Canadian nickel producers look abroad to add capacity

Market developments involving nickel are causing mixed reactions.

Cominco is preparing new facilities at its Glenbrook ferronickel plant in Oregon to receive nickel ore from New Caledonia and increase production from 1.4 million lb. to 2.8 million lb. per month.

Inco has offered to purchase the Greenvale plant in one of the most environmentally sensitive areas near Australia’s Great Barrier Reef where water and ore to run the plant must be imported from elsewhere. Russian exports are causing disturbances as official exports are down but unofficial “scrap” material is appearing and being sold at substantial discounts to the LME. Additionally, several western producers, including Inco and Falconbridge, now process Russian concentrate at their refineries. Another part of the much publicized drop in official

Russian exports results from Cuban exports to the former USSR being shifted to western processors such as Sherritt Gordon and directly to consumers where possible. It seems unlikely the Russian consumer sector can absorb its normal production for some time and the higher export volumes, in some form, will continue.

Average LME prices (to date) in June slipped to US$3.27 per lb. from US$3.32 in May as LME inventories climbed again to 29,400 tonnes from 27,000 tonnes on June 1.

Zinc LME cash prices and stocks rose again fuelled by a squeeze on nearby contract settlements. The gap between cash and the lower 3-month price widened from US45 cents per lb. average for May to US82 cents to date in June. The situation may resolve itself by the end of the month. Stocks now stand

at 277,300 tonnes, up from 265,000 tonnes June 1.

Copper markets reflected the improved economic figures. Average June cash prices for copper are up to US$1.027 per lb. from US$1.024 in May along with a further drop in LME and Comex stocks to 291,000 tonnes from 297,000 tonnes. Cobalt producers Gecamines and ZCCM announced they would hold prices at US$25 per lb. for the balance of 1992. Depending on quality, dealer prices are clustered just above and below this bench mark.

Lead improved with increased demand. Average LME prices in June (to date) are up to US24.6 cents per lb. from US23.6 cents in May. Stocks were virtually unchanged at 136,875 tonnes.

Molybdenum oxide prices edged up again on improved steel industry demand to US$2.30-2.40 per lb. from the US$2.25 range.

In precious metals, platinum continued its rebound on production disruptions in Russia and South Africa and steady demand for auto catalysts, moving up to US$370.79 per oz. from US$357.87 in May. June averages (to date) for palladium at US$80.15 per oz. are down slightly from US$82.79 in May. On continued press commentary about annual consumption exceeding production, gold rose slightly to US$338.32 per oz. from US$337.04 and looks ready to test the long downtrend in the next few weeks. Silver was off a penny at US$4.06 per oz., little changed from May’s US$4.07.

— Jack Dupuis is a minerals marketing consultant based in Thornhill, Ont.