Canadian Mining Journal

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CANADIAN MINING PERSPECTIVES – Nickel lures them in with sky-high price

Our readers know that high prices for any metal spurs activity in that sector. Nowhere is that more true lately tha...


Our readers know that high prices for any metal spurs activity in that sector. Nowhere is that more true lately than the nickel industry. The price per pound is setting sky-high records. So is the price of taking over LIONORE INTERNATIONAL of Toronto.

NORILSK NICKEL of Russia has ratcheted up its offer to $27.50/share of LionOre. Bidding began when XSTRATA NICKEL offered $18.50/share at the end of March. Norilsk entered the fray in early May with an offer of $21.50. Xstrata came back with a bid of $25.00/share a week ago, and now Norilsk has topped that. This writer is wondering if the LionOre price is being inflated beyond its realistic value.

The offer for LionOre is almost 50% higher now than it was eight weeks ago. Does that make the Xstratas original bid ridiculously low, or the latest Norilsk bid ridiculously high?

Meanwhile, the price of nickel has reached an all-time high of US$25.00/lb, based on the London Metal Exchange (LME) price of US$50,000 per short ton. It has risen steadily from the US$10.00-mark of only a year ago.

But can nickel remain at that level? Already it is feeling downward pressure. At 8 a.m. eastern time this morning (May 23) it was trading at approximately US$22.50/lb. With LME stocks of nickel rising sharply over the last three weeks, the price may suffer from further pressure in the short term. Looking at the longer term picture, inventories have fallen sharply over the last year. The possibility of a shortage has CREDIT SUISSE saying the price may rise another 20%.

The high price of a pound of nickel has steelmakers threatening to find a substitute. They have not yet moved away from nickel, but if they do, the price of that metal could be forced downward.

In the meantime nickel miners can enjoy their good fortune.


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