     9
    2.2       Properties                                                  9
    2.2.1     Health and environmental issues                            10
    2.3       Occurrence                                                 11
    2.3.1     Sulphide ores                                              12
    2.3.2     Lateritic ores                                             13
    2.4       Resources                                                  15
    2.4.1     Ocean floor resources                                      17

    3         Mining, processing and refining of nickel                  19
    3.1       Mining                                                     19
    3.1.1     Mining of sulphide ores                                    19
    3.1.2     Mining of laterite ores                                    19
    3.2       Processing                                                 20
    3.2.1     Processing of sulphide concentrates                        20
    3.2.1.1   Pyrometallurgical processing of sulphide concentrates      21
    3.2.1.2   Hydrometallurgical processing of sulphide concentrates     21
    3.2.2     Processing of laterite ores                                22
    3.2.2.1   Pyrometallurgical processing of laterite ores              22
    3.2.2.2   Hydrometallurgical processing of laterite ores             23
    3.2.3     Matte refining                                             25
    3.2.3.1   Pyrometallurgical matte refining                           25
    3.2.3.2   Hydrometallurgical matte refining                          26
    3.2.4     Nickel products                                            27

    4         World nickel production and supply data                    31
    4.1       Mine production                                            31
    4.2       Production of intermediate nickel products                 37
    4.3       Primary nickel production                                  38
    4.4       Nickel production by company                               45

    5         Nickel production costs                                    49
    5.1       Future nickel production costs                             52

    6         Review of nickel producing and processing countries        54
    6.1       Albania                                                    54
    6.1.1     Kokogllave-Devolli project                                 54
    6.2       Argentina                                                  54
    6.3       Australia                                                  54
    6.3.1     Nickel resources in Australia                              57
    6.3.2     Producers of nickel in Australia                           57
    6.3.2.1   Australian Mines                                           57
    6.3.2.2   BHP Billiton                                               57
    6.3.2.3   Fox Resources Limited                                      64
    6.3.2.4   Minara Resources                                           65
    6.3.2.5   Independence Group                                         66
    6.3.2.6   Mincor Resources NL                                        67
    6.3.2.7   MMC Norilsk Nickel                                         69
    6.3.2.8   Panoramic Resources                                        72
    6.3.2.9   Western Areas NL                                           74
    6.3.2.10  Xstrata Plc                                                76
    6.3.3     Potential Australian nickel producers                      77
    6.3.3.1   Australasian Resources Limited                             77
    6.3.3.2   Emu Nickel                                                 77
    6.3.3.3   Gladstone Pacific Nickel Project Limited (GPNL)            78
    6.3.3.4   Heron Resources                                            78
    6.3.3.5   Jervois Mining                                             79
    6.3.3.6   Metallica Minerals Limited                                 79
    6.3.3.7   Metals X Limited                                           79
    6.3.3.8   Nickelore Limited                                          80
    6.3.3.9   South Boulder Mines                                        80
    6.4       Belgium                                                    80
    6.5       Botswana                                                   80
    6.5.1     Producers of nickel in Botswana                            81
    6.5.1.1   Bamangwato Concessions Limited (BCL)                       81
    6.5.1.2   Tati Nickel Mining Co.                                     81
    6.5.2     Potential nickel producers in Botswana                     81
    6.5.2.1   Dikoloti Nickel Project                                    81
    6.6       Brazil                                                     82
    6.6.1     Nickel resources in Brazil                                 83
    6.6.2     Nickel producers in Brazil                                 84
    6.6.2.1   Anglo American                                             84
    6.6.2.2   Votorantim Group                                           84
    6.6.2.3   Mirabela Nickel                                            85
    6.6.3     Potential nickel producers in Brazil                       86
    6.6.3.1   Vale Inco                                                  86
    6.6.3.2   Xstrata                                                    86
    6.6.3.3   Horizonte Minerals                                         87
    6.7       Burkina Faso                                               87
    6.8       Burundi                                                    87
    6.8.1     Musongati nickel deposit                                   87
    6.8.2     Muremera nickel deposit                                    88
    6.9       Cameroon                                                   89
    6.1       Canada                                                     89
    6.10.1    Producers of nickel in Canada                              91
    6.10.1.1  FNX Mining                                                 92
    6.10.1.2  North American Palladium Ltd                               92
    6.10.1.3  Sherritt International Corporation                         93
    6.10.1.4  ValeInco                                                   94
    6.10.1.5  Xstrata Plc                                                97
    6.10.2    Potential nickel producers in Canada                      100
    6.10.2.1  Canadian Royalties                                        100
    6.10.2.2  Crowflight Minerals Inc.                                  101
    6.10.2.3  Donner Metals                                             101
    6.10.2.4  Mustang Minerals                                          102
    6.10.2.5  Noront Resources                                          102
    6.10.2.6  Nuinsco Resources Limited                                 102
    6.10.2.7  Starfield Resources                                       103
    6.10.2.8  Strongbow Exploration                                     103
    6.10.2.9  Ursa Major Minerals Inc.                                  103
    6.11      China                                                     104
    6.11.1    Producers of nickel in China                              109
    6.11.1.1  Jinchuan Non-Ferrous Metals Corp (JNMC)                   109
    6.11.1.2  Other Chinese nickel producers                            111
    6.12      Colombia                                                  112
    6.12.1    Producers of nickel in Colombia                           112
    6.12.1.1  Cerro Matoso SA (CMSA)                                    112
    6.13      Cuba                                                      113
    6.13.1    Producers of nickel in Cuba                               114
    6.13.1.1  Cubaniquel                                                114
    6.13.1.2  Moa Bay SA                                                115
    6.13.2    Potential nickel producers in Cuba                        116
    6.14      Dominican Republic                                        116
    6.15      Finland                                                   117
    6.15.1    Producers of nickel in Finland                            118
    6.15.1.1  Belvedere Resources                                       118
    6.15.1.2  Boliden Harjavalta                                        119
    6.15.1.3  Norilsk Nickel Finland                                    119
    6.15.1.4  Talvivaara Mining                                         120
    6.15.2    Potential nickel producers in Finland                     120
    6.16      France                                                    121
    6.16.1    Producers of nickel in France                             122
    6.16.1.1  Eramet                                                    122
    6.17      Germany                                                   122
    6.18      Greece                                                    122
    6.19      Greenland                                                 124
    6.19.1    Nickel deposits in Greenland                              124
    6.19.1.1  Ammassalik/Kitak                                          124
    6.19.1.2  Giesecke                                                  124
    6.19.1.3  Maniitsoq                                                 124
    6.19.2    NunaMinerals A/S                                          124
    6.2       Guatemala                                                 125
    6.20.1    Potential nickel producers in Guatemala                   125
    6.20.1.1  Fenix nickel project                                      125
    6.20.1.2  Maya Niquel S.A.                                          126
    6.21      India                                                     126
    6.22      Indonesia                                                 127
    6.22.1    Producers of nickel in Indonesia                          129
    6.22.1.1  P.T. Aneka Tambang                                        129
    6.22.1.2  P.T. International Nickel Indonesia                       130
    6.22.2    Potential nickel producers in Indonesia                   130
    6.22.2.1  Weda Bay                                                  130
    6.22.2.2  Gag Island                                                131
    6.22.2.3  La Sampala                                                131
    6.22.2.4  Sulawesi Mining Investment                                131
    6.23      Ivory Coast                                               132
    6.24      Japan                                                     132
    6.24.1    Producers of nickel in Japan                              134
    6.24.1.1  Hyuga Smelting Company Limited                            134
    6.24.1.2  Pacific Metals Company Ltd (Taiheiyo Kinzoku KK)          135
    6.24.1.3  Sumitomo Metal Mining Company Ltd                         135
    6.24.1.4  Inco TNC Ltd                                              135
    6.24.1.5  Nippon Yakin Kogyo Co Ltd                                 136
    6.25      South Korea                                               136
    6.25.1    Producers of nickel in South Korea                        136
    6.25.1.1  Korea Nickel Corp.                                        136
    6.25.1.2  Société du Nickel de Nouville-Calédonie et Corée          137
    6.25.2    Potential nickel producers in South Korea                 137
    6.26      Kosovo                                                    137
    6.26.1    Ferronikeli                                               137
    6.27      Madagascar                                                138
    6.28      New Caledonia                                             138
    6.28.1    Producers of nickel in New Caledonia                      141
    6.28.1.1  Société Le Nickel - SLN                                   141
    6.28.1.2  Independent nickel producers in New Caledonia             142
    6.28.2    Potential nickel producers in New Caledonia               142
    6.28.2.1  Goro                                                      142
    6.28.2.2  Koniambo                                                  143
    6.28.2.3  Nakety/Bogota                                             143
    6.29      Norway                                                    144
    6.29.1    Mining of nickel in Norway                                144
    6.29.2    Producers of nickel in Norway                             145
    6.29.2.1  Xstrata Nikkelverk                                        145
    6.29.3    Potential nickel producers in Norway                      145
    6.29.3.1  Blackstone Ventures                                       145
    6.3       Papua New Guinea                                          145
    6.30.1    Potential nickel producers in Papua New Guinea            145
    6.30.1.1  Ramu Nickel Project                                       145
    6.30.1.2  Mambare Nickel Deposit                                    146
    6.31      Philippines                                               146
    6.31.1    Producers of nickel in the Philippines                    147
    6.31.1.1  Nickel Asia Corporation                                   147
    6.31.1.2  Coral Bay Nickel Corporation                              149
    6.31.1.3  Toledo Mining                                             149
    6.31.1.4  Century Peak Metals                                       150
    6.31.2    Potential nickel producers in the Philippines             150
    6.31.2.1  Intex Resources                                           150
    6.31.2.2  Pujada Nickel Project                                     150
    6.31.2.3  Acoje & Zambales                                          151
    6.31.2.4  Nonoc                                                     151
    6.31.2.5  Taganito                                                  151
    6.32      Russia                                                    151
    6.32.1    Resources of nickel in Russia                             153
    6.32.2    Producers of nickel in Russia                             154
    6.32.2.1  MMC Norilsk Nickel                                        154
    6.32.2.2  Ufaleynickel                                              157
    6.32.2.3  Rezh Nickel                                               157
    6.32.2.4  Yuzhuralnickel                                            158
    6.32.3    Potential nickel producers in Russia                      158
    6.32.3.1  Amur Minerals Corporation                                 158
    6.33      South Africa                                              159
    6.33.1    Producers of nickel in South Africa                       160
    6.33.1.1  Anglo Platinum                                            160
    6.33.1.2  Impala Platinum Ltd                                       161
    6.33.1.3  Lonmin Plc                                                161
    6.33.1.4  Nkomati joint venture                                     162
    6.33.2    Potential nickel producers in South Africa                162
    6.33.2.1  Sheba's Ridge                                             162
    6.34      Spain                                                     163
    6.35      Sweden                                                    163
    6.36      Tanzania                                                  163
    6.36.1    Potential nickel producers in Tanzania                    164
    6.36.1.1  Kabanga Nickel Project                                    164
    6.36.1.2  Nachingwea Nickel Project                                 164
    6.36.1.3  African Eagle Resources Plc                               164
    6.37      Turkey                                                    165
    6.38      UK                                                        165
    6.38.1    Producers of nickel in the UK                             166
    6.38.1.1  ValeInco                                                  166
    6.38.2    Potential nickel producers in the UK                      166
    6.38.2.1  Alba Mineral Resources                                    166
    6.39      Ukraine                                                   166
    6.4       USA                                                       167
    6.40.1    Primary production                                        167
    6.40.2    Secondary production                                      167
    6.40.3    Potential nickel producers in the USA                     167
    6.40.3.1  Eagle Nickel Project                                      167
    6.41      Venezuela                                                 168
    6.42      Vietnam                                                   168
    6.43      Zambia                                                    169
    6.44      Zimbabwe                                                  169
    6.44.1    Producers of nickel in Zimbabwe                           170
    6.44.1.1  Bindura Nickel Corp.                                      170
    6.44.1.2  Rio Tinto Zimbabwe Ltd                                    171
    6.44.1.3  Zimplats Holding Ltd                                      171

    7         Consumption of nickel                                     172
    7.1       Consumption of nickel by end-use                          176
    7.2       Outlook for nickel                                        178

    8         End-uses for nickel                                       181
    8.1       Use of nickel in stainless and heat resisting steels      181
    8.1.1     Grades of stainless steel                                 181
    8.1.2     Forms of nickel used in stainless steel                   185
    8.1.3     Production of stainless steel                             187
    8.1.3.1   Stainless steel production capacity                       192
    8.1.4     Consumption of stainless steel                            197
    8.1.5     End-uses for stainless steel                              203
    8.1.6     Consumption of nickel in stainless steel and outlook      206
    8.1.6.1   Stainless steel market outlook                            208
    8.1.6.2   Future demand for nickel in stainless steel               213
    8.2       Use of nickel in nickel alloys                            215
    8.2.1     Use of nickel in high performance alloys/superalloys      218
    8.2.1.1   Nickel-base high performance alloys                       219
    8.2.1.2   Cobalt-base high performance alloys                       220
    8.2.1.3   Iron-base high performance alloys                         221
    8.2.1.4   High performance alloy processing technology              221
    8.2.1.5   Recycling of HPA scrap                                    223
    8.2.1.6   Consumption and markets for high performance alloys       224
    8.2.2     Use of nickel in special performance alloys               232
    8.2.2.1   Thermal expansion alloys                                  232
    8.2.2.2   Electrical resistance alloys                              233
    8.2.2.3   Magnetic alloys                                           233
    8.2.3     Use of nickel in general technical alloys                 235
    8.2.3.1   Nickel-copper alloys/cupro-nickel alloys                  235
    8.2.3.2   Coinage alloys                                            237
    8.2.3.3   Copper-nickel-manganese (Constantan)                      238
    8.2.3.4   Nickel-copper-zinc                                        238
    8.2.3.5   Aluminium-nickel                                          239
    8.2.3.6   Aluminium bronzes                                         239
    8.2.3.7   Phosnic bronzes                                           239
    8.2.3.8   Bronze and brass casting alloys                           239
    8.2.3.9   Shape-memory-effect (SME) alloys                          240
    8.2.3.10  Nickel-chromium alloys                                    241
    8.2.3.11  Nickel quaternary alloys                                  241
    8.2.3.12  Ultra-high nickel alloys and nickel metal                 241
    8.2.3.13  Nickel alloy coatings and castings                        242
    8.2.4     Outlook for nickel in nickel alloys                       242
    8.3       Use of nickel in plating                                  244
    8.3.1     Types of plating                                          244
    8.3.1.1   Electroplating                                            244
    8.3.1.2   Electroless (autocatalytic) plating                       245
    8.3.1.3   Selective plating                                         246
    8.3.1.4   Immersion coating                                         246
    8.3.1.5   Electroforming                                            246
    8.3.2     Applications of industrial nickel plating and coating     247
    8.3.3     Outlook for nickel in plating                             248
    8.4       Use of nickel in other alloy steels                       248
    8.4.1     Full alloy steels                                         249
    8.4.1.1   Structural or alloy engineering steels                    250
    8.4.1.2   Maraging steels                                           250
    8.4.1.3   Carbide strengthened steels                               251
    8.4.2     Tool steels                                               251
    8.4.3     Lean steels                                               251
    8.4.4     Bearing steels                                            252
    8.4.5     Other full alloy steels                                   252
    8.4.6     Outlook for nickel in other alloy steels                  253
    8.5       Use of nickel in batteries                                253
    8.5.1     Types of nickel-containing batteries                      253
    8.5.1.1   Nickel-cadmium batteries                                  254
    8.5.1.2   Nickel-metal hydride batteries                            256
    8.5.1.3   Nickel hydrogen batteries                                 256
    8.5.1.4   Nickel-zinc cells                                         257
    8.5.1.5   Nickel-iron cells                                         257
    8.5.1.6   Sodium nickel chloride batteries                          258
    8.5.2     Production and markets for secondary batteries            258
    8.5.3     Outlook for nickel in batteries                           260
    8.6       Use of nickel in catalysts                                261
    8.6.1     Markets for nickel in catalysts                           262
    8.7       Use of nickel in chemical uses                            263
    8.7.1     Ceramics and glass                                        263
    8.7.2     Dyes and pigments                                         263
    8.8       Use of nickel in cast iron                                263
    8.8.1     Grey cast iron                                            264
    8.8.2     Ductile cast iron                                         265
    8.8.3     Austenitic cast iron                                      265
    8.8.4     Martensitic white cast iron                               265
    8.9       Use of nickel in hydrogen storage                         266
    8.1       Use of nickel in in-situ composites                       266

    9         International trade in nickel                             268
    9.1       Trade in nickel ore and concentrates                      268
    9.1.1     Exports of nickel ores and concentrates                   268
    9.1.2     Imports of nickel ore and concentrates                    270
    9.2       Trade in nickel matte                                     271
    9.2.1     Exports of nickel matte                                   271
    9.2.2     Imports of nickel matte                                   273
    9.3       Trade in ferro-nickel                                     275
    9.3.1     Exports of ferro-nickel                                   275
    9.3.2     Imports of ferro-nickel                                   277
    9.4       Trade in nickel sinter                                    279
    9.4.1     Exports of nickel sinter                                  280
    9.4.2     Imports of nickel sinter                                  281
    9.5       Trade in unwrought nickel metal                           283
    9.5.1     Exports of unwrought nickel metal                         283
    9.5.2     Imports of unwrought nickel metal                         285
    9.6       Trade in nickel powder and flake                          287
    9.6.1     Exports of nickel powder and flake                        287
    9.6.2     Imports of nickel powder and flake                        289

    10        Nickel supply/demand balance                              291
    10.1      Nickel demand outlook                                     291
    10.2      Nickel supply outlook                                     292
    10.2.1    Future potential nickel production                        292
    10.2.2    Forecast primary nickel production                        294
    10.3      Forecast nickel supply/demand balance                     294

    11        Prices of nickel                                          296
    11.1      The London Metal Exchange                                 296
    11.1.1    Historical movements in LME nickel price                  297
    11.2      New York dealer nickel price                              301
    11.3      Market outlook for nickel prices                          302

    Tel: +44(0)20-8944-0066. Fax +44(0)20-8947-9568 Email:info@roskill.co.uk

http://www.roskill.com/reports/nickel

SOURCE Roskill Information Services


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