In June 2014, RMC announced a Direct Shipping Ore Exploration Target for the Company’s Wowo Gap Nickel Laterite Project of 40 to 60 million tonnes at 1.6% to 1.8% Ni.
This announcement was in response to a significant change in the nickel laterite markets with an impending shortage of lateritic Ni ore following the Indonesian ban on mineral exports. The DSO opportunity has become the focus of exploration at Wowo Gap.
On 12th January 2014, the Indonesian Government’s ban on mineral exports took effect. Nickel laterite ore prices have since risen significantly as has the price of primary nickel metal.
Market commentators are beginning to become more optimistic regarding the medium to longer term future for nickel prices. In presenting its 2013 annual results to shareholders in March 2014, Glenore Xstrata, one of the leading global nickel producers, noted that “Indonesia’s ore export ban and the likelihood of enforcement have potentially transformed nickel’s outlook and a continued export ban post presidential elections will balance the market in 2014 followed by significant deficit in 2015.”
China, the world’s largest importer of nickel laterite ore is beginning to seriously investigate alternative sources of supply. With the cessation of laterite ore supplies from Indonesia, both Chinese and Japanese end users have begun to actively seek alternative supply sources. China’s demand is for raw materials for Nickel Pig Iron production whilst Japanese consumers seek high grade saprolite for the production of ferro nickel.
In 2013, China imported 70 Mt of laterite ore, 40Mt from Indonesia and 30Mt from the Philippines. Market reports suggest that Philippine exports to China will reach 40Mt in 2014 but weather and other issues have delayed exports which are running around the same level as 2013. With difficulties faced by importers, alternative sources grow in importance.
PNG offers a potential solution to the supply availability issue, a matter that will be further emphasised as laterite nickel prices either continue to rise or remain stable at the current high levels.
RMC is uniquely well positioned to take advantage of this significant recent positive development in the nickel ore market dynamics through its 100% ownership of the Wowo Gap project in PNG and is actively engaging with East Asian nickel producers who have been directly impacted by enforcement of the Indonesian export ban.
The Exploration Target was identified following a review of the existing exploration and drill hole data, which demonstrated that elevated Ni grades tend to occur at the base of the auger core drill holes, which were drilled to test the softer limonite zone overlying the rocky saprolite layer beneath. This suggested the Ni grade of the underlying saprolite ore is likely to be higher in grade than the overlying limonite ore.