By Leia Michele Toovey- Exclusive to Nickel Investing News

Nickel futures traded higher on India’s Multicommodity Exchange (MCX) today due to increased buying interest.

A favourable response to the stimulus packages that will be put in action by the incoming U.S. administration lifted most of the base metals.  On the MCX, Nickel December 2008 contract opened at Rs 462.80 a kg as compared to its previous closing of Rs 457.20. The last quoted price for the same was Rs 481, up 5.21 per cent. Nickel January 2009 contract surged by 5.16 per cent to Rs 495.50 a kg as compared to its previous closing of Rs 471.20. It touched a high of Rs 499.50 and low of Rs 478. On the London Metal Exchange (LME), three-month nickel MNI3 was indicated at $9,100/300 a tonne. Global nickel prices reached an all-time high of $51,800 a tonne in May 2007, but were already sharply lower by the end of last year at around $26,000. This rapid price deterioration is forcing many nickel companies to change strategy.

Company news

X-strata placed its Falcondo ferro-nickel mines on care in maintenance in August for four months, citing market conditions. The company now plans to extend the period of production hiatus.  ”Despite evaluating various alternatives for the Falcondo operation during the temporary suspension of operations, it is not economically viable to restart operations,” Ian Pearce, Chief Executive Officer of Xstrata Nickel said in a recent statement. There has been no mention of when operation will restart; however, a feasibility study is in progress to convert the operations energy source from oil, to a viable alternative.  Such a move has the possibility to drastically cut operating costs.

Brazil’s Vale will indefinitely close a mine in Canada that yields 8,000 tonnes of finished nickel a year as the global economic slowdown hits demand for raw materials. The cutback, which will also slow or delay two other nickel and copper projects in Canada, comes as Vale said it is necessary for the company to cut output at some high-cost operations and lay off 1,300 workers globally. The cut-backs in Canada follow Vale’s decision in October to reduce output at some high-cost operations, including a reduction in nickel output at its PT Inco unit in Indonesia and processing plants in Dalia, China. In July, the company will also stop mining nickel for one month its Voisey’s Bay mine in Newfoundland, which produces nickel and copper concentrates.  Vale Inco made the announcement last Thursday that it will shut down production at Voisey’s Bay next summer, because of a sudden downturn in the global marketplace. Vale sent letters to its management employees at the mine, explaining what was happening and asking management to contact employees to advise them to take their annual vacation during the shutdown month.

Rio Tinto will slash more than 14,000 jobs globally as part of an aggressive cost cutting exercise to reduce its debt. The company wants to curb its debt by $10 billion by the end of next year. To meet that target, the company is also planning to halve capital works expenditures next year and put more of its assets up for sale.

The world’s top producer of nickel and platinum group metal palladium, Norilsk Nickel will cut output of the metals this and next year.  Nickel output is expected to fall to 298,000 tonnes this year from previously planned 300,000-305,000 tonnes, and palladium output to 2.764 million ounces from the earlier forecast 3.00-3.05 million ounces. In 2009, Norilsk expects to produce 290,000-305,000 tonnes of nickel and 2.610-2.625 million ounces of palladium. Norilsk intends to keep copper output at the planned level of 420,000 tonnes this year, but plans to cut output to 385,000-400,000 tonnes in 2009 due to completion of mining rich cuprous ores.  Their platinum output will fall to 625,000 ounces this year from the previously planned 710,000-720,000 ounces and to 600,000-620,000 ounces in 2009. Norilsk will focus on cash-generating assets and reducing capital expenditures to critical committed amounts with an option for fast future recovery, as well as postponing exploration and early stage projects.

French metals and mining company Eramet SA Tuesday said it now expects current operating income in 2008 in the same range or slightly greater than the EUR1.2B in the full year of 2007. In its third quarter revenue publication, the group had confirmed outlook of “significantly higher” current operating income for 2008.  Eramet also said it has revised its 2008 nickel delivery forecast to 51,000 tonnes and adjusted production accordingly. From the start of 2009, nickel output will be adjusted to an annualized level of around 50,000 tonnes.  The company is currently looking into steps to cut production costs.
Wallbridge Mining Company Limited, together with its joint venture partner Lonmin Plc, will spend C$1.5 million to carry out the 2009 work program on the Wallbridge/Lonmin Sudbury Camp Joint Venture properties. The funding provides for approximately 3,700 meters of diamond drilling and other exploration work for the period from October 1st, 2008 to September 30th, 2009. “We are very pleased that Lonmin is again participating in our exploration efforts in Sudbury”, stated Alar Soever, President of Wallbridge. “This will allow us to further advance these properties, in spite of the current difficult economic environment.” Wallbridge and Lonmin formed the SCJV in January 2002 to explore a number of properties in the Sudbury area for platinum group metals, as well as copper and nickel. Lonmin and Wallbridge will both contribute funds to the exploration program, with Lonmin contributing C$1.1 million, and Wallbridge contributing C$0.4 million.

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