Mines and Money: Interview with Mark Bennett, MD and CEO, Sirius Resources
This interview is an extract from a full interview included in the Mines and Money eBook: Identifying Investment Opportunities in the Mining Sector – Asia Edition. The full eBook can be downloaded here.
Mark Bennett is a geologist with extensive experience in gold, nickel and base metal exploration and mining. He is a Member of the Australasian Institute of Mining and Metallurgy, a Fellow of the Geological Society of London and a Fellow of the Australian Institute of Geoscientists. He has worked mainly in Australia, West Africa and Canada, predominantly for LionOre and WMC. Mark’s key achievements include twice winning the AMEC Prospector of the Year Award, for the discovery of the Thunderbox Gold Mine and the Waterloo nickel mine and the Nova nickelcopper deposit in Western Australia.
We asked Mark about the current state of the Asian Nickel market, and also got his evaluation of Sirius’ success in recent years.
Mines and Money: What’s your outlook for the Nickel over the next 12 months?
Mark Bennett: So in terms of my personal view on the outlook for the nickel sector, it’s very much about nickel price and that in turn is about Indonesia, China, and the Asian stockpiles. What the last 18 months have shown me is that, first of all, when we found Nova, some people said that it’s a great discovery but it’s nickel and who cares about nickel. Nickel was six dollars a pound thereabouts. Then, the Indonesian ban came into force, and there was an instant increase in the price. At which point the producers, particularly the higher cost producers, were very relieved because they were suddenly making a decent margin on their production. But the nickel price ran very hard and very quickly, on the assumption that the LME stock piles would diminish very rapidly, and that they’d be a deficit of supply.
And I guess what happened next is two things. One, is the Chinese started substituting Indonesian laterite with Filipino laterite. And blending the two, which meant the nickel pig iron producers in China, could hangout longer. And also, they appeared to be a lot more nickel stock piled in China than was previously realized. And the effect of that was that the LME inventories have continued growing rather than shrinking. So, there was a fairly emotional reaction to that, in that the pretty substantial amount of the nickel price gains were pretty well wiped out, and the price dipped back down again to where it is now. If I were high cost nickel producer right now, I’d feel unhappy about that but I’m actually really happy about that because my fear was that the price was running so hard and so quickly that when that happens, you often get overexcited and there’s a bubble which eventually bursts and that the worst thing from our perspective would be that bubble burst before we were actually producing.
So with this sort of intelligence everybody’s hearing now which is, yeah, China’s getting some of the short fall of nickel from the Philippines but the composition of that material isn’t appropriate to their blast furnaces. They’re having to blend it with their remaining stockpiles of Indonesian left to right which is gradually running out at which point it something has to give and that’s when we should hopefully see the manifestation of that in terms of the stockpiles diminishing and the nickel price going up but in a slower way and over a longer period. If current commentators are correct, a longer slower burn in the nickel price so that it’s starting to peak in 2017, 2018 is the absolute perfect timing for us because that’s when we’ll be hitting our straps with production. My view with the nickel factories is hopefully it will be exactly what the commentators are now suggesting there’ll be minor ups and downs but fairly sort of static in the short term and then hopefully gradual lifting price sort of 12 months out and continuing.
Read the full interview with Mark by downloading the eBook here.