Ann: MD's Presentation at AGM, page-8

Livewire - yesterday

cheers

Nickel
"Chinese manufacturers developed a new nickel pig iron (NPI) smelting technology back in 2007 in response to rapidly rising prices. NPI is a low grade ferronickel utilising laterite nickel ores instead of the more scarce pure nickel. Such innovation in metallurgy has altered the industry and lowered the cost curve. In January 2014 Indonesia banned the export of unprocessed ore. This was a major source of feed for the Chinese NPI industry and was expected to result in a significant reduction in NPI, so nickel prices rallied in anticipation. Contrary to expectations, prices halved as Filipino ore was substituted and inventories built up ahead of the export ban, which saw a collapse in nickel prices.
Prices are now deep into the cost curve. Based on Wood Mackenzie data, half of the global industry is now losing money. This position is clearly unsustainable, but nickel miners are holding fast with only minimal production cuts so far. The longer prices remain low, the more likely we will see a meaningful supply response. Glencore has taken capacity reductions in coal, copper and zinc already this year. It would not surprise us if they made a similar announcement on nickel in the near future. We are more positive on the medium term outlook for nickel with limited downside to the price given cost support. Our preferred exposure is Independence Group."