Analysts warn that too much nickel is being produced
The Sudbury Star reported that Glencore CEO Mr Ivan Glasenberg, amid calls to slash production, says that as much as 70 per cent of global nickel output is unprofitable as the big nickel producers really screwed up by expanding too fast.
He said "People are bleeding cash, and when I say bleeding, it's big cash. We don't understand why people don't react in the same manner as we do. Big mining companies, other mining companies keep operations open, praying for better prices."
Evy Hambro, manager of BlackRock's World Mining Fund, Glencore's fourth-biggest shareholder, said last week that “The nickel market seems to be very, very depressed relative to the cost curve. How much longer do you think we're going to see some of this production remain around before it's forced to be taken out of the market?"
While Societe Generale SA earlier this month forecast the nickel market to be in deficit in both 2016 and 2017, years of excess production has expanded stockpiles, the news agency said. Inventories reached a record of about 900,000 tons, equal to almost six months of global demand, Macquarie Group Ltd. estimated last month.
Glencore said it controls two nickel operations that don't make money at current prices. Mr Glasenberg said on the call that the Murrin Murrin mine in Australia was unprofitable and may be closed and that its recently built Koniambo mine in New Caledonia was a "difficult" one. Glencore inherited the project through its 2013 acquisition of Xstrata Plc.
In Sudbury, Glencore operates the Nickel Rim and Fraser mines, a mill and a smelter and employs about 1,200 people.
Nickel has plunged 44 per cent this year, the worst performing main contract on the London Metal Exchange. Prices touched the lowest since June 2003 last month.
Source : The Sudbury Star