On June 15, 2022, ASX-listed Pacific Nickel signed an investment agreement with Glencore for a three-year, $22 million investment agreement. U.S. dollar pre-export financing and offtake of four-year production at the Kolosori nickel project in the Solomon Islands.
The offtake agreement may be extended for a further two years by mutual agreement. Offtake prices will be linked to market prices with standard commercial adjustments based on product quality.
Pacific Nickel told shareholders on June 15 that the $22 million in debt financing will include $17 million in construction and $5 million in reserves. The facilities are still subject to Glencore completing its final due diligence, approval of the Kolosori mining license, credit approval and full documentation.
Early works at Kolosori were successfully completed earlier this year, including construction of infrastructure, excavation of test pits to assess mining and storage designs, and calibration of grade control methods, completion of geotechnical assessments, and quarrying Assessment to provide building materials required for dock and road construction.
DFS for the project is scheduled for completion in the second quarter.
Zhongwei New Materials has completed the commissioning of its production line for producing high nickel matte with an annual output of 80,000 gold tons. It plans to start purchasing high matte nickel in large quantities in July. In July, it will purchase 7500+ tons of high nickel matte nickel with upstream suppliers, and has become the world's largest buyer of high nickel matte. During the same period, well-known domestic producers of electrolytic nickel plates also used 3,000+ nickel metal per month to produce high-quality matte nickel in Indonesia. The supply of laterite nickel resources was more widely used in new energy and traditional industries.
Guangxi Zhongwei will build a new high-matte production line in Qinzhou, with a designed annual production capacity of 80,000 tons, to meet the raw material demand for high-matte nickel sulfate production in the first phase of the project. The investment is 506.087 million yuan.
On March 25, Energy China International Group and Indonesia Bolimar Co., Ltd. signed the mining and transportation contract for the Luwuk laterite nickel ore project in Sulawesi Island, Indonesia, realizing the rolling development in the Indonesian mining market.
Indonesia's nickel reserves rank first in the world, accounting for 52% of the world's total nickel reserves. The project is located in Sulawesi Island, which accounts for about 80% of Indonesia's total nickel ore resources, with a total mining area of about 1,000 hectares. Energy China International Group is responsible for organizing the implementation of mining and transportation services. The annual mining and transportation volume is 2 million tons, and the contract period is 5 years. The scope of the project mainly includes surface clearing, overburden stripping and ore stripping, excavation, loading, transshipment, and road maintenance during construction.
This project is an important project for Energy China International Group to actively participate in the joint construction of the "Belt and Road" in Indonesia. It is also a leading and coordinating "2+N+X" brother enterprise to coordinate "going out", accelerating transformation and upgrading, and promoting non-electricity business "going out". "Another result.
1. The demand for stainless steel for automobile exhaust pipes has peaked
The amount of stainless steel in each vehicle is generally 24kg-30kg, of which the amount of stainless steel in the exhaust pipe is generally 15kg-22kg, and the amount of steel used in the exhaust pipe accounts for more than 50%, or even more than 90%. The stainless steel used for the exhaust pipe is mainly 409, 439, 436 steel, and some are also 304, 80% of which are ferritic stainless steel.
According to statistics, in 2021, there will be 26.535 million vehicles in China, with more than 3.5 million new energy vehicles in the mid-term (no car exhaust pipes), and 23 million traditional fuel vehicles (requiring car exhaust pipes). If traditional fuel vehicles are measured by 18.5kg of stainless steel per vehicle, it means that 426,000 tons of stainless steel are needed.
In 2021, China's automobile production will be 26.535 million units, a year-on-year increase of 6.5%; compared with the same period in 2019, an increase of 2.8%. From the perspective of annual development, automobile production and sales in 2021 will show a year-on-year increase, ending the three consecutive years of decline since 2018. Among them, new energy vehicles have become the biggest bright spot. The annual sales volume exceeded 3.5 million, and the market share increased to 13.4%, which further shows that the new energy vehicle market has shifted from policy-driven to market-driven.
In the first quarter of 2022, my country's automobile production and sales will maintain a stable year-on-year growth; new energy vehicle production and sales will continue to maintain rapid growth, and the market penetration rate will reach about 19%; in the first quarter, automobile exports will maintain rapid year-on-year growth, and vehicle exports may exceed 600,000 In particular, the export of new energy vehicles may reach more than 150,000.
With the gradual improvement of the infrastructure of new energy vehicles, relevant preferential support policies and the advantages of electric vehicles, the production and sales of new energy vehicles in my country are still setting new historical records, realizing the substitution effect on the traditional fuel vehicle market, and driving the auto market to accelerate to new energy vehicles. transformation.
It can be seen from the above data that although China's automobiles maintain a moderate growth trend, the growth is mainly for new energy vehicles (which do not require automobile exhaust pipes). On the contrary, traditional fuel vehicles have continued to show a negative growth trend, which means that the demand for stainless steel for automobile exhaust pipes The peak has been shown, and the demand has gradually decreased.
2. The level of domestic automobile decorative strips rises rapidly
In recent years, with the improvement of people's living standards, the aesthetics of family cars is also constantly improving. Therefore, a large number of decorative bright strips for the body are used in passenger cars. It is optimistic that about 50% of passenger cars use stainless steel bright strips. Based on the average consumption of 2.2Kg/vehicle, it is estimated that the annual consumption of domestic decorative strips in 2021 will be about 29,000 tons. In addition to the demand in the secondary refitting market, the demand for high-end stainless steel decorative strips is expected to be more than 30,000 tons. With the rapid rise in the level of domestic stainless steel automotive trim strips, substitution of imports will be the trend.
3. The prospect of steel for automobile tanks is unlimited
It is reported that the current domestic municipal sanitation, gardens, highway systems used in sprinkler trucks, spray trucks and oil supply trucks used in oil fields, etc., their tanks and pipelines are mainly made of ordinary carbon steel materials, and the service life of vehicles is limited by the tank. The treatment of body anticorrosion technology has restricted the development of liquid tank vehicles for many years.
Stainless steel materials for automobile tanks not only solve the problem of anti-corrosion treatment from the source, but also extend the use of vehicles more widely. The full application of stainless steel materials in liquid transportation vehicles optimizes the production process of the tank, makes the production process of the product more environmentally friendly, and at the same time improves the service life of the product and expands the scope of use, so that it can not only take into account the watering operation, but also It can also transport food liquids such as pure water and milk, as well as corrosive liquids such as seawater.
Undoubtedly, this is a product with a high competitive advantage in the domestic and foreign markets. In addition, the stainless steel material also has a high recycling value. Once promoted, it will definitely lead the entire industry.
At 7:26 a.m. on June 18, 2022, with the operation of the shaker, the finished product of the 50th heat of the No. 1 converter of the HNMI matte nickel division was slowly poured into the ladle and tapped smoothly. At 9:16, the feeding and air supply were continued, and the next furnace blowing was carried out, which marked a qualitative breakthrough in the production of Qingshan high nickel matte converter. Under the leadership of the company's leaders, all employees of the nickel matte business unit adhere to the cultural concept of "dare to be the first, honesty and dedication", overcome many difficulties such as immaturity in technology and unskilled operation, and continue to make progress and break through themselves. , forge ahead bravely, and make continuous efforts to ensure the stable and efficient production of high nickel matte.
From construction to the initial stage of production, there were many difficulties. All employees of the matte business department worked hard, and constantly summarized themselves in the production process, from process optimization, equipment improvement, blowing process parameter control, production rhythm, material control, and personnel management. etc. to improve. The furnace age of the converter has exceeded 50 times, and it has gradually moved towards stable production, which has painted a strong stroke for the rapid development of Qingshan Park.
Magnus' wholly-owned subsidiary MEG Harta Indonesia (MHI) signed an agreement on June 14 to provide mining and supply of nickel ore from the Kolaka mine in Sulawesi. Mitsubishi Heavy Industries and another private Indonesian company called "Company A" are buyers. The sellers are entities owned by the Sulawesi Regional Government and two Indonesian private companies.
Magnus stated that for confidentiality reasons, and because the relevant consent of the parties was not obtained, the identities of the parties could not be disclosed. The sellers have agreed to sell an initial amount of 20,000 tonnes of nickel ore – possibly 10% more or less. Buyers - Mitsubishi Heavy Industries and Company A - have the option to purchase more quantities as shipments increase.
MHI also signed another agreement with Company A on June 13 to jointly sell and transport nickel ore. Company A holds a license to transport and sell nickel ore. Mitsubishi Heavy Industries will be responsible for procuring the nickel ore and preparing it for shipment, covering the cost of renting a terminal and loading the nickel ore onto a barge or ship. The two parties will cooperate for 12 months from the date of signing the agreement.
In addition, Company A entered into an agreement on November 15, 2021 to sell nickel ore extracted from Kolaka to third-party smelters. Nickel ore sales under the agreement will run until January 15, 2023.
On July 4, 2022, Brazil Nickel announced that after an 18-month construction and commissioning period, its 100%-owned Piauí nickel-cobalt laterite project has begun continuous nickel production.
The company said in a media statement that the first nickel hydroxide product was produced by the world's first independent laterite nickel heap leaching operation. The initial production of PNP1000 will be increased to 1400 tons of NHP nickel per year, which is the first step in increasing productivity later. PNP1000 is the initial small-scale commercial production project at the Piauí Nickel Project.
Brazil Nickel said its annual production guidance for 2022 is 300 tons of nickel and 3 tons of cobalt, and it expects annual production guidance of 1,400 tons of nickel and 35 tons of cobalt in 2023.
Eddy Soeparno, Deputy Chairman of Indonesia's Seventh Committee DPR RI, said that with its large nickel resources and reserves, Indonesia has the opportunity to become a major player in the raw material supply chain for the future of battery electric vehicles.
Eddy Soeparno said total nickel resources in 2021 will reach 13.957 billion tonnes of ore and 145.208 million tonnes of metal. Total nickel reserves reached 4.561 billion tons of ore and 49.260 million tons of metal. According to 2020 U.S. Geological Survey data, Indonesia is the world's largest producer of nickel ore, with nickel production reaching 800,000 tons in 2019, compared with world nickel production of 2.668 million tons. The largest proportion of Indonesia's nickel resource reserves is nickel ore with a nickel content of less than 1.7%, which contains a large amount of cobalt used in lithium battery materials.
Speaking at the Nickel Summit in Bali on July 26, 2022, Eddy Soeparno said: "In order to support the government's strategic project to develop electric vehicle batteries, there needs to be incentives for laterite nickel ore that can be processed through a hydrometallurgical process with a nickel content of less than 1.7%. The HPAL plant in the world. As the country with the largest reserves of nickel in the world, as well as other metal minerals such as copper, manganese, aluminum, etc., is currently building an ecosystem for the electric vehicle industry, Indonesia has a high bargaining position in controlling the supply chain to meet the needs of battery-based demand for electric vehicles”.
The Seventh Committee DPR RI is also a member of Indonesia Battery Holding Company (IBH) through its partners: Mind Id, PT Antam Tbk, PT Pertamina (Persero) and PT PLN (Persero), in collaboration with the Ministry of Industry and Information Technology and the National Research and Innovation Agency (BRIN) Accelerating the development of a battery-based national electric vehicle industry ecosystem has become a national project.
He emphasized that in order to encourage the development of the domestic downstream nickel industry, policies to restrict the export of NPI and FeNi or nickel derivatives with nickel content below 70% need to be implemented.
In Indonesia, mines produced nearly 8.1 million wet tonnes of marketable nickel ore in the first half of 2022, up 33% year-on-year. External ore sales in the quarter exceeded 7.5 million wet tons, up 79% year-on-year. The nickel-iron alloy plant, also supplied by the mine, produced 19,600 tonnes in the first half. Eramet sold 8,500 tonnes as part of the offtake contract. During the period, Weda Bay's contributions to the FCF Group totalled €121 million, of which €107 million was related to the payment of dividends and repayment of shareholder loans.
In New Caledonia, SLN mining production was 2.4 million wet tonnes, up 6% year-on-year, despite severe weather and operational difficulties. Ferronickel production rose 10% to 20,400 tonnes, while ferronickel sales rose 6% to 20,000 tonnes. Exports of low-grade nickel ore rose 31% to 1.5 million wet tonnes. However, the Doniambo plant has been severely disrupted by ongoing power supply difficulties.
Cash costs averaged $8.06/lb in the first half of 2022, with input cost increases primarily in energy, coal (prices more than tripled) and freight (nickel ore up about 43%), while currency effects and favorable ore Prices offset some of the impact. As of June 30, SLN had debt of 427 million euros and had breakeven free cash flow in the first half of the year.
In the third quarter of 2022, demand for nickel in the stainless steel industry should continue to slow due to rising raw material prices and global macroeconomic uncertainty.
Global primary nickel production is expected to continue to grow in the second half of 2022, but is still mainly supported by developments in Indonesian production (NPI, matte and HPAL25).
At Weda Bay in Indonesia, ferronickel production was confirmed at nearly 40,000 tonnes in 2022, with saleable mine production targets remaining at around 15 million wet tonnes.
In New Caledonia, problems with grid supply cannot be resolved until a temporary offshore power plant is planned to be built in early September, so the target has been revised to produce more than 40,000 tonnes of ferronickel at the Doniambo plant in 2022. Mine exports exceeded 3.5 million wet tons.
The specific production and sales are shown in the table below:
