Now is the time to get back into the nickel business, says the president and chief executive officer of a junior nickel miner with operations in Timmins and Gogama.
"We make money at $7 (U. S. per pound) nickel," Gary Nash of Liberty Nickel said Monday. "We make good money at $8 nickel and very good money at $9 and so forth. Above $10 would be excellent, (but) I don't think it will go above $10. The Chinese have too much pig iron (a form of nickel)."
Liberty Nickel is now mining at its Redstone and McWatters Mines, producing 300 and up to 500 tonnes of ore a day respectively. McWatters, which is in the development stage and has now reached 150 metres of depth, is producing nickel. Ore from the two sites is treated at an on-site concentrator and shipped to Xstrata Nickel's Falconbridge smelter in Greater Sudbury for processing.
In the event of a labour dispute involving Mine Mill Local 598/CAW next month, he said Liberty Nickel could ship its concentrate to China for smelting. That's because its majority owner is the Jilin Jien Nickel Industry Company in Panshi City.
Nash said the Vale Inco strike "helps (nickel prices) in the short term. It's taken a little bit of nickel out of the market."
Nash said the company's cost of production is close to $7 US per pound. Nickel was selling for $8.31 US per pound on the London Metal Exchange on Friday.
Liberty Nickel plans to open a third nickel mine -- Hart -- by mid-2010. That mine will be staffed by McWatters Mine employees, but could require an additional 15 employees.
"It's about 4.5 years of mine life," he said. "But we have only drilled about one-third of the project. It has 737,000 (tonnes of ore) inferred and 600,000 measured. It's good grade ore at 1.5% nickel."
Nash said it's hard to understand why nickel prices are in the $8-9 US range while inventories of the metal in the London Metal Exchange warehouses are at record levels.
"That is totally against the laws of economics, the law of supply and demand," he said. "You have 160,000 tonnes sitting in the LME warehouses, but there's 114,000 sitting in one warehouse in Rotterdam. Why is that metal just sitting there when the American steel producers are paying a premium up to 90 cents a pound to get nickel for their (stainless) steel?"
David Constable, vice-president- investor relations of FNX Mining, which operates the McCreedy West and Podolsky mines and the Levack Footwall deposit in Greater Sudbury, isn't concerned about what happens with nickel in 2010 because FNX is focused on copper.
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"Right now, our star is hitched to the copper market," he said "We are out of the nickel business, have been out since the fourth quarter of 2008.
Constable said the company is looking to mine nearly 900,000 tonnes of ore at its Greater Sudbury operations, producing just less than 50 million pounds of copper and eight million pounds of nickel.
Constable said with China's appetite for nickel remaining constant, while world inventories of nickel continue to grow, it is FNX's view that the world nickel market will fully recover when the North American and European economies fully recover. That recovery, he said, won't come until the end of this year or sometime in 2011.
"We have said from the beginning when everything went in the tank, this is going to be a two-or three-year wave," he said.
FNX now has about 450 people working at its Greater Sudbury operations, up about 40 from the end of 2008. Ore from the operations is being processed at Vale Inco's Clarabelle Mill in Greater Sudbury.
Ursa Major Minerals Inc., which shut down its Shakespeare nickel open pit operation just outside of Greater Sudbury in October 2008, is looking to re-open it shortly.
"It's a matter of days," said Richard Sutcliffe, the company's president and chief executive officer. "We believe there is a favourable outlook for the metal for the foreseeable future ... We believe the recovery has taken hold."
Sutcliffe said 35 people were working at Shakespeare when it shut down. Ore from the operation will be crushed on site and then sent to Xstrata Nickel's Strathcona Mill for processing.
Ursa Major Minerals is also looking at opening a second nickel mine -- the Nickel Offsets Mine -- also northwest of Greater Sudbury.
"We're getting there," said Sutcliffe. "It's quite promising. "We have some numbers we're putting out in the next week. We're quite impressed by them, but the main focus is Shakespeare."
Source: Sudbury Star
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