Tag: LIM

Takeover target LionOre Mining International has downgraded its nickel production forecast for calendar year 2007, only a fortnight after reaffirming the target of 44,300 tonnes.

No wonder Norilsk Nickel and Xstrata are fighting over LionOre Mining International; according to the international investment bank, Credit Suisse, world nickel prices could continue to rally and even reach $US65,000 a tonne this year.

World nickel prices have jumped 155 per cent over the past 12 months as stocks have fallen 75 per cent to equal around two days of global consumption.

There are 11 nickel mining projects being built around the world but only three including BHP Billiton’s late and over budget Ravensthorpe project in Western Australia, will start production before 2010.

The world price, which is essentially the LME price, closed Thursday at $US46,800 a tonne for three months metal, while the cash price ended at $US50,300, with stocks of the metal down to perhaps two days supply and not much more.

Nickel for immediate delivery rose to a record $US54,050 a metric ton in London on May 15.

That makes the price drop around 8 to 9 per cent on fears of de-stocking by stainless steel producers. But that’s not deterring the rival bidders for LionOre.

Norilsk Nickel raised its bid for LionOre Wednesday night to $C27.50 ($A30.76) per share, valuing the Canadian miner at around $C6.8 billion ($A7.6 billion).

The Russian company’s revised bid is 10 per cent above a revised second offer from Xstrata, which last week made a bid of $C25.00 per share, valuing LionOre at $C6.2 billion.

According to reports Jeremy Gray, head of mining research that Credit Suisse in London, believes the recent sharp downturn in the price of the metal (from more than $US50,000 a tonne for three months metal on Monday of this week to Wednesday’s close) was an over reaction.

He believes the market seems to anticipating a severe correction in the nickel price, because of fears that stainless steel producers will cut the amount of nickel used in their steel products and sell surplus stocks to take advantage of the near record prices.

Xstrata has returned fire in the takeover battle for LionOre Mining International, Australia’s third largest nickel producer, by increasing its takeover bid to $6.7 billion.