Nickel price hinges on South-east Asian mining policy

Subject

The recovery in nickel prices this year after a 40% drop in 2015 and the likelihood that they will continue to trend upwards.

Significance

President Rodrigo Duterte's administration has closed around one-quarter of the mines in the Philippines for environmental reasons since taking office in June. This, combined with rising demand from Chinese real estate, has sharply boosted nickel prices. However, at 11,250 dollars per tonne, the steelmaking ingredient remains almost 80% below the May 2007 all-time high of 51,800 dollars per tonne and around 40% below the levels reached after Indonesia banned ore exports in 2014. There is substantial uncertainty over supply from Indonesia and the Philippines. Indonesia could start exporting unprocessed minerals again, while the Philippines could reopen many of the mines it has shut down.

Impacts

• Nigeria has discovered a hitherto undocumented style of high-grade native nickel -- eventually this could put downward pressure on prices.
• The Philippines is threatening to close more mines due to environment concerns -- global nickel prices could surge higher.
• Indonesia has banned metal ore exports since 2014 to encourage firms to build smelters but rumours abound that Jakarta may lift the ban.
• Axiom Mining is studying the feasibility of a Solomon Islands direct shipping ore project that could compete with neighbouring exporters.