Nickel reserves

The question of whether the natural resources of the planet are in danger of being exhausted is sometimes raised. In the case of nickel there appears to be little reason for concern. Nickel is the fifth most common element found on Earth. Only iron, oxygen, silicon and magnesium are more abundant. However, the reserves that can be economically mined are of course more limited. Nickel reserves refer to proven reserves in land based deposits. Nickel resources (estimated at twice the amount of nickel reserves) encompass sub-economic reserves, i.e. not mineable at a profit. 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

Usage of nickel has increased over time and is correlated with economic development. In the past decade world nickel demand increased from 1.009 million tonnes in 1998 to 1.278 million tonnes in 2008, a growth rate of 2.4 per cent per year. However, the upward trend has had peaks and valleys. The year 2006 saw the greatest demand for nickel at 1.401 million tonnes. In 2007, demand declined to 1322.7 million tonnes as the global economic crisis unfolded and in 2008 demand dropped again to 1278.2 million tonnes. Asia is now the largest regional market for nickel representing 54 per cent of total world demand. China alone now accounts for 25 per cent of world nickel demand compared with 4 per cent ten years earlier.

First Use

Because nickel is usually recycled, a distinction is often made between the use of newly produced metal and recycled scrap. ‘First use’ refers to the destination of newly produced nickel. By far the most important use of new nickel is the production of stainless steels. This use accounts for over 60 percent of first use nickel 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. Other sectors of first use include alloys, casting, electro-plating, chemicals and batteries.

Nickel production

Strong world economic growth until 2007 supported rising production of primary nickel metal. In 2007 world primary production stood at 1.42 million tonnes. However, the economic crisis led to lower worldwide nickel production in 2008 and production of primary metal declined to 1.37 million tonnes. Despite the worldwide decline, China, Norway and the European Union managed small increases in production in 2008, while declines were registered in Russia, Australia and New Caledonia. For the first half of 2009, worldwide production of refined nickel continued to fall.

Nickel price and stocks

The price of nickel has shown considerable volatility over the last thirty years. The chart below shows the historic price for nickel in both real and nominal values. In the late 1980s there was a peak in the price of nickel. 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. Nickel prices then declined until the end of 2008, when the average cash price in December hit a low of $9678. In early 2009, nickel prices began to once again climb and by August 2009 the price for a tonne of refined nickel had once again touched $20,000.

Stocks of nickel have grown as the worldwide economic recession continued. For example, at the beginning of 2009, LME stocks were about 78 thousand tonnes, and by the middle of 2009, LME stocks were above 100 thousand tonnes.