Nickel market braces for Indonesia moves

4/20/2012 6:25:06 PM | Interview with Mark Selby

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"We expect to see nickel prices move higher once the export restrictions kick in." If Chinese pig iron smelters can't get their feed from Indonesia, they will have to look elsewhere.

Mark Selby, Senior VP of Business Development for Royal Nickel Corp.

Focus: Advancing a large nickel sulphide project in Quebec

Can you give us your perspective on what is happening in the nickel market right now?

“Indonesia, a country that supplies about 15% of the world’s nickel, has introduced legislation aimed at banning exports of unprocessed nickel. This could happen as early as May and would affect countries like China and Japan, which are large importers of Indonesian nickel. Producers will have to produce a credible plan to process ore in Indonesia or have their export licenses revoked.”

How do you think this will play out over the next few months?

“Due to growth concerns in China, mining development stories haven’t been getting a lot of investor attention. But we expect to see nickel prices move higher once the export restrictions kick in. If Chinese pig iron smelters can’t get their feed from Indonesia, they are going to have to turn to other suppliers.”

How is this impacting the exploration and production side of the industry?

Royal Nickel Corp. (TSX: T.RNX, Stock Forum) is headed by a group of former Inco Ltd. executives and is developing the Dumont nickel project near Amos, Que. “When it reaches the production stage (likely by 2015) it will rank as the fifth largest nickel sulphide operation in the world.”

Trading at 49 cents this week, Royal Nickel has a market cap of $44 million, based on 89.5 million shares outstanding. The 52-week range is $1.88 and 47 cents.

Are there any other companies like Royal Nickel out there?

Hard Creek Nickel Corp. (TSX: T.HNC, Stock Forum) is developing the Turnagain nickel deposit in north central British Columbia. Trading at 12.5 cents this week, Hard Creek has a market cap of $10 million, based on 80.4 million shares outstanding. The 52-week range is 43.5 cents and 10.5 cents.

First Point Minerals Corp. (TSX: V.FPX, Stock Forum). Its flagship property is the Decar nickel property in central B.C. The project is managed by Cliffs Natural Resources Inc. (NYSE: CLF, Stock Forum). On April 16, First Point announced a 43-101-compliant resource estimate for the Baptiste deposit at Decar. It is estimated to host an inferred resource of 1.2 billion tonnes, grading 0.113% of recoverable nickel.

Trading at 66 cents this week, First Point has a market cap of $60.8 million, based on 92.2 million shares outstanding. The 52-week range is $1.06 and 39 cents.

ABOUT THE AUTHOR

Interview with Mark Selby

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