"From green hype to bailouts, the nickel industry has imploded"

" \r\n \r\n \r\n \r\n \r\n \r\n From green hype to bailouts, the nickel industry has imploded \r\nJust 18 months ago, the world\u2019s biggest mining company was in a nickel frenzy. BHP Group, to much fanfare, had struck a deal with Tesla Inc. to supply it with the crucial ingredient for electric vehicles. It was about to go toe-to-toe with Australian billionaire Andrew Forrest for control of one of the globe\u2019s most prospective mines.\r\n\r\nFor BHP, nickel offered a bright spot. Its management had earmarked the material as a key pillar of growth, a future-facing commodity that would help offset its exit from fossil fuels and let it tap into new demand driven by the world\u2019s race to decarbonize.\r\n\r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n\r\nYet things have quickly soured for BHP and other miners. The nickel market has been thrown into chaos after a flood of new supply from Indonesia \u2014 the result of huge Chinese investment and major technological breakthroughs. Mines across the world are at risk of closing, others are asking for state bailouts or going bust. BHP, for one, is now weighing up\u00a0 the future of its flagship Nickel West mine \u00a0in Australia.\r\n\r\nUntil recently, many of the industry\u2019s biggest names couldn\u2019t have been more bullish about the prospects for nickel. The once-boring metal, traditionally used to make steel stainless, is a crucial ingredient for electric vehicle batteries. A supply shortage stretching for years to come was forecast and mining companies jumped at a great opportunity to burnish their green credentials.\r\n\r\nTraditionally, nickel has been split into two categories: low grade for making stainless steel and high grade for batteries. A huge Indonesian expansion of low-grade production led to a surplus, but processing innovations have allowed that glut to be refined into a high-quality product that\u2019s hitting the battery market.\r\n\r\nAs a result, prices for the metal have crashed over 40% from a year ago, adding to hurdles in a market that is also wobbling from weak demand and persistent concerns about China\u2019s economy. Macquarie analysts estimate that more than 60% of the global industry is losing money at current prices.\r\n\r\nThe scale of the collapse has left some in the industry questioning if there\u2019s a future for most nickel mines outside of Indonesia. It\u2019s also adding to concerns among US and European policymakers about China\u2019s control over key commodities, with its companies leading much of the Indonesia\u2019s production.\r\n\r\n\u201cAfter watching the tide go out on the nickel world for over a year \u2013 with the halving of its metal price \u2013 we\u2019ve got some high-cost assets exposed now,\u201d said Tom Price, head of commodities strategy at Liberum Capital Ltd. He added that mines in Western Australia and the French territory of New Caledonia are likely to be the most vulnerable.\r\n\r\n In New Caledonia \u00a0\u2014 the South Pacific island chain that was once seen as the future of nickel production \u2014 the French government has been forced to step in to keep mines and plants operating that are essential to the territory\u2019s economy. Officials have been meeting with key shareholders of three processing plants to hammer out a rescue deal, with no breakthrough so far.\r\n\r\nThe situation has been equally bleak in Australia.\r\n\r\nIn addition to BHP\u2019s review of nickel assets there, Panoramic Resources Ltd. is suspending a key mine after entering voluntary administration late last year, when it failed to find a buyer or partner. An IGO Ltd. site will be shuttered, as will some operated by tycoon Andrew Forrest\u2019s Wyloo Metals Pty Ltd. and First Quantum Minerals Ltd.\r\n\r\nProducers in Western Australia are also turning to officials for help. At a crisis meeting at the end of last month, miners asked the federal government to provide tax credits for downstream processing.\r\n\r\nBut even with production pullbacks starting to bite, they\u2019re unlikely to provide imminent support to nickel prices, according to Allan Ray Restauro, an analyst at\u00a0 BloombergNEF . He said, \u201cThe flood of supply from Indonesia is projected to continue to exert downward pressure on prices in 2024.\u201d\r\n\r\nThat\u2019s because Indonesian production \u2014 which already accounts for half of global supply \u2014 may prove more resistant to output cuts. The Southeast Asian nation has emerged as a global nickel hub after billions of dollars of investment in efficient plants that benefit from inexpensive labor, cheap power and readily available raw materials.\r\n\r\nStill, the country\u2019s rapid expansion has drawn criticism. Much of its production comes from coal-powered energy, giving it higher emissions per ton than rival producers, and its rapid expansion is eroding rainforests.\r\n\r\nProducers such as BHP have instead trumpeted that buyers paying a premium for so-called green nickel would help lift prices. So far, however, there has been little evidence of that.\r\n\r\nThe company conceded late last year that automakers remain happy to buy Indonesian nickel, suggesting there will be little relief for miners elsewhere any time soon.\r\n\r\n\u2018What can stop these mine and project closures? A sustained lift in nickel prices, obviously,\u201d said Liberum\u2019s Price. \u201cTypically, only a nickel demand recovery can achieve that.\u201d\r\n\r\n \r\n \r\n \r\n "

"From green hype to bailouts, the nickel industry has imploded"

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