Nickel Q2'22 production results mixed as Russian producer maintains high output

Total output from five large primary nickel producers increased year over year in the second quarter but declined compared to the first quarter, according to data from S&P Global Market Intelligence. Total output from five large mined nickel producers, however, fell year over year but held relatively stable compared to the prior quarter.

Total primary nickel output in the second quarter from PJSC Mining and Metallurgical Co. Norilsk Nickel, Glencore PLC, Vale SA, BHP Group Ltd. and PT Vale Indonesia Tbk rose 8.5% year over year to 126,472 tonnes but fell 11.5% from the first quarter, continuing a trend of quarter-over-quarter decline.

Total mined nickel production by IGO Ltd., Lundin Mining Corp., Sumitomo Corp., Boliden AB (publ), and Zimplats Holdings Ltd. declined 10.4% from the year-ago period to 20,221 tonnes, while the quarterly production change was relatively mild at an increase of 1.2%.

Mined nickel refers to nickel ore and concentrates, while primary nickel includes the nickel used in smelter and refinery products, like cathodes, nickel pig iron and ferronickel.

The production changes came at a time of fluctuating industrial metals prices. Nickel prices have come nowhere near the historic peaks they reached in March, following Russia's invasion of Ukraine, but they have remained above levels seen before the run-up to the war.

Primary nickel output rises YOY on Norilsk jump

Russian primary nickel producer Norilsk Nickel recorded the largest year-over-year net production change with an increase of 17,015 tonnes, or 54.1%. The company attributed much of the change to low 2021 production volumes due to the partial suspension of operations at its Oktyabrsky and Polar Division mines in response to flooding.

Since the second quarter's end, The London Metal Exchange Ltd. has banned Russian nickel exported after July 20 from its approved U.K. warehouses. The exchange had previously declined to remove Norilsk Nickel from its system despite U.K. sanctions on the company's CEO, Vladimir Potanin.

Vale SA reported the largest year-over-year and quarterly production drops at 22.3% and 30.9%, respectively.

PT Vale Indonesia Tbk, which has five active nickel projects in Indonesia, recorded year-over-year and quarter-over-quarter declines of 16.5% and 9.1%, respectively. That was before the Indonesian government revoked more than 100 nickel mining permits as part of a broader effort to expand governance over the industry.

PT Vale Indonesia Tbk did not immediately respond to a request for comment.

* Read more about the exploration index for nickel and other base metals. * View a timeline of sanctions on Russia.

Mined nickel producers see middling results

Four of five of the largest mined nickel producers logged year-over-year production declines. The exception was Zimplats Holdings, a subsidiary of South Africa-based Impala Platinum Holdings Ltd., whose production remained relatively stable with an increase in production of less than 1% since 2021 and the first quarter of 2022.

IGO recorded the largest year-over-year production decline at 17.5%, closely followed by Sumitomo at 13.7%.

Sumitomo was the only top mined nickel producer to log both quarterly and year-over-year production decreases, a reversal of the 1,600% year-over-year jump it reported in the first quarter.

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