According to the USGS(United States Geological Survey) data, the global nickel reserves in 2019 are 89 million tons, and the regional distribution of global nickel reserves is more concentrated, and the top three countries Indonesia, Australia and Brazil together account for about 60% of global nickel reserves, of which Indonesia and Australia account for more than 20%, and China's nickel reserves are less. Only 3% of global reserves.
With the continuous release of nickel production capacity in Indonesia, supply has increased significantly, and the global nickel market has continued to be oversupplied, and nickel prices have fallen again and again. In 2023, nickel prices fell by about 45%. More than 60 per cent of the global nickel mining industry is losing money at current prices, according to estimates. Among them, the biggest hit is Australia's nickel miners.
According to foreign news on January 30, Australian battery metal producer IGO Ltd said that due to low prices, it will stop production of Cosmos nickel project in Western Australia for maintenance, while cutting annual lithium production estimates. Canadian mining giant First Quantum Minerals announced that due to the sharp fall in nickel prices in 2023, the company decided to cut costs and suspend its operation at the Ravensthorpe nickel-cobalt mine in Western Australia, Australia, which will lead to 30% layoffs.
A year and a half ago, BHP Group, the world's largest mining company, announced that it had signed nickel supply agreements with Tesla and Toyota. At that time, BHP's management had identified nickel as a key pillar of the company's business growth. According to the Caixin report, BHP Billiton holds 120,000 hectares of land in Western Australia. The exploration results show that the area has more than 7.4 million tons of nickel reserves, which is the second largest nickel sulfide resource base in the world. And just last week, BHP warned about the outlook for its western Nickel operations, saying it was considering placing Nickel West, which employs 3,300 workers, in a "care and maintenance period".
Since September 2023, five miners in the WA Nickel industry have closed or scaled back production, including Panoramic Resources, BHP Nickel West, Wyloo and First Quantum Minerals. Western Australia's nickel industry is at risk of becoming unviable due to an influx of cheap supply from Indonesia, lower-than-expected demand for battery ore and rising local costs.
The nickel crisis in Western Australia needs "strong support" from the government.
On February 16, 2024, the federal government added nickel to Australia's Critical Minerals List, making it easier for struggling mining companies to access the federal government's A $4 billion critical Minerals Fund. But even if the nickel industry gets a $4 billion critical minerals fund, it will be a drop in the bucket for the entire industry.
According to a Reuters survey, nickel is expected to have a surplus of 241,000 tons in 2024; A surplus of 204,000 tons is expected in 2025. Nickel surplus in the next two years.
Citic related report shows that on the supply side, it is expected that pure nickel, ferro nickel, nickel sulfate, etc. will maintain the trend of supply expansion, of which nickel sulfate may have a higher supply growth rate in 2024. On the demand side, the stainless steel market is relatively rigid, and the growth rate is expected to be basically flat with previous years, while the growth rate of batteries may slow down, and the alloy plate is also a low-speed growth trend, so the oversupply of the global nickel market in 2024 May be further aggravated.
After an epic rise in nickel following the Lun Nickel event, the nickel industry will shift to a new stage of overall oversupply from 2023 onwards. International nickel prices will remain relatively low and may remain so for several more years before the nickel glut in the market is corrected.
