Industry Trend Analysis - Hurricane Season To Hit Nickel, Cobalt Output - OCT 2017
BMI View: We have revised down our Cuban nickel and cobalt production forecasts for 2017 following operational disruptions due to hurricanes. Cuba's nickel sector will experience a slow recovery thereafter, given the lack of new projects planned and a weak long term outlook for nickel prices.
On September 8, the Cuban government announced the shutdown of the state-run Ernesto Che Guevara nickel-cobalt plant and the winding down of operations at the Moa nickel-cobalt mine and plant in preparation for Hurricane Irma. The Moa operation, a joint-venture between the Cuban government and Canadian miner Sherritt International, produced 15.2kt of nickel and 1.7kt of cobalt in H117, representing a 9.6% and 10.7% y-o-y decline, respectively, due to impacts from Hurricane Matthew at the end of 2016 and a longer planned annual refinery shutdown.
As such, we lowered our 2017 production forecast for Cuba's nickel and cobalt, to a 20% and 30% contraction, respectively, from previous expectations for modest growth. While the damage from the hurricane remains unclear and thus presents a downside risk to longer-term production forecasts, we expect the state-run General Nickel Company SA of Cuba and Sherritt to prioritise restarting operations given higher nickel prices in 2017 compared to 2016, and rising cobalt prices.
|Difficult Recovery For Nickel Output|
|Cuba - Nickel Mine Production ('000 tonnes) & Growth (% y-o-y)|
|f = BMI forecast. Source: USGS, BMI|