Posted on 21 May 2024
Nickel prices traded at the London Metal Exchange surged over 5% on Friday amid violent protests and unrest in New Caledonia, the world’s third-largest nickel producer in 2023.
The metal jumped nearly 7% intraday trading at $21,150/tonne, before easing back to a gain of around 5% at $20,880/t. The futures contracts boost was supported by concerns about further supply disruptions in New Caledonia, and the IEA’s forecast of future supply shortages driven by the “rapid” EV demand growth, mine closures and slow investment.
Despite its ongoing challenges, the South Pacific archipelago is expected to maintain its position as the third-largest global producer in 2030, with a 6% market share. According to an IEA report on Friday, Indonesia will hold a 62% share of the nickel supply in 2030, with the Philippines accounting for an 8% share. Together, these three countries should supply 76% of all nickel ore mined in the globe in 2030, up from 69% in 2023.
French miner Eramet operates five nickel mines in the country through its subsidiary SLN. Due to lower prices, the company has shut down production and reduced export volumes to 200,000 wet metric tonnes (wmt) in Q1 2024. This is 62% lower than a year earlier. Eramet says LME prices dropped 36% y-o-y in Q1 and its SLN ore prices by 33%. Yet, prior to the political unrest in New Caledonia, the firm anticipated “a more optimistic outlook in Q2.”
Earlier in the week, SLN announced a fire on the conveyor at the Kouaoua mining centre, which transports the ore to the seaside loading dock. The protestors’ attack is likely to halt exports, though the company is yet to confirm such outcome.
The IEA has identified around 25 operating or potential mines that could still be at risk of closure, if the current low nickel price persists, primarily in New Caledonia and Canada. The effects of these potential supply disruptions would be seen in the medium to long term, with Indonesia increasing its dominance with what some in the industry call “dirty nickel” due to its carbon footprint.
The French territory’s economy has deteriorated with the slump in nickel prices, despite the French government’s pledge to help maintain operations ongoing with subsidies. Paris has now sent in troops to regain control of a major road to the airport, as intensifying rioting left six dead.
Kallanish is awaiting an update from SLN.
Source:Kallanish
