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Article #145: Nickel stocks

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Exploring the nickel mining industry in Kingdom accounted for most of the 48%
Canada and China's needs and shortages (60,000 ton) increase in production,
for stainless steel manufacturing. while expanded production in Australia
As an exceptionally and New Caledonia accounted for all of
versatile metal, nickel enjoys a special the 39% (35,000 ton) increase in Oceania.
place in the industrial world. With its Japan accounted for most of the 22%
lustrous, silvery-white appearance, low increase in production in Asia during
thermal and electrical conductivities, that same period.
high resistance to corrosion and The rising demand for nickel production,
oxidation, excellent strength and with its associated high commodity
toughness at higher temperatures, ability prices, has spawned new approaches to
to be magnetized, and a melting point of nickel production. Historically, most
1453° C, nickel is not only attractive sulfide nickel ore bodies are mined
and durable in its own pure form; it also underground at relatively low production
readily alloys with many other metals. rates and with mining costs that can
Nickel is readily recognized in coins, approach $20 per ton, or even more. The
where it is used by many countries in current lack of high grade nickel sulfide
both pure and alloy forms, and as bright exploration targets has more recently
and durable electrolytically-applied shifted attention to laterite nickel
"nickel plating" coatings on steel. Its deposits, which can be mined at low cost
primary use, however, is as an alloying using modern mining and process methods
component with chromium and other metals that recover ore at grades well below
in the production of stainless and those that had traditionally been
heat-resistant steel used not only in exploited. These new methods are changing
industry and construction, but also for the way large mining companies and
household products such as pots and pans, knowledgeable investors are looking at
kitchen sinks, and other everyday items. mineral properties. The trend began in
Stainless steel is produced in a wide the 1960's with copper projects going
range of compositions to meet industry from smaller underground operations,
requirements for corrosion and heat often with grades exceeding 2% to larger
resistance, and also to facilitate a low grade projects withgrades that could
clean and hygienic surface for food and be less than 0.5%. By the 1970's the bulk
other processing. About 65% of nickel is mining of other low grade metals was
used to manufacture stainless steel. advancing, most notably gold using new
Around 20% is used in other steel and hydrometallurgical techniques at grades
non-ferrous alloys, often for specialized well below those that had traditionally
industrial, aerospace and military been exploited. It may now be nickel's
applications. About 9% is used in turn to benefit from this approach.
plating, while 6% in used in other Historically most sulfide nickel ore
applications, including coins and a bodies have had grades of 1% to 2% Ni,
variety of nickel chemicals. As the mined underground at relatively low
emerging middle class in countries such production rates and with high operating
as China and other Asian nations demand costs. Laterite nickel deposits can be
more stainless steel products from sinks bulk mined, but the nickel can't be
to door handles, nickel consumption is on concentrated, so that both capital and
the rise. Stainless steel currently operating costs are typically higher than
accounts for about two-thirds of nickel sulfide projects. As a result major
consumption up from one-third in the past mining companies are not necessarily
three decades. While nickel demand in looking for high grades, but rather for
Europe and the Americas decreased in the large tonnage potential that can be shown
period from 1997-2002, this demand to be economically attractive. One
increased in Asia and the former East example of low grade sulphide nickel
Bloc countries. Chinese nickel deposits is Hard Creek Nickel
consumption increased by 15.4% in 2005, Corporation's (HNC) 100% owned Turnagain
slightly less than the 19.1% growth Project located near Dease Lake, BC,
reported in 2004. Chinese consumption Canada. Turnagain's nickel grades, low by
during this decade has actually been the traditional standards, show exciting
single largest factor impacting the potential if treated with newly developed
nickel market, with supply struggling to process technology, and a bulk tonnage
keep pace with this rising demand due to open pit mining approach. At Turnagain,
a physical shortage of the metal. In early stage process studies carried out
fact, China recently announced a cut-back by several independent and well
in stainless steel production because recognized mineral industry testing
they are unable to source enough nickel. laboratories suggest that there are
This rising demand and limited supply is promising opportunities to recover metal
pushing up prices. As of July 2006, on site, at a high production rate, for
nickel was trading at over $12.00US per an excellent financial return on the
pound in contrast to historical prices of necessary capital investment for
less than $5.00US over the previous 15 equipment, steel, cement, energy, labor
years. Experts predict that this and other costs, while nickel is priced
continued high demand - based not only on at historical levels. In a Preliminary
China's continuing economic boom but also Assessment recently prepared by AMEC
on the West's demand for hygiene, will Americas Limited (AMEC), one of the top
continue for the foreseeable future. three international mine engineering
Only about 1.3 million tons of new or design firms, a 50,000 tonne per day
primary nickel are produced and consumed milling operation by Hard Creek Nickel at
annually, compared with over 15 million Turnagain is modeled with a 17 year mine
tons of copper and nearly 800 million life that is predicted to produce a total
tons of steel. The growing world economy of 833 million pounds of nickel, 57
through the mid-nineties triggered an million pounds of cobalt and 85 million
expansionary drive in nickel capacity by pounds of copper over the life of the
existing manufacturers resulting in a mine, representing the largest new nickel
production increase of 30%in the five deposit in Canada. There are very few
year period from 1993-1998. European similar low-grade nickel projects in the
expansion in both Finland and the United world.






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