SMM Forecasts 2-Year Global Nickel Oversupply in 2011 and 2012

Sumitomo Metal Mining (SMM) forecasts worldwide nickel supply would exceed the global consumption by 54,000 tonnes in 2012. Oversupply volume is forecasted to enlarge from estimated 11,000 tonnes in 2011. SMM considers worldwide nickel consumption would increase by 4.6% to 1.638 million tonnes in 2012 from 2011 due to the increase of stainless steel production. However, nickel supply is likely to increase by 7.3% to 1.692 million tonnes by commencement of new projects. Global oversupply would continue for two years in a row.

One of the newly starting large projects is Goro development in New Caledonia. Goro nickel project is mainly led by Vale, while in which SMM also joins. The output capacity is planned at 60,000 tonnes per annum.

Large scale production has not started at Goro project due to several-time troubles. However, test operation is now starting in November with one-third output capacity to confirm ability of nickel oxide production through integrated processes. Commercial production is scheduled to commence in 2012.