US dollar drop fails to lift nickel in light of Lehman bankruptcy
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By Leia Michele Toovey- Exclusive to Nickel Investing News
Nickel prices tumbled more than 5 per cent on Monday as investors sold-off metals amid financial turmoil after Lehman Brothers filed for bankruptcy.
The decline in the U.S. dollar failed to compensate for the Lehman instigated sell-off flurry. Analysts, however, are urging investors to sit tight as they expect the end of week prices to reflect the dollar’s decline.
Copper was positive today as the dropping dollar and declining stockpiles compensated for the Lehman crisis. Copper Investing News has an article, ‘Lehman catastrophe fails to shake LME copper’, that details how the red metal has held steady. If the greenback continues to drop, Nickel will hopefully mirror copper and regain some steam.
Nickel for three-months delivery on the London Metal Exchange dropped to US$18,225 per tonne and was at US$18,325/18,400 per tonne versus Friday’s close of US$19,250 per tonne. On the MCX, Nickel September contract opened at Rs 885 a kg as compared to its previous closing at Rs 881.40; and has moved in the range of Rs 851.30 to 886. The last traded price for the same was Rs 856, down 2.88 per cent. Similarly, Nickel October contract declined 2.70 per cent, at Rs 868.50 a kg against its earlier closing at Rs 892.60. Nickel November contract shed 0.56 per cent at Rs 892 a kg compared to its earlier closing at Rs 897, touching a high of Rs 892.
Cuba’s nickel industry, damaged by Hurricane Ike a week ago, has resumed part production, according to Basic Industry Minister Yadira Garcia. The state-owned Pedro Sotto Alba plant in Moa Holguin is now in full operation, and another state-owned plant in Nicaro Holguin was preparing to open. The Ernesto Chef Guevara plant, a joint venture with Sherritt International (S.TO) in Moa Holguin has suffered the greatest damage. There is no ETA as to when operates at this plant will resume. Cuba is one of the world’s top nickel producers at 75,000 tonnes of unrefined nickel and cobalt per year.
BHP Billiton has sent out a reassurance that despite being postponed, BHP Billiton will honor its agreement with local partner Asiaticus Management Corporation (Amscor) to develop a US$1.5 billion nickel project in Davao Oriental province. Ruben Tan, Vice-president of Amscor earlier asked Atienza, the Minister of Environment from Australia, to send a letter to BHP in regards to the joint venture agreement between Amscor and BHP Billiton, claiming that BHB misled Amscor to believe that actual production would start by 2010. Atienza responded with the statement, “The Pujada nickel project in Davao Oriental is a big ticket project that should not be rushed. They are still in the exploration stage. It is still along way before the company starts producing nickel. They need to have a clear blueprint that would guide them in their mining operations.”
BHP Billiton has yet to conduct a pre feasibility study focusing on the Pujada peninsula, Davao Oriental. The area has an estimated nickel reserve capacity of 150 million tonnes at 1.3 per cent concentration. The nickel processing plant, once operational, is expected to have an annual capacity of 50,000 tonnes. Amscor is eager for production to commence as soon as possible as the mine will be of great benefit to the local economy.
Australia’s Mirabela Nickel Ltd (MBN.AX) has signed an agreement to sell the remaining half its nickel concentrate from a new mine in Brazil to Norilsk Nickel. Mirabela has already agreed to sell the other half to Brazil’s Votorantim Metais Niquel S.A. Norilsk, the world’s largest nickel producer, will provide Mirabela with a US$50 million subordinated loan facility as part of the agreement. These agreements came following Mirabela’s July announcement that it will increase the size of the Santa Rita lode to yield 40 per cent more nickel after it starts up next year. This would allow the mine to produce on average annual 27,000 tonnes of nickel in concentrate. The open pit-designed mine, set to start in mid-2009 at a rate of around 18,500 tonnes of nickel in concentrate, should hit full stride by mid-2010.
Tags: BHP, concentrator, cuba, greenback, hurricane, investing news, lehman brothers, LME, lme copper, london, london metal exchange, mcx, Mine, Mining, mirabela, nickel, nickel prices, norilsk, stockpiles
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