Weekly Metals News Digest (Oct 23–27)
Nornickel shows interesting results
Nornickel published the results of its production for the first nine months of this year, and they proved somewhat contradictory. On the one hand, nickel output from January to September 2023 decreased by 9% to 145,271 thousand tons, while copper increased by 4% to 303,990 thousand tons. The production of palladium, meanwhile, increased by 1% to 2.145 million troy ounces, and platinum by 7% to 528,000 thousand troy ounces.
It would seem that there are some issues with the output of copper and nickel, given the ongoing price declines for both of these base metals at the London Metal Exchange since January 2023. Currently, copper is trading at around $7,900 per ton, and nickel at around $18,200. Besides, surpluses of copper and nickel are forecast for 2024.
Overall, copper and nickel production at the company remains fairly stable, despite repair works taking place at the Talnakh Concentrator and Nadezhda Metallurgical Plant along with other activities carried out this year. This is evidenced by the increase in copper output in Q3 2023 (quarter-on-quarter) by 6% to 100,518 thousand tons and nickel output by 21% to 53,945 thousand tons.
Rusal becomes shareholder of Chinese alumina refinery
Russia's only primary aluminium producer Rusal has acquired a 30% stake in Chinese steelmaker Hebei Wenfeng New Materials for almost $267 million.
The company was founded in 2020 and owns an alumina refinery in Hebei province with an annual capacity of 4.8 million tons. Rusal said in a statement that the deal would give it "access to competitively priced alumina" and secure its key raw materials supplies.
Rusal is the largest aluminium producer outside of China, producing almost 4 million tons of the winged metal a year. Last year, the company lost a significant part of its alumina supply – about 28.3%. This was due to the loss of control over the Nikolaev alumina refinery in Ukraine, as well as the suspension of shipments from Australia and reduced supplies from Aughinish in Ireland.
Sibanye-Stillwater plunges into crisis
The management of Sibanye-Stillwater has found itself in a difficult situation: it has been forced to cut the staff of four mines located in South Africa. As part of this, 4,000 people, or almost 9% of the entire Sibanye-Stillwater workforce will be laid off.
Sibanye-Stillwater's top management cited the fall in global prices for platinum group metals against the backdrop of higher prices for electricity, raw materials and materials used in the construction and operation of underground mines, and the depletion of reserves of operating deposits as the official reason for such an unpopular decision.
This statement does reflect the figures, as the cost of platinum on the world market is currently at its lowest level since the beginning of this year at $918.2 per troy ounce, while palladium stands at $1,127.
But the roots of today's problems lie much deeper and are related to the acquisition of mines in South Africa in 2013. Even then there were fears that they were unprofitable, and now they have been confirmed.
The prospects for the Rustenburg platinum belt, where they are located, look unclear, and it is likely that no major deposits will be discovered there in the coming years.
Constellium's rolled aluminium sales decline
French company Constellium has faced a decline in the sales of its products and consequently lower revenues. According to its latest report, sales of flat aluminium rolled products in Q3 2023 decreased by 5% (year-on-year) to 369,000 tons. Sales for the packaging and automotive industries decreased by 2% to 261,000 tons, and by 3% to 53,000 tons for the aerospace industry.
Overall figures for the first nine months of this year do not look good: sales of flat rolled products for packaging materials and the automotive industry decreased by 5% to 792,000 tons, though aerospace industry sales actually increased, albeit by a paltry 1% to 171,000 tons. Overall, shipments of rolled aluminium products produced by Constellium from January to September 2023 decreased by 5% to 1.156 million tons.
Although the management of Constellium did not make any forecasts regarding the prospects for the sales of aluminium products at the end of this year, we can in principle expect a reduction in sales to 1.48–1.5 million tons (in 2022, the company shipped 1.6 million tons of flat aluminium rolled products to its customers).
Red metal demand is growing in India
Good news is coming out of India: domestic copper consumption exceeded 1.5 million tons this year compared to 1.311 million tons the previous year.
Demand for the red metal in India was driven by construction, household appliances, transportation, renewable energy, construction and repairs to power lines. The Indian government's policy of encouraging investment in various sectors of the national industry also played a major role.
For example, due to the modernization of India's extensive railroad network, an increase in the number of high-speed trains and the growing use of electric vehicles, copper consumption in the transport sector increased by 34%. By comparison, demand for copper in construction expanded by only 11%, as it is mainly used in high-end residential developments.
At the same time, existing volumes for the mining and processing of copper raw materials do not meet the needs of India's non-ferrous metallurgy industry, so it has been forced to increase imports of ores and concentrates from abroad. Imports of pure copper for the subsequent production of flat-rolled products, pipes, cables and wires are also increasing.
Forecast: Hydrogen cars will help expand demand for platinum and palladium
Sibanye-Stillwater's predicament, unsurprisingly, may have a positive impact on the global platinum and palladium market, as it is one of the largest producers of the metals. Reduced mining and processing of complex ores containing precious metals may reduce the supply of platinum and palladium and thereby contribute to higher platinum and palladium prices.
Meanwhile, there are prerequisites for expanding demand for both metals in the global market, and they are related to the development of hydrogen fuel cell vehicles. These vehicles can contain eight to ten times more platinum than diesel-powered ones, since it is platinum that is used in their fuel cells. The use of palladium should not be discounted, however, as it is an excellent absorber of hydrogen and can also be used in fuel cell vehicles.
It is worth noting that various enterprises are engaged in the creation of hydrogen-powered vehicles. For example, Hyundai Motors has developed and launched the hydrogen-powered Xcient truck on the world market. To date, Hyundai Motor has sold 150 Xcient trucks, which are operated in Germany, Switzerland, Israel, South Korea and New Zealand, and it has plans to enter the US market.
