By Leia Michele Toovey- Exclusive to Nickel Investing News ^[1]

^[2]Nickel prices have slumped over 80 per cent to about $9,850 a tonne since reaching a record high of $51,800 in May 2007. Many nickel enterprises have already chosen to suspend production on account of low prices, but these output cuts have failed to keep pace with the drop in demand from stainless steel producers.

There was hope that stimulus package spending would revive nickel prices. This hope faded this week when Jinchuan Group Co said that Chinese State Reserve Bureau is unlikely to buy the metal for its stockpiles now. Mr. Yang Zhejiang, chairman of Jinchuan, said that "Looking at the current situation, the government is unlikely to buy nickel. Demand from stainless steelmakers is not very good and the demand for the metal is not sufficient. At current prices, we have a little profit." China accounts for about 25% of global nickel demand. There was hope ^[3] that China may buy 10,000 to 20,000 tonnes of the metal for its reserves.

Nickel futures declined this week on the MCX. The most actively trading, the nickel March contract, is trading down 1.58 per cent against its earlier close of Rs 505. Nickel April contract is trading lower by 1.41 per cent at Rs 504 per kg after opening at Rs 514.30.  Similarly, Nickel May contract is trading down 2.30% at Rs 510 per kg as compared to its earlier close of Rs 522.

European Nickel Plc ^[4] plans to issue 72.5 million shares to raise about $6 million to bridge the time gap before it receives financing from two Chinese partners. Shares will be issued at 6 pence each, a slight discount to the closing price on Tuesday of 6.35 pence. On Feb. 19, European Nickel announced the signing of a $350 million debt facility with two Chinese partners to fund its flagship Caldag mine in Turkey.  The financing amount is adequate to fund the project through production. On Wednesday, the firm said it would take around three months for the deal with the Chinese partners to be finalized and it needed interim funds to continue to develop the project in the meantime.

According to First Nickel, the company will have its Lockerby nickel mine up and running within two years, after suspending ^[5] nickel production last Oct as metal's prices crashed.  The restoration costs of Lockerby are estimated to be about $54.2 million. The company anticipates nickel prices during 2011-2015 will increase to $10 per tonne.

Cuba may soon join a growing list of countries shutting down nickel plants in the face of slumping prices. Unrefined nickel and cobalt production at two state-run processing plants are under review due to their inefficiencies. "Cutbacks are being considered at two state run plants" state-run television's top economic commentator, Ariel Terrero, said last week.  The international economic crisis is hitting the nickel industry hard, with little prospect for improvement in the short term. "Evidently we will have to take measures. The Caribbean island is one of the world's largest nickel producers at 70,400 tonnes in 2008, and supplies 10 per cent of the world's cobalt, according to Cuba's Basic Industry Ministry. 

Mirabela Nickel Ltd ^[6] signed a commitment letter to raise $150 million from a senior secured term loan facility to develop its Santa Rita project in Brazil. The nickel explorer said the commitment is approved by Credit Suisse, Barclays, West LB, and Caterpillar Financial Services. Credit Suisse and Barclays will pay $40 million each, while Caterpillar Financial Services will pay $30 million. The commitments to fund are conditional on Mirabela raising $133 million in additional equity. Mirabela Nickel also said it is in talks with another lender to raise up to an additional $40 million.