Australian nickel output to defy global deceleration

The Nova operation in Western Australia. Image: Independence Group

Australia is set to grow its nickel production against a significant global slowdown for the commodity over the next decade, according to Fitch Solutions.

The world’s nickel ore production could fall by 15.4 per cent year-on-year in 2020 due to the introduction of a nickel ore export ban in Indonesia.

Global nickel production was projected to grow by an annual average rate of 1.7 per cent year on year, a considerable plunge from the 6.7 per cent year on year average achieved over 2010 to 2019.

Fitch Solutions expected nickel production to reach 2.8 million tonnes by 2029, up from 2.1 million tonnes in 2020.

Australia, along with Russia and Canada, will maintain a stable regulatory environment and solid project pipeline, according to the analyst firm.

“We currently forecast 21 new nickel projects in the country’s pipeline, which will support an average production growth of 2.1 per cent year on year over 2020–2029,” Fitch Solutions stated.

It also highlighted contribution from IGO’s Nova operation in Western Australia to the national nickel production in the years to come.

IGO produced 30,708 tonnes of nickel in concentrate at the Nova mine during the 2019 financial year, exceeding its guidance of 27,000 to 30,000 tonnes.

“Moving forward, IGO aims to discover and develop similar nickel deposits that will further boost Australia’s output as the company aims to capitalise from nickel-related battery demand,” Fitch Solutions stated.

Glencore’s Murrin Murrin operations in Western Australia also produced 36,600 tonnes of nickel metal in 2019, a 3 per cent (or 1100 tonnes) higher than the previous year.

BHP also decided to keep its Australian portfolio of nickel assets to benefit from the electric vehicle revolution after previously considering a sale, according to Fitch Solutions.

Construction of a nickel sulphate plant at BHP’s Kwinana nickel refinery in Western Australia is under way, with stage one operation expected to produce up to 100,000 tonnes a year of nickel sulphate.

BHP expects to achieve first production at the refinery in the first half of this year.

“(Our) autos team forecasts electric vehicles to see significant production growth in the coming years, meaning the Australian nickel sector will likely attract further investor interest in the medium- to long-term,” Fitch Solutions concluded.

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