The nickel price surged in the second half of 2016, supported by a credit-fuelled construction boom in China and President Trump’s potential infrastructure spending plans, both of which increased demand for the metal.
Many analysts believe that nickel will do well in 2017 as well, and some have even predicted that it could become one of the best-performing commodities of the year. Increased construction is expected to continue to buoy the metal’s price, while mine suspensions in the Philippines, the world’s top nickel-producing country, could continue.
The nickel production industry is relatively concentrated with the top ten largest producers of refined nickel accounting for approximately 55% of global output in 2014.
Nickel occurs in nature principally as oxides, sulphides and silicates. Ores of nickel are mined in over 23 countries and are smelted or refined in 25 countries. Most important are Russia, Canada, New Caledonia, Australia, Indonesia, Cuba, China, South Africa, Dominican Republic, Botswana, Columbia, Greece and Brazil. Important nickel refineries also operate in Norway, Finland, France, Japan and the United Kingdom. Primary nickel is produced and used in the form of ferro-nickel, nickel oxides and other chemicals, and as pure nickel metal.
Mining and processing of sulphide ores has predominated nickel production due to low operating cost during the mining, concentrating and smelting stages when compared with laterite processing. Sulphide ores are, however, becoming increasingly difficult to find and the discovery rate is dipping sharply. Laterite ores, however, are abundant and account for the majority of global nickel resources but represent a minority of global nickel production.
About 65% of the nickel which is produced is used to manufacture stainless steels. Another 20% is used in other steel and non-ferrous alloys – often for highly specialized industrial, aerospace and military applications. About 9% is used in plating and 6% in other uses, including coins, electronics, and in batteries for portable equipment and hybrid cars. In many of these applications there is no substitute for nickel without reducing performance or increasing cost.
The world primary nickel production totalled 1.983 million tonnes in 2014 reaching in the period 2011-2015 an annual growth rate of 5.5%.
Usage of nickel has increased over time and is correlated with economic development. World nickel demand increased from 907 thousand tonnes in 1990 to 1.465 million tonnes in 2010, an annual average growth rate of 2.3%. Since then the strong growth recorded by the Chinese economy has further accelerated the increase in nickel demand that recorded in only six years, from 2010 up to 2015, an annual growth rate of 5.0%. Asia is now by far the largest regional market for nickel currently representing 71% of total world demand. China alone now accounts for close to 52% of world nickel demand compared with 18% ten years earlier.
As global demand continues supply shortfall is expected to widen unless additional production capacities of nickel become available. The challenges to ramp up capacity by existing nickel producers, create opportunities for companies that offer cost-effective processes to produce nickel products by treating the abundantly available nickel laterites.