Nick Sheard, IL vice president for exploration, told reporters during the Asia Pacific Mining Conference that the shortage is foreseen to hound up to 2009.
Four projects are expected to bring nickel production starting 2006. These are Inco’s Voisey’s Bay, 50,000 tonnes, first quarter 2006; Inco’s Goro, 60,000 tonnes; BHP Billiton’s Ravensthorpe, fourth quarter, 2007; and Vermelho, 46,000 tonnes, fourth quarter, 2008.
But production from these projects will not be enough.
"We have projects coming online, but the world still requires an extra 50,000 tons," he said.
"With an assumed four percent long-term nickel demand growth rate, the market needs a ‘Goro-size’ project every year to meet increased demand at that rate. Only a portion of Voisey’s Bay will represent new nickel on the market."
Inco’s Goro has 37.7 million tonnes at 1.5 percent nickel, 0.12 percent cobalt and is one of world’s highest grade and largest leacheable nickel laterite deposits.
Sheard said five years of under-investment due to unrealized expectations from Australian acid leach projects caused tight nickel markets, although projects will begin beefing up nickel supply by 2006.
World nickel demand is taken up largely by Europe, 36 percent followed by other Asian countries, 31 percent; Japan, 15 percent; and US and Canada, 11 percent.
Despite the shortage’s being foreseen only up to 2009, Sheard said exploration companies always look forward to new exploration areas due to the long-term nature of mineral development.
"Exploration is such a long term game. It takes about seven years from discovery to mining," he said. He said IL is also looking at possible exploration project in the Philippines, but declined to comment on the area it is eyeing.
"We think there’s potential in the Philippines. There’s been a lack of exploration in the Philippines, so we still expect a lot of opportunities," he said.
IL is involved locally in two major fabrication yards for Goro. It has made investments needed to assume a leading market position in Asia. This includes those in Inco TNC Ltd (Japan, 1965); Taiwan Nickel Refining Company (1984); Shanghai Sales Office (1004); Korea Nickel Company (1989); and Jinco Non-Ferrous Metals Co. (Kunshun, China, 1997).
IL is in talks with Falcon Bridge for a forthcoming merger which will provide a synergy for the merged company that will make it world’s biggest nickel producer.
"There are synergies in exploration that will be considerable. We’re not exploring copper in South America, they do. They don’t explore in China, we do," he said.
IL has more exploration projects in Goro in New Caledonia and PTI in Indonesia. In July this year, it began mining at Petea, Malaysia which produces about one million tonnes of saprolitic nickel ore per year.
