State of the International Nickel Industry -A Canadian Perspective

During the past few years, the international nickel industry has taken some important steps to respond to conditions of global production overcapacity, relatively flat demand and low prices. These include the implementation of major cost reduction programs by most producers, closure of some high cost operations and the establishment of the Nickel Development Institute. Consumption in the western world increased by about 7 per cent in 1987 compared to 1986, supplies were less than demand, inventories were low, and late in the year prices increased dramatically. By year-end 1987, most producers were operating at, or close to, their effective capacities. Nickel demand is expected to increase to the year 2000 at an annual rate of about 1.7 per cent, led by increasing usage in the stainless steel sector. If this rate of growth is realized, then there will be need for the effective capacity of the nickel industry to be increased. Producers in Canada have put considerable effort in the past few years into reducing costs - with impressive results. Mining costs, in particular, have been reduced dramatically. While production is still less than the peak years of the yearly 1970's, it has increased substantially from levels of the early 1980's. Over the next few years, production is expected to increase slowly. A key determinant of the level of production in the 1990's could be the effect that regulations on sulphur dioxide emissions have on limiting production.