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Nickel price surges on Indonesia export ban news as gold cools

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Nickel price surges on Indonesia export ban news as gold cools

The London Metal Exchange nickel price surged in the week ended Aug. 30 as speculation rose that Indonesia would expedite restrictions on nickel ore exports from January 2022 to the end of 2019, while gold's run temporarily stalled.

On Aug. 30 Reuters reported Indonesia's Energy and Mineral Resources Minister Ignasius Jonan saying the nickel restrictions came "according to the President's direction."

The move helped nickel defy the negative sentiment from the ongoing U.S.-China trade war, which hit most base metals bar copper, often the bellwether to macro forces, which rose mildly on China saying it would not immediately retaliate to U.S. plans to impose additional levies on a combined US$550 billion of Chinese goods.

Price ring

LME nickel rose from US$15,750 per tonne on Aug. 23 to US$17,850/t by Aug. 30.

On a weekly basis, copper ticked up to end the week at US$5,677/t from US$5,674/t, aluminum fell to US$1,712/t from US$1,745/t, zinc fell to US$2,245/t from US$2,260/t, lead fell to US$2,038/t from US$2,082/t and tin to US$15,775/t from US$16,025/t.

The S&P Global Platts IODEX iron ore CFR North China price also fell from US$88.95/t to US$85.85/t despite the price rising 5% on the last day of the week.

Platts said market sources saw a rise in end-user demand for seaborne cargoes on less stringent production cuts as well as expectations steel margins will be supported.

Having briefly hit US$1,555 per ounce early in the week, gold finished down at US$1,521.20/oz from US$1,527.10/oz a week prior, while silver rose from US$17.42/oz to US$18.22/oz.

Talking points

Gold's dip is not expected to last long, though UBS, Citigroup, ANZ Research and SP Angel all built the case for a long-term bull run.

Meanwhile, Channel News Asia reported Aug. 27 that consultancy Roskill believes at least US$22,000/t would be needed to incentivize new greenfield nickel projects, though that would partly depend on byproducts such as cobalt.

Though stainless steel accounts for about 70% of global nickel demand and batteries about 4%, Roskill expects the latter to rise to nearly 10%, or about 258,000 tonnes, by 2022, when many expect parity between the costs of making electric and internal combustion engine cars.

Financings

Peabody Energy Corp. commenced cash tender offers to purchase US$1 billion of its 2022 and 2025 senior secured notes, as part of a refinancing initiative to accommodate the pending Powder River Basin/Colorado joint venture with Arch Coal Inc.

Lundin Mining Corp. executed a third amended and restated agreement to increase its secured revolving facility to US$800 million with a US$200 million accordion option.

Metals X Ltd.'s Bluestone Mines Tasmania Pty Ltd. subsidiary reached an agreement with Citibank NA for a four-year, A$35 million secured term loan facility.

Galaxy Resources Ltd. acquired Alita Resources Ltd.'s senior secured loan facility worth US$28.8 million that was provided by lenders led by Tribeca Investment Partners Pty. Ltd., making Galaxy the largest equity holder of the troubled lithium miner for which administrators were appointed during the week.

RNC Minerals entered into a bought deal agreement with a syndicate of underwriters to raise gross proceeds of C$18.0 million for the continued ramp up of production at Beta Hunt gold project and integration with Westgold Resources Ltd.'s Higginsville gold operation in Western Australia.

Vale SA is planning an early redemption of its June 2021 bonds, which have about US$281.0 million outstanding, on Sept. 26.

Anglo Pacific Group PLC struck a deal with a Mantos Copper SA subsidiary to acquire a 1.525% net smelter royalty on the Mantos Blancos open pit copper mine in Chile for about US$50.3 million in cash. Mantos entered a US$250 million financing package, including a US$150 million off-take facility with Complejo Metalurgico Altonorte SA and a US$25 million agreement with an Osisko Gold Royalties Ltd. subsidiary to upsize an existing silver stream agreement.