Industry Trend Analysis - Grim Short-Term Outlook for Canada Mining - OCT 2015

BMI View: Plan s for nickel mine output expansion in Canada will be scaled back due to persistently low nickel prices. The closure of the First Nickel -owned Lockerby nickel mine in Sudbury reflects the challenges facing the mining industry in Canada, as well as a global consolidation and divestment trend in the industry.

The production outlook of Canadian nickel is lower than previously expected as global nickel prices will remain depressed along with other metals. We recently revised down our refined nickel price forecasts, for instance to USD12,200/tonne from USD15,500/tonne for 2015. Although Canadian production over the past few months has been on par with that in 2013, the remainder of 2015 will see a drop in production to more sustainable levels as firms continue to adjust to an era of low commodity prices. While Canada remains a major global producer of nickel, the Sudbury mine closure is indicative of the country's higher entry and operational costs, in addition to the added challenge of its remote location. As such, we expect nickel production levels to begin accelerating later than our initial forecast of 2016.

First Nickel applied for receivership on August 20, 2015 and consequently halted production at its Lockerby nickel and copper mine in Sudbury, Ontario. After initially downsizing in January, First Nickel has resorted to closure, citing weak nickel prices. The company reported a loss of USD33.1mn in Q115.

Production Growth To Slow
Canada Nickel Production %m-o-m

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