Worldwide nickel overstocks are having a challenging effect on Australian Miners. With nickel prices falling to levels that have not been seen since before the financial crisis, many nickel producers have been forced to scale back operations, sack workers and close mines.
It is thought that the global oversupply of nickel, combined with a decline in demand for the metal, has contributed to the difficulties seen currently by the Australian nickel market. Business commentator Tim Treadgold said, “Nickel traditionally grows around three or four per cent a year, but there’s new sources of supply coming onto the market which is crushing the price.”
It is though that cheap substitute ‘pig nickel’ is to blame for the downturn. This low grade ore, invented by the Chinese, is able to be shipped directly to China. This means that many Australian nickel suppliers are being bypassed.
The Australian nickel industry has had a turbulent history. In 1969, the mining company Poseidon discovered nickel in Western Australia. At a time when nickel was in high demand because of the Vietnam War, the discovery pushed nickel prices to record highs. However, the good fortune was short lived. By the time Poseidon started producing Nickel, prices had fallen and the nickel ore was of lower grade than originally thought. Profits from the mine were not enough to keep Poseidon afloat, so the mine was eventually taken over by Western Mining.
Several companies have since mined nickel in Australia, with output gradually increasing. By 2012, Australia was the world’s fourth-largest nickel producer. However, it’s not yet known what long term effects the current oversupply will have on the Australian nickel industry.