Eramet announced that in Q3 2018, sales for the Nickel division ended at EUR 179 million, up 25% versus Q3 2017, mainly driven by the increase in nickel prices. Global stainless steel production is very dynamic, and was up 5.9%8 during the first nine months of the year versus the comparable 2017 period. This quarter remained overall stable worldwide (-0.8%8 versus Q3 2017), with a slowdown in production in China (-3.4%8), offset by strong growth in Indonesia (+70.5%8).
Primary nickel demand grew 5%8 during the first nine months. It was also boosted by the good prospects for batteries development for electric vehicles, which grew significantly during the first nine months of the year versus the comparable 2017 period.
Global primary nickel production was up 5.6%8 during the first nine months versus nine months 2017, driven by continued growth in nickel pig iron (NPI9) production in Indonesia (+56%8 during the same period).
Nickel supply/demand thus remained in deficit overall as in 2017, with demand that should exceed supply by more than 100 kt of nickel in 2018. Nickel inventories at the LME10 and SHFE10 continued to decline during Q3 (-40% versus end-December 2017).
LME average prices during the quarter thus increased by 26% to USD 6.02/lb (USD 13,266/t), versus an average of USD 4.78/lb (USD 10,528/t) in Q3 2017 but down versus H1 2018 (USD 6.30/lb, i.e. USD 13,871/t), with a further decline in October.
In New Caledonia, since early August, the Kouaoua mining centre was subject to a physical blockade by a group of protesters contesting the start of operations for three deposits, authorised in May 2018 by the Northern Province, after in-depth consultation with the New Caledonian government and local customary authorities. Kouaoua, which is one of SLN’s four main mining centres, produces 20% of the ore required annually for ferronickel production in the Doniambo plant. Faced with this blockade situation and to ensure the safety of its employees and equipment, SLN has had to shut down operations in the mining centre. Following a dialogue process with all stakeholders, the mining centre has started to resume operations.
In early October, activity at the Tiébaghi mine was also stopped for a few days in a disrupted local environment linked to the self-determination referendum to be held on 4 November.
All these disruptions should have an impact on the Group current operating income, of approximately €15m for the 2018 financial year.
Against this background, nickel metallurgical production in Doniambo was down 4% during the first nine months of 2018, whereas ferronickel sales’ volumes remained stable (+1% versus Q3 2017) and ended at
40.2 kt year-to-date at end-September.
Thanks to good mining production (excluding Kouaoua), SLN nonetheless achieved a record level of approximately 411 kt of exported ore in Q3 2018, +38% year-to-date at end-September. Exported ore is lower-grade in nickel and cannot be used for local metallurgical production.
SLN cash-cost11 at real economic conditions stood at USD 5.75/lb12 during the quarter and USD 5.88/lb12 year-to-date at end-September, penalised versus 2017, mainly through changes in the Euro/US dollar exchange rate, the rise in the price of fuel, and difficulties in mining operations.
Following the annual shutdown for large-scale maintenance works, the start-up in activity at the Sandouville plant is progressing slowly and posted improved performances during the last few weeks and a production capacity rate of more than 50%.
