Nickel reserves

The nickel reserves relate to proven reserves in land based deposits. Nickel resources (estimated at twice the amount of nickel reserves) which would encompass sub-economic reserves, i.e. not mineable at a profit are not included in the table. The development of new process technologies will result in the conversion of some resources into the reserve base. Ongoing exploration continues to add to both bases. According to some sources, nickel resources on the sea-bed are many times those located on land. The land resource base is thought to be in excess of 100 years at the present mining rate.

Nickel demand

Nickel demand in Europe decreased in the period 2002-2005 before recovering in 2006. In the Americas demand fell between 2002 and 2003 before growth resumed in 2004. Nickel demand increased strongly in Asia throughout the same period and stood 35% higher in 2006 than in 2002 thanks to rapid increase in Chinese nickel usage. Nickel demand is expected to continue to rise by 2-3% per annum.

First Use

Stainless steels account for about two-thirds of nickel consumption up from one-third in the past three decades. The market for stainless steel is growing at the rate of about 5-6% per annum. Little growth is expected in the other sectors of first use.

Nickel production

Strong world economic growth through the last five years has continued to support rising nickel production. In 2006 world primary production stood 14% higher than in 2002. In Europe, expansion in production was registered in Russia and Norway. In Oceania, Australia and New Caledonia experienced a decline in primary nickel production while Japanese primary nickel production also declined in both 2005 and 2006. Although world nickel production looks likely to recede in 2007 compared with 2006, further expansions by existing producers mainly in China, Canada and Russia indicate that a nickel production increase looks likely for 2008.

Nickel price

The price of nickel has experienced volatility over the last twenty years. In the first half of the 1990s the economic collapse of the former "Eastern Bloc" countries resulted in a surge of nickel exports that drove nickel prices lower than the cash costs of production resulting in reduced nickel production in the "West". Until 2003 the nickel cash price remained below US$10000 per tonne. The price breached $14000 per tonne in 2005 and then escalated dramatically through 2006 before peaking at an average of $52179 per tonne in May 2007. World nickel usage in 2006 stood 16 per cent above the level recorded during the price trough of 2001 and climbed further in the first half of 2007 thanks to buoyant Chinese demand. The nickel market registered a deficit of about 44000 tonnes in 2006, but this cannot explain the degree of price escalation experienced through 2007. The collapse of the nickel cash price to an average of $27652 in August 2007 would seem to indicate that speculative investment as well as strong market fundamentals played a part in the price bubble.