By Leia Michele Toovey- Exclusive to Nickel Investing News

It is no secret that there has been a big price crash in industrial metal prices this year, and nickel took the biggest hit. But nickel’s poor performance may mean that it will be the first to pull itself out of troubles. We all know that there will be an upside for all the commodities, and with key timing there is a much better opportunity for the smart investor to make astronomical profits.

Before the downswing, there was little opportunity in the over inflated economy. As a testament that that an economic downswing can be a time of greatest opportunity, I found it interesting to learn last week that Warren Buffet just had one of his best quarters amassing wealth from the stock market. He pulled this off in a time period where the economy was perpetually taking a nose dive.

Norilsk Nickel senior economist David Wilson is convinced that their will be some prudent shuffling around when it comes to the performance ratings of the industrial metals. He anticipates that nickel will gain steam; but copper, the metal that held up the best in the midst of global market turmoil will likely experience more downward pressure. Commenting on copper’s future, Mr. Wilson stated “because the prices are above the marginal cost of production, there is little incentive for producers to cut output so the prices face significant downside risk.” Three-month copper MCU3 was trading at around $5,380.

The metal, used mainly in construction, is trading well below its record high of $8,940 per tonne it hit in early July. Wilson said analysts’ expectations of copper demand was too optimistic as he believed the full impact of the slowdown in the Chinese housing market was not yet fully reflected in demand. “There is no sign of demand recovering China,” he said, adding the lower demand will bring supply-related consequences. “Slowing demand will push the copper market into a surplus in 2008-2010.”

When it comes to nickel, the market position paints a different picture. Wilson thinks that the worst may be over. Further downside risk is limited, because at current prices nickel is trading below its marginal cost of production. Three-months MNI3 nickel was at around $13,000 a tonne. “Nickel demand is expected to be supported on rebuilding of stocks by stainless steel producers and distributors,” Wilson said. Cutback in stainless steel production since last year and producers consuming stocks have slashed nickel demand.

World nickel prices are now only a quarter of what they were just months ago when nickel hit its peak, but at the same time to be optimistic, it is important to note that nickel is still double its value of two years ago. Current nickel prices are causing many miners to struggle in maintaining profitable operations. Even X-strata closed down one of its mines this summer for maintenance work, and it seems every week there is a new company that is diversifying operations, reporting dwindling stock value, or even facing a hostile takeover.

This week, DMCI Mining Corp. announced that they are thinking of proposing to their Australian partner, Rusina Mining NL, the temporary suspension of their direct shipments from their mining site in Zambales. They will open this proposal to debate when they have a board meeting later this week. The 50-50 joint venture between DMCI Mining and Rusina Mining started early in 2007, and has been considered an ideal partnership, with Australian Rusina having the financial resources and Philippine DMCI bringing local know-how to the table. Regional knowledge is key to operating mining projects in developing countries; as controversy is usually stirred up by the locals. The president of DMCI Holdings, Isidro Consunji, motioned towards lack of sales as the main culprit behind shrinking profits. Consunji added that his company would be willing to wait and see if market prices settle before making any drastic moves.

Rusina Mining’s chief executive, Robert Gregory, sees things a different way. When interviewed by telephone, Mr. Gregory stated that their Zambales mining operations will continue to operate. He did confirm that their overseas markets “have contracted a lot,” but Rusina is still committed to sustaining their Zambales operations. “We are here for the long term. We plan through ups and downs in this business, not just when the prices are high.”

To add extra value to the company, necessary in the current economic landscape, Rusina is pursuing a nickel processing plant in Zambales that would be an “added-value” to their nickel ore deposits. This will require a great deal of capital investment into technology that would allow them to extract gold, nickel, and other precious metals from low grade ores. Despite the high price tag, Gregory feels that it would be a sustainable endeavour.

Given that nickel prices are so close to rock bottom, and mining company’s shares have dropped drastically, now would be the time to start planning your next investment. I remember how many people kicked themselves for not jumping on stocks such as Microsoft and Starbucks back in the day. Although the recession has hit many investors hard in the pocket book, it has also has opened new doors.