Domestic

Jinchuan looks to extract nickel firm's assets

By ZHANG QI (China Daily)
Updated: 2010-04-08 10:22

BEIJING: Jinchuan Group Ltd, China's largest nickel producer, has made a $150 million offer for Canadian junior nickel miner Crowflight Minerals Inc to gain its assets in Manitoba and Ontario, Canada.

Jinchuan's offer is about 26 cents a share or a 57 per cent premium over Crowflight's 20-day average selling price on the Toronto Stock Exchange, Toronto-based Crowflight said on Wednesday in a statement.

Crowflight recently restarted its Bucko Lake nickel mine in Manitoba as the international price of the metal recovered after the financial slowdown. The company also has mineral deposits in Ontario's Sunbury basin.

Jilin Jien Nickel Industry Co, China's second-largest nickel miner, late last year bought a 14.7 percent stake in Canada-based Victory Nickel from Nuinsco Resources Ltd for 18.4 million yuan ($2.7 million).

The move is on the back of rising nickel prices on global markets, indicating bright prospects for the nickel market in the second half of the year, said Wang Lixin, an analyst with industry consultancy firm Umetals.com.

Nickel prices touched 170,000 yuan per ton on Wednesday, up nearly 20 percent from December 2009, according to Umetals.com.

The performance of the international nickel market tops that of the domestic market, with 30 percent growth in nickel prices on the London Metal Exchange in the same period.

Nickel is a key ingredient in the manufacturing of stainless steel. Demand from stainless-steel producers slumped since the second half of 2008 due to the economic downturn.

The industry has been showing signs of a pick-up since March 2009. Stainless-steel mills have been running at full capacity since late last year.

But prices remain low compared to 260,000 yuan per ton in January 2008, indicating that there is room for upward pricing.

Nickel imports stood at 16 million tons in 2009, with expectations of 10 percent growth this year, said Wang.

"The strong recovery of the international nickel market will also push up demand from the domestic market, and nickel prices in the Chinese market will further increase in the second quarter of this year," said Umetals' Wang.

Chinese nickel pig iron producers have been ramping up production on the back of rising nickel prices, and nickel pig iron output appears set to account for a big chunk of nickel demand from the domestic stainless-steel sector. Sector demand was roughly 300,000 metric tons last year, and will likely rise in 2010, Dow Jones quoted Celia Wang, a nickel analyst at CBI China as saying.