Soviet factor skews forecasts for nickel market

Worldwide nickel consumption in balance with production until the late 1990s and annual growth in consumption at a galloping 3.4% after that (at least until 2005.) These were the projections of nickel-copper producer Falconbridge as delivered by Tom Pugsley, the company’s director of mining, engineering and research.

Pugsley’s comments were made at a recent meeting of the CIM mineral economics committee in Toronto, and were all the more timely for coming so soon after his recent visit to a number of the Soviet Union’s nickel mining/metallurgical centres.

The Soviets are the world’s largest nickel producer (and consequently a major source of platinum group metals) accounting for 29.9% of world production versus 27.3% for Canada (or, 215,000 tonnes and 196,200 tonnes, respectively, for 1989). If Cuba’s production is included, and this is the reality of the present relationship between the two countries, the Soviet total increases to 35.9% or 258,500 tonnes.

The 3.4% growth in consumption is nowhere near matched by the growth in production and, by 2005, there is a projected shortfall in excess of 200,000 tonnes, an amount that exceeds Canada’s total annual output for 1989. Pugsley screened through a global assemblage of about 20 nickel exploration projects, eliminating half of them on the basis of logistics, poor grade or inadequate reserves. The remainder included Falconbridge’s Raglan deposits in the Ungava Peninsula of Quebec.

(Noticeably, there was no mention of any Sudbury or Manitoba projects. This omission underscores the reluctance of either Inco or Falconbridge to publicly recognize ore reserves in the “possible” category. It also conveniently denies the independent estimation of the capability either company has for increasing production rates as opposed to simply maintaining them.)

The biggest question mark hangs over the Soviet Union and Cuba for new supplies of metal. The accompanying chart shows that Soviet nickel exports to the West have increased dramatically during the last few years. With the known high grades of Soviet reserves, and their abundance, the Soviet Union could go a long way toward closing the production gap. The hard currency that comes from exporting to the west is needed, the plant and labor force are already in place but will the present political turmoil spill over and spoil the equation?

A similar state of affairs exists with Cuban nickel, albeit on a lesser scale. There, too, reserves of ores are immense; this time the ores are lateritic rather than sulphide, the metallurgy is long proven and the labor force is trained and experienced.

Considering that 5-6 years is needed to bring a mine on stream in Canada (including an estimated two years for the environmental phase at Raglan) and that the nickel production shortfall will start to show in 1997-1998, the push is now on for mine development.