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General Review Of Nickel In 2009 And Its Outlook For New Year (2)
(Continued from dated January 22, 2010)

Nevertheless, reflecting the extremely risen nickel price as seen in 2007 and 2008, consumers left from nickel and this case caused to change the composition in consumption of raw materials for production of stainless steel, having resulted in a fall of nickel price. The ratios of nickel-based stainless steel produced in Japan for the last 2 years were <> 2008 : 57% and <> 2009 : 61%, having recovered by 4% from that in 2008. This recovery in production of nickel-based stainless steel was due to a considerable reduction in production of chrome-based stainless steel caused by a substantial decline in the automobile industry.

Owing to the Lehman shock emerged in September of 2008, the monetary organizations concerned had withdrawn from their financing or reinvestigated for their loan and these movements resulted in the negative case, which new nickel projects as once counted to be more than 200 have been determined to defer its completion to 1 - 2 years later. Also, a sharp fall of nickel price became the factor to deteriorate a profitability for nickel production. Most of these new nickel projects have been based on laterite ore (low grade nickel ore), from which nickel is planned to be extracted by means of applying PAL process, and the cost for nickel production is estimated to be US$10 - 15 per lb. of nickel.

Among these new nickel projects, those scheduled to launch in 2010 nickel production on commercial base are (1) Mirabela nickel project in Brazil (started to mine nickel ore from November 2009), (2) Goro nickel project in New Caledonia (commenced to mine nickel ore from November 2009), (3) Radio Hill nickel project in Western Australia (launched to mine nickel ore from December 2009) and (4) Munali nickel project in Papua New Guinea (to commence its development from January 2010). The largest question is from when does the Goro nickel project in New Caledonia move to produce nickel on a substantial scale. An accident, which sulfuric acid leaked, occurred on the end March of 2009 at this project and, therefore, commercial production of nickel metal was unable to materialize in 2009. The management side so far did not release any official comment on this problem but it has been strongly viewed that the Goro project will produce nickel on a commercial scale from the second half of 2010.

The global production of stainless steel in 2010 is forecasted to increase on a base tone. The world output of crude stainless steel in 2010 is estimated at 27.50 million tons, increasing by more than 10% compared to that in 2009. However, the output of stainless steel in 2010 will be not possible to return to the level in 2007 (produced 28.10 million tons) and a feeling of the prosperity is insufficient. The world demand for nickel in 2010 has been felt with a certain response but the largest subject on nickel supply is an issue of the negotiations being currently taken place between management and two unions in Sudbury of Canada on renewal of labor agreement.

One labor dispute is an issue of the strike already continued from July of 2009 by unions of Vale-Inco and another labor matter is the negotiation between Xstrata Nickel and its union at Sudbury refinery (nickel mine) on renewal of labor agreement to be expired on the end January of 2010. According to an evaluation by the nickel industry, the nickel operations in Sudbury of Canada had been previously estimated to be an overwhelmingly low cost but have now been involved in the factors to raise its production cost. In view of the facts that, when nickel price had risen sharply, the wages of workers had been raised to a substantial extent, the mining in deeper pits has caused to increase cost and both companies of Vale-Inco and Xstrata Nickel have had new managements through the takeovers made in 2007 to 2008, an anxiety for issues of communications between managements and unions have been still left.@(Completed)
last modified : Thu 28 Jan, 2010 [10:11]
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