Nickel and Cobalt

By: Richard Mills | Fri, Apr 1, 2011
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In 1751, Axel Fredrik Cronstedt of Sweden attempted to extract copper from the mineral Kupfernickel - today called niccolite. To his surprise instead of copper, he got a silvery white metal he started calling nickel. The name nickel comes from the German language and means Old Nick - which is a name Germans use for the devil - so nickel is "Old Nicks copper" or the "Devil's copper."

In 1913, Harry Brearly an English scientist, was the first to produce stainless steel when he accidentally discovered the addition of chromium makes stainless steel stainless. More than 10.5% chromium needs to be added to allow the outside protective oxide film to form on the steel - this provides corrosion resistance and gives stainless steel its bright, silvery appearance - the more chromium added the greater the corrosion resistance.

Nickel is an important alloying addition in nearly two thirds of the stainless steel produced today. Its primary function is to stabilize the austenitic (face-centered cubic crystal) structure of the steel. Normal carbon steel will, on cooling, transform from an austenite structure to a mixture of ferrite and cementite. When added to stainless steel nickel stops this transformation keeping the material fully austenite on cooling. Austenitic stainless steels have high ductility, low yield stress and high tensile strength when compared to carbon steel - aluminum and copper are examples of other metals with the austenitic structure.

The minimum amount of nickel that will stabilize the austenitic structure is eight percent. That is the percentage present in the most commonly used grade of stainless steel - Type 304 is 18% chromium and 8% nickel and is known as 18/8. This composition was one of the first to be developed, it was used for chemical plants and also to clad the Chrysler Building in New York City.

Almost 40% percent of annual nickel use is in nonferrous alloys (mixed with metals other than steel) and super alloys (metal mixtures designed to withstand extremely high temperatures and/or pressures or have high electrical conductivity). Nickel is present in over 3000 different alloys that are used in more than 250,000 end-use applications.

Nickel is used as a coating on other metals to slow down corrosion, for the production of coins, as a catalyst for certain chemical reactions and as a colorant - nickel is added to glass to give it a green color.

Rechargeable nickel-hydride batteries are used for cellular phones, video cameras, and other electronic devices. Nickel-cadmium batteries are used to power cordless tools and appliances.

Nickel Uses
nickelinstitute.org

Because nickel is usually recycled, a distinction is often made between the use of newly produced metal and recycled scrap. 'First use' refers to the destination of newly produced nickel. By far the most important use of new nickel is the production of stainless steels.

Nickel Warehouse Stock Levels

1 Year Nickel Spot

It is estimated that there is about 140 million tons of nickel available in identified deposits. Nickel-bearing deposits come in 2 types:

Nickel sulphide deposits are formed by magmatic segregation. These sulfide deposits are also called magmatic sulfide deposits and are found in Australia, Canada, Russia and South Africa and are typically associated with copper and platinum group metals.

Nickel Laterite deposits are formed from weathering of ultramafic rocks and are usually operated as open pit mines. They are located principally in Western Australia, New Calodonia, Indonesia, Colombia, Cuba, Venezuela, Brazil and the Dominican Republic.

Today, nickel sulfide deposits are the primary source of mined nickel - about 58% of world's nickel production come from nickel sulfide and 42% of mined nickel comes from nickel laterite deposits.

The trend of future nickel production is changing because of the current lack of high quality nickel sulfide exploration targets - nickel laterites are most likely to be developed as the world's future primary nickel sources.

Three countries dominate the top three spots in terms of nickel deposits:

Russia is the world's leading country for nickel production and Russian mining giant Norilsk Nickel is the world's largest producer. Most of the countries nickel production (an amazing one-fifth of global production) is from Norilsk - the largest nickel sulfide deposit in the world.

Canada is the world's second largest nickel producing country. Most of the countries nickel currently comes from the Thompson Nickel Belt in Manitoba, the Sudbury Basin of Ontario, and the Ungava peninsula of Quebec.

Vale SA, a Brazilian company and the world's second largest mining company by market value, said its total nickel output will be cut by about five percent this year as it repairs a damaged furnace in Canada. The company, whose goal is to become the world's top nickel producer in 2011, said on February 7th 2011 the No. 2 furnace at its Copper Cliff nickel plant in Sudbury, Ontario would be shut down for at least 16 weeks.

On the announcement nickel futures jumped to their highest price in almost three years - nickel for three month delivery climbed $660, or 2.3 percent, to settle at $29,150 a metric tonne.

Australia is the world's third most important producer of nickel. The country primarily exports its nickel products to Europe, Japan and the United States.


Nickel Sulphide Deposits

Magmas (magma is a mixture of molten rock, volatiles and solids that is found beneath the surface of the Earth - Lava is the extrusive equivalent of magma) originate in the upper mantle and contain small amounts of nickel, copper and PGE. As the magmas ascend through the crust they cool as they encounter the colder crustal rocks.

If the original sulfur (S) content of the magma is sufficient, or if S is added from crustal wall rocks, a sulphide liquid forms as droplets dispersed throughout the magma. Because the partition coefficients of nickel, copper, iron and Platinum Group Elements (PGE) favor sulphide liquid these elements transfer into the sulphide droplets in the magma. The sulphide droplets sink toward the base of the magma because of their greater density and form sulphide concentrations. On further cooling, the sulphide liquid crystallizes to form the ore deposits that contain these metals.

Currently, the majority of today's nickel is produced from sulphide deposits, as it is easier and cheaper to mine and process than lateritic ore. However known sulphide deposits are getting depleted and new discoveries are scarce.

There are two main types of nickel sulphide deposits. In the first, Ni-Cu sulphide deposits, nickel (Ni) and copper (Cu) are the main economic commodities - copper may be either a co-product or by-product, and cobalt (Co), Platinum Group Elements (PGE) and gold (Au) are the usual by-products.

The second type of deposit is mined exclusively for PGE's with the other associated metals being by-products.

Nickel sulphide deposits can occur as individual sulphide bodies but groups of deposits may occur in areas or belts ten's, even hundreds of kilometers long. Such groups of deposits are known as districts. Two giant Ni-Cu districts stand out above all the rest in the world: Sudbury, Ontario, and Noril'sk-Talnakh, Russia.

The most important platinum-rich PGE district in the world is the Bushveld Complex, South Africa. The Fraser Institute mining survey ranks the attractiveness of mining investment destinations. This year's survey shows South Africa has fallen from 27/47 places in the 2003 period to 67/79 this year. South Africa is now just above Zimbabwe and the Democratic Republic of the Congo in the Fraser Institute survey rankings. The second PGE district in importance is the Noril'sk-Talnakh district, which is exceptionally Palladium (Pd) rich as a by-product of its Ni-Cu ores.


Nickel laterite deposits

Nickel laterite deposits were first discovered in 1864 by French civil engineer Jules Garnier in New Caledonia - commercial production started in 1875. New Caledonia's laterites were the world's largest source of nickel until Sudbury Ontario's sulphide deposits started production in 1905 and totally dominated global production for the next 70 years.

Eighty-four million tons, or roughly 60 percent of global available nickel is in laterite deposits - a deposit in which weathering of ultramafic rocks has taken place. The initial nickel content is strongly enriched in the course of lateritization - under tropical conditions fresh rock weathers very quickly. Some metals may be leached away by the weathering process but others, such as aluminum, iron and nickel can remain.

Typically nickel laterite deposits are very large tonnage, low-grade deposits located close to the surface. They tend to be tabular and flat covering many square kilometers. They are most often in the range of 20 million tonnes and upwards, with some examples approaching a billion tonnes of material.

Laterite deposits usually contain both an upper dark red limonite (higher in iron and lower in nickel, magnesium and silica) and lower bright green saprolite zone (higher nickel, magnesium and silica but lower iron content). Due to the different quantities of iron, magnesium and silica in each zone they must be processed differently to cost-effectively retrieve the nickel.


What is Happening with Cobalt?

A strategic material is a commodity whose lack of availability during a national emergency would seriously affect the economic, industrial, and defensive capability of a country - many countries classify cobalt as a critical or a strategic metal.

Cobalt made the short list of four metals that the European Union chose to name as representative of the 40 metals it is classifying as critical. The US is the world's largest consumer of cobalt and the US considers cobalt a strategic metal. The US has no domestic production - the United States is 100% dependent on imports for its supply of primary cobalt - currently about 15% of U.S. cobalt consumption is from recycled scrap, resulting in a net import reliance of 85%.

Although cobalt is one of the 30 most abundant elements within the earth's crust it's low concentration (.002%) means it's usually produced as a by-product - cobalt is mainly obtained as a by-product of copper and nickel mining activities.

Today 40% of the cobalt consumed in the world originated as a by-product from copper production in the West African country of the Democratic Republic of Congo (DRC) - cobalt production in most other countries is a by-product of nickel mining.

The copper deposits in the Katanga Province of the Democratic Republic of the Congo are the top producers of cobalt and the political situation in the Congo influences the price of cobalt significantly. The politically unstable Democratic Republic of Congo contains half the world's cobalt supply and represents the lion's share of anticipated future cobalt supply - the DRC's 2007 output was equal to the combined production of cobalt by Canada, Australia and Zambia.

In a nine billion dollar joint venture with the DRC China got the rights to the vast copper and cobalt resources of the North Kivu in exchange for providing $6 billion worth of road construction, two hydroelectric dams, hospitals, schools and railway links to southern Africa, to Katanga and to the Congo Atlantic port at Matadi. The other $3 billion is to be invested by China in development of new mining areas. Approximately half of known global cobalt reserves are in the DRC, and close to 40%-50% of incremental cobalt production, over the next five years, is anticipated to emanate from the DRC.

China is extremely short of cobalt concentrates and needs to import cobalt concentrates in large amounts every year. The leading global producers of refined cobalt are China (39%), Finland (15%) and Canada (8%). China is a leading supplier of cobalt imports to the United States.

The cobalt market is small in comparison with other base metals. Consumers purchase cobalt through negotiated agreements, bids, and open markets from producers, traders and to a lesser degree, government stockpiles and private inventories.


Uses

Cobalt is a strategic and critical metal used in many diverse industrial and military applications.

LME Cobalt futures contracts commenced trading on the London Metal Exchange (LME) on 22 February 2010. LME Official Opening Stock 18th March 2011 was 248t. Spot price was US$37,500.00 tonne

China seemingly has most of the DRC's production of cobalt locked up, that's up to 40% of global mined cobalt.

Cobalt is classified as a strategic/critical metal.

With the recent strong support for electric vehicles the use of cobalt in this sector alone has led to a formidable demand for the element.

There is no doubt in this author's mind that cobalt's profile will continue growing in the coming months and years.

Are nickel and cobalt on your radar screen?

If not maybe they should be.

 


 

Richard Mills

Author: Richard Mills

Richard (Rick) Mills
www.aheadoftheherd.com

Richard Mills

Richard lives with his family on a 160 acre ranch in northern British Columbia. He invests in the resource and biotechnology/pharmaceutical sectors and is the owner of Aheadoftheherd.com. His articles have been published on over 400 websites, including: SafeHaven.com, WallStreetJournal, USAToday, NationalPost, Lewrockwell, MontrealGazette, VancouverSun, CBSnews, HuffingtonPost, Beforeitsnews, Londonthenews, Wealthwire, CalgaryHerald, Forbes, Dallasnews, SGTreport, Vantagewire, Indiatimes, Ninemsn, Ibtimes, Businessweek, HongKongHerald, Moneytalks, SeekingAlpha, BusinessInsider, Investing.com and the Association of Mining Analysts.

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