Nickel price tipped to average $20,000t in 2015 as sector prepares for more buoyant annual gathering

Carey Smith, Alto Capital

An average nickel price of US$20,000 per tonne has been forecast for Australian nickel producers in 2015 – but the sector has been urged to keep its grass roots focus on untapped potential nickel discoveries in Australia, rather than overseas.

The price expectation is more than 11% higher than the average US$18,000 evident in the sector so far in calendar 2014 – with Perth-based Alto Capital research analyst, Mr Carey Smith, saying returns could go even higher due to pressure from the greenback.

“By next year, I expect that the Australian dollar will be trading around the range of 85-87c to the US dollar on average and that will be a bonus for Australian nickel producers,” Mr Smith said.

“That exchange market environment can potentially add another 20% in Aussie dollar terms to revenue for producers, so the outlook for nickel not only looks pretty rosy at the moment but continues to hold firm for the long-term,” he said.

Alto Capital’s upbeat 2015 price outlook comes on the eve of next week’s one day Australian Nickel Conference in Perth on Thursday October 2 – a forum both Mr Smith and organisers say will be held amid the most elevated outlook for the commodity in some years.

Nickel was trading below $US14,000/t at the close of last year’s conference but Mr Smith says the base metal has since easily accounted for predictions that it could exceed $US18,500/t in 2014.

“For Australia’s nickel explorers, a positive nickel market makes it much easier to raise capital so the sector should be confident of at least a forward 12 month window of raising funds,” Mr Smith said.

“However, a dose of realism is also needed and while there is always pressure to unearth the next big discovery, our junior explorers have time on their side – particularly if they are venturing into Western Australia’s Fraser Range,” he said.

“While Sirius Resources ignited that region when it struck nickel sulphide mineralisation at Nova just over two years ago, Fraser Range is still a very fresh nickel province and we should not expect the Sirius success to be replicated in any sort of hurry,” Mr Smith said.

“Two years in a whole new province isn’t a long time to get to understand its geology and my sense is that nickel explorers already in or planning to enter the province have a two-year window or so in order to make the level of discoveries that can keep market sentiment interested in both nickel, and the Fraser Range.”

Mr Smith noted that some Australian explorers are seeking opportunities away from Australia but nickel-minded players did not need to look much further than Western Australia.

“Historic nickel-bearing hot spots such as Kambalda and Leonora/Leinster still offer great potential for significant nickel discoveries, as well as Fraser Range, as there is still plenty of nickel to be discovered in those areas,” he said.

“This is because nickel is a very hard to find base metal, with very small footprints that are mostly nickel sulphide deposits.”

He called on proven nickel companies to play a role in reinvigorating the Australian nickel industry by supporting wider grassroots and brownfields exploration.

Australian Nickel Conference Convenor, Mr Bill Repard, said the nickel sector had been energised this year, partly by speculation about how rapidly China was depleting its 2013 ore stockpile of 25 million tonnes, and similar speculation on when and if the Philippines would follow Indonesia’s path and impose export bans on unprocessed nickel ore.

“Currently, there are no new large-scale nickel projects coming on stream and existing or mooted export bans will only add to the pace at which supply and demand pressures must invariably spike a price rise,” Mr Repard said.

Mr Mark Fedikow, the President and CEO of Toronto-listed North American Nickel which has development projects in both Canada and Greenland, including the world class Sudbury district, is coming to Perth as a keynote speaker for the Conference, to be held at the Pan Pacific Hotel on Thursday October 2.