Courtesy of Xstrata
There is a high demand for nickel in the world today.
There are few who would disagree with that statement.
Beyond that point, however, opinions differ
greatly on what this demand means for the future of
nickel prices and production.
Dave Constable, vice president of investor relations at
Canadian FNX Mining Company, believes that the price will
remain high and demand will continue to outstrip the available
Laterites – nickel’s new frontier
When it comes to predicting the future supply of nickel, it is
necessary to take into account the geology of deposits.
Constable offered his insights, which stem from the finer points
of the production side and his background as a geologist.
“Nickel deposits mainly come in two forms,” explained
Constable. “There are the sulphides, which accounted for
most of the worldwide production until now, and the laterites,
which contain about 70 per cent of the world’s
reserves of nickel, but only account for about 40 per cent of
Nickel laterites, according to Constable, are a much more
challenging type of ore from which to extract the metal.
“Laterites formed when sulphide deposits were weathered
by nature over millions of years,” explained Constable.“This left
iron, magnesium, silicon and, of course, nickel.” The reason the
nickel is there, however, is because the high temperatures (lateritic
deposits mostly occur within 15 degrees of the equator)
and moisture failed to extract it, even after millions of years.The
miner’s challenge, then, is to accomplish what nature couldn’t,
and do so in a cost-effective way.
Much in the same way that heavy oil has a higher cost base,
explained Constable, laterites cannot be profitable below a certain
“Up to now, we dealt with sulphide nickel, which was relatively
inexpensive to bring to production and involved predictable
technology, so we saw prices of $3 to $3.50/lb worldwide,
and those were used to evaluate the viability of new projects.
Now we have more and more laterite projects coming
online. These are increasingly expensive, increasingly over
budget and late coming online, and there’s a long tail bringing
them up to production.”