Western sanctions against Russia in response to the invasion of Ukraine are unlikely to lead to a total supply halt in the market, according to French mining group Eramet's chairwoman and chief executive Christel Bories.
For Russia, which produces 7pc of the world's nickel supplies, being hit by a Western embargo could add to current supply tensions in the stainless steel value chain, but China's close geopolitical relationship with Russia is likely to mean that it will continue to absorb Russian supplies, Bories said said last week.
The group's production of nickel and nickel products rose strongly in 2021, along with its manganese output.
At the firm's New Caledonia asset, nickel ore production increased by 21pc on the year to 7mn t, driven by higher realised prices but offset in part by the increase in freight costs.
Activities in New Caledonia were disrupted all year round, including due to blockades linked to Brazilian miner Vale at the end of 2020, unfavourable weather in the second quarter, loss of an electric power plant unit and a significant increase in Covid-19 cases on the territory in the third quarter, prompting questions over the future of Eramet's New Caledonia operations in October last year. This had a negative impact on ferronickel production particularly, which declined by 18pc to 39,000t. These concerns were alleviated earlier this month as Eramet's Société Le Nickel subsidiary received approval to export an additional 2mn t/yr of nickel ore.
Eramet's low-grade nickel ore exports increased by 17pc to 3mn wet metric tonnes (wmt) in 2021. Nickel ore production at Weda Bay in Indonesia significantly increased year on year in 2021, climbing to 9.9mn t, up from 3.41mn t a year earlier but falling short of Eramet's 12mn t annual guidance set at the end of the second quarter of 2021.
Production of nickel ferroalloy in Weda Bay climbed to 39,000t in 2021, up from 23,500t a year earlier when there was no first-quarter production. The nickel ferroalloy plant in Indonesia operated at maximum capacity throughout the year, Eramet said.
Nickel salt and high-purity nickel production at the group's Sandouville plant in Normandy, France rose by 21.92pc on the year in the first half of 2021 to 8,900t.
"The markets of the mining and metals division remain well oriented at the start of 2022 and should continue to grow over the year, with prices set to remain at globally high levels," Eramet said. "Developments in energy costs, in particular gas and electricity, remain uncertain for 2022 with continued price increases potentially impacting on the group's profits."
Eramet produced 7.02mn t of manganese ore in the first half of 2021, rising by 21.04pc from the same period last year owing to continued growth in the firm's Gabon mining asset following a capital expenditure influx totalling €151mn ($170.2mn). Manganese alloy production in 2021 increased by 7.02pc year on year to 747,000t.
