Despite increased demand for nickel, low profitability owing to the combination of persistently low prices and higher costs may result in project closures over the next five years, according to research and consulting firm GlobalData.
The company's latest report states that operating nickel mines scheduled for closure during the forecast period include the Savannah and Mount Keith mines in Australia, the Cantilan nickel project in the Philippines, and the Lac Des Iles mine in Canada. These operations face declining margins and also depleted reserves.
Global refined nickel consumption is set to grow from just under 2,000 thousand tonnes (kt) in 2016 to 2,023 kt by 2020, representing a compound annual growth rate (CAGR) of 1.3%, which is drop of the previous high growth of 5.23% from 2010 to 2015, according to GlobalData.
Cliff Smee, GlobalData's Head of Research and Analysis for Mining, explains: "Growth is supported by rises in the population and urbanization in emerging economies such as China and India, which are expected to invest heavily in upgrading infrastructure and expanding industrial and output capacity.
"Current low LME prices in the nickel market will shut high-cost capacity in the short to medium term, and when warehouse stock begin to deteriorate prices will revert to growth."
GlobalData believes that high prices post 2020 will support the development of new projects, including the Araguaia project in Brazil, the Mandiodo project in Indonesia, the Wingellina and Hooneymoon Well projects in Australia, the Platreef project in South Africa, and the Voisey's Bay mine expansion and the Eagle's Nest projects in Canada.