A worker processes nickel at a nickel smelter of PT Vale Tbk, near Sorowako, Indonesia's Sulawesi island, January 8, 2014.
A worker processes nickel at a nickel smelter of PT Vale Tbk, near Sorowako, Indonesia's Sulawesi island, January 8, 2014. Indonesia's ban on exports of key mineral ores - unless they are processed in the country - risks backfiring as weaker commodity prices mean it is not cost-effective to invest in expensive smelters and refineries. Picture taken January 8, 2014. REUTERS/Yusuf Ahmad

Speculations on possible nickel ore ban leeway pull nickel prices down anew, leaving international creditors anxious over the base metal’s continuously blurring future.

Morgan Stanley once again slashed its forecast for nickel, saying that nickel prices this year may fall by 12 percent to $13,228 a tonne for the third quarter, and 10 percent to $13,448 a tonne for the final quarter. Goldman Sachs , despite slashing its 2015 forecast for nickel last month after cost deflation, continued to suppress the base metal’s value, believing that prices could become slightly higher before the year ends.

Goldman Sachs said that nickel prices will end up in a 126,000 tonne deficit in 2016. This, in turn, will contribute to a total 5 percent decline in global refined production to 1.89 million tonnes, compared with a 3 percent increase in consumption to 2.01 million tonnes.

This scenario will persuade steel producers from China to buy more unprocessed ore from suppliers in the Philippines, as well as from other high-grade ore producers outside the Asia Pacific region. If this happens, nickel producers like Amur Minerals Corporation (OTC:AMMCF) can be a major commodity producer in 2016. A large percentage of its future nickel production could go straight to China and Japan, the largest nickel consumers in the world today, while also supplying to steel makers in emerging countries such as India, Malaysia and Vietnam.

Two months ago, Russia-based Amur Minerals obtained pre-production license from the Russian government after years of exploring and establishing itself as a significant and potential player in the base metals segment. The company’s flagship project is the Kun-Manie Reserve, one of the largest nickel reserves in the world.

On Ore Ban Relaxation

According to Forbes , Indonesia is mulling over a ban relaxation on nickel as the short-lived bauxite leeway helped local producers sell their unprocessed products abroad without suspending their smelting constructions in the country. Several months ago, the country allowed bauxite and copper producers to export their products by paying additional export tax fees.

Many local miners said that building local smelters was not viable in the absence of supporting infrastructure and export revenue, especially now that the country's revenue from mining has plunged. "We are discussing this to see if there's a possibility of us providing a slight relaxation," Sofyan Djalil, Indonesia’s Coordinating Minister of Economic Affairs told Reuters last month.

By allowing nickel exports, Indonesian ore producers can get additional funds to invest in nickel processing facilities. The total ban on exports in 2014 left many small mining companies putting a large fraction of their revenues on building smelting facilities while losing former customers abroad. This resulted in massive job cuts and total operations shutdown.

Contact the writer: a.lu@ibtimes.com.au

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