Monsters of Rock: Miners recover to break even (almost) as market absorbs Chinese growth news
Link copied to
After a second day in a row that threatened to turn sour for major ASX mining stocks, the market pivoted through the afternoon with materials companies ending at a spare 0.07% fall.
The knife-edge nature of trade in the big commodity players was highlighted among the iron ore giants, with BHP’s (ASX:BHP) 0.12% drop tempered by lifts across the rest of the ferrous list.
Singapore iron ore futures lifted 0.67% to US$121.40/t after a lift in spot prices overnight. Iron ore is holding up despite sentiment taking a hit from jawboning from the Chinese Government’s powerful National Development and Reform Commission.
The state planner says it wants to curb speculation among traders it blames for sending iron ore prices higher after a more than 50% rise over the last four months.
Meanwhile, economists have been cautiously optimistic after China revealed its slowest expansion in over 40 years in 2022 at 3% GDP growth yesterday.
“While GDP of 3% was the second slowest pace since the 1970s, December data came in better than expected,” ANZ’s Mahjabeen Zaman said.
“Much of the upside surprise came from manufacturing, with industrial production rising 1.6% in Q4. The fall in retail sales (-1.8% y/y) was also limited. This saw copper surge to its highest level since June 2022.”
LME Copper, an economic bellwether, is currently fetching US$9105/t, though physical premia have been low on account of sluggish near-term demand.
Indonesian nickel hasn’t always had the best ESG reputation, with the bulk of its ‘Class 2’ nickel production unsuited for use in lithium ion batteries and produced in energy intensive coal powered furnaces.
Moves are afoot to change that, with the expansion of high pressure acid leach and nickel matte production in Indonesia opening the door to make it a major source of nickel for batteries.
Nickel Industries (ASX:NIC), an ASX listed miner which has grown into one of the world’s largest nickel producers by tapping the support of Chinese stainless steel giant Tsingshan to establish an empire of nickel pig iron projects in the South East Asian nation, is joining that wave.
The company producer 4743t of nickel matte in the fourth quarter of 2022 at higher margins to its nickel pig iron products, and has tapped investors, including 18.4% owner Tsingshan, for US$471m ($674m) in new funding to bankroll an expansion of its battery nickel interests.
The raising will fund the US$270m purchase of Tsingshan’s indirect 10% interest in the PT Huayue Nickel Cobalt Project in the Morowali Industrial Park, a further 10% interest in NIC’s 70% owned Oracle RKEF project, and options on participating in the DAWN HPAL+ project and a nickel matte conversion opportunity at Oracle for US$40m.
The deals promise to transform Nickel Industries’ downstream impact. With the nickel matte transition and HPAL acquisition around 53% of its 114,000tpa of nickel metal output will be class 1 nickel, suitable for EV batteries.
Should the DAWN and ONI matte options be exercised NIC would have a production level of 156,000tpa, two thirds in class 1.