BNC bullish on nickel prices

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BINDURA Nickel Corporation (BNC) says it expects nickel prices in 2018 to surpass last year’s levels as demand in steel and batteries soars.
Nickel prices have been on a medium-term growth since February, 2016 when prices reached a 13-year low.
The price of the metal is a function of developments in the steel industry, car production and the battery sector.
Batirai Manhando, BNC managing director, said the listed miner sees prices of the resource continuing to soar into the future.
“We expect the price of nickel to be higher than what it was in 2017, we have already seen that the price has held between $14 000 and $15 000 per ton of nickel for the past four to five months, and if you look at what is happening in Europe and in China in terms of demand, it looks like we are going to see much higher prices in the future.
“So we are positioning our business in a way that will put us in a position to take advantage of any price increases in the future,” he told analysts at a briefing in the capital recently.
In an apparent response to the market, the company has been spending considerably on capital investments.
During the year ended March, 2018, the company’s total capital expenditure amounted to $4,6 million. A major project currently underway is the $18,9 million “Trojan Shaft Re-deepening” which the company says will see the deepening of the Trojan Mine shaft to 46 Level.
Another investment project, “The Smelter Restart,” is at 83 percent completion. The Refinery and Shangani Mine however remain under care and maintenance.
The company’s nickel price improvement expectations in 2018 are based on consensus forecasts.
Nickel stocks in warehouses around the globe are reportedly continuing to decline and the market is expected to be in deficit in line with the trends that were prevalent in recent years.
There have been a few product cuts, some of which were caused by the closure of 43 percent of the mines in the Philippines, which have still not resumed production following the environmental audits in that country.
Analysts forecast that demand for stainless steel will grow by between five percent and eight percent per annum until 2025.
“This growth will augur well for nickel prices as 60 percent to 70 percent of nickel is used in the production of stainless steel,” the company said in a statement accompanying its financials for the year ended March 2018.
“Fund managers and investors have increased their buying appetite, while speculative traders have exacerbated the buying momentum,” the company added.
Currently, only 36 000 tonnes of nickel are used for the manufacture of batteries.
However, market estimates are that the demand for nickel for this purpose will have increased to between 300 000 and 500 000 tonnes per annum by 2025, the market has also priced-in this dynamic in the recent upsurge.
BNC’s performance during the year ended March, 2018 benefited from the price increases translating to a year on year turnover increase of 19 percent to $53,6 million from $45,1 million in 2017, in spite of a four percent reduction in volume of nickel concentrate sold.
Profit after tax was $5,8 million up from $610 000 in 2017, which the company says “was achieved against the background of a $4,3 million impairment of the Refinery asset, which had drastically eroded profit in the prior year.”
“…the profitability growth was also partly influenced favourably by the efficiencies derived from effective cost management which resultsed in a proportionately lower cost increase than the growth in revenue,” the company said.
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