Monsters of Rock: Can you spare a nickel?
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Despite an avalanche of quarterly reports there were few standouts among the big resources names on Thursday as the sector traded flat.
One bright spot was Indonesian nickel producer Nickel Mines (ASX:NIC), the largest beneficiary of a 5.4% jump in nickel prices to more than US$21,000/t overnight, rising 4.29% to be the strongest performer among the large cap and mid cap miners.
Nickel Mines is an unusual stock in that while listed in Australia, it is involved in the production of nickel for nickel pig iron in Indonesia, the industry whose growth looms as the big supply threat to Australia’s nickel sulphide miners.
This week it announced a deal for limonite ore normally treated as overburden from its Hengjaya mine to be processed at a high-pressure acid leach plant in the Indonesia Morowali Industrial Park.
Rio Tinto (ASX:RIO) was the worst performer among the diversified miners, falling 1.3% as investors digested a strategy update that included plans to spend US$7.5 billion this decade developing renewable energy to halve emissions from its Pilbara iron ore and aluminium businesses by 2030.
American conglomerate AMCI has succeeded in rolling Jupiter Mines managing director Priyank Thapliyal off the board of the South African-focused manganese miner, with former BHP CEO Brian Gilbertson also removed from his post as chairman at the miner’s AGM yesterday.
It came a day after Jupiter Mines reported a half year profit after tax of $27.56 million, which included $12.62m from the demerger of its Juno Minerals (ASX:JNO) iron ore business in WA.
Its primary asset, a share in the Tshipi manganese mine in South Africa’s Northern Cape delivered Jupiter a profit of $15.7m, down from $36 million in the first half of 2020-2021.
Jupiter said Tshipi’s profits were down due to “due to sustained depressed manganese prices and significant increases to logistics and shipping costs not borne by the end customer.”
The ASX’s largest mineral sands producer is enjoying strong conditions for its zircon products, but says customers and suppliers are closely watching the real estate market in China.
Iluka’s zircon is largely sold into the tiling industry, with production rates steady in China after returning to pre-pandemic levels in the June Quarter.
It sold 89,000t of zircon in the third quarter, with prices rising by US$125/t in the September Quarter and increasing by US$120-170/t from October 1, helping Iluka increase revenues slightly to $392m.
Its revenue year to date is up 69.1% on its pandemic affected 2020, rising from $666.7m last year to $1.13 billion so far in 2021.
While the December Quarter is generally a slower sales period, Iluka says its fourth quarter zircon sales are fully committed.
“Overall, the ceramics industry is experiencing sustained growth in sales. However, profitability is being challenged by increasing costs throughout the supply chain,” Iluka said in its quarterly report.
“The COVID-19 pandemic and associated logistics disruptions remain a headwind, while energy supply shortages are presenting new challenges in some tile producing countries.
“A number of Iluka’s customers and suppliers are closely monitoring developments in the Chinese real estate industry.”
The pigment market is also supporting increased prices of up to US$200/t for the synthetic rutile and rutile it sells as titanium dioxide feedstocks.
BCI shares went on a tear today after the former iron ore miner and now salt and potash hopeful made the final investment decision to approve its Mardie salt project in WA’s north-west.
BCI, which is famously backed by Australian media and mining services mogul Kerry Stokes, says it will wrap its debt and equity funding arrangements soon on the project, which promises to produce 5.35Mtpa of high purity salt and 140,000tpa of sulphate of potash.
Construction is expected to commence in 2022 on the $800 million project, which is expected to supply fertiliser chemicals into Asia for six decades.
Managing director Alwyn Vorster said the tenements at Mardie were acquired for just $225,000 a decade ago by BCI’s predecessor Iron Ore Holdings.
Non-executive chairman Brian O’Donnell called Mardie, which has drawn $450 million in funding from the Commonwealth Government’s Northern Australia Infrastructure Facility, a “Tier 1 asset”.
“The BCI Board is pleased to see the Mardie Project reach this important milestone and we congratulate the BCI management team on delivering the project to this point.
“The final investment decision reflects our collective confidence that the project funding will be finalised in coming weeks, based on the expected approvals pathway and indications of interest received from existing shareholders, including Wroxby Pty Ltd, and potential new shareholders.
“The Mardie investment case is compelling with its large scale, low cost, and long operating life representing key attributes of a world class sustainable, multi-generational tier 1 asset.”