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Nickel Outside Indonesia: Vietnam Steps Forward

December 15, 2014 | About:

Vietnam, which is known globally for its rich culture and tourism and not for its nascent mining industry, decides to step forward.

Now that the global nickel industry is under threat of various supply-related predicaments due to Indonesia’s nickel ore ban, nickel-dependent consumers seek for better alternatives. Consumers redirected its effort to the Philippines, the second-largest nickel ore producer, when the Southeast Asian super economy announced that it would stick its guns on the ban.

In November, Indonesia shocked the world again on news that the ore prohibition efforts have reached a “point of no return.” This aggravated the problems on ore supply, which then led to speculations that a deficit would affect the global nickel commerce in 2015.

The looming deficit left consumers stockpiling, catapulting nickel price to record-high performance in the first nine months of 2014. Nickel became the best-performing base metal this year, sending investors to a yearlong wild ride. Nickel consumers, however, had to bear with Indonesia’s irrevocable decision and find alternative suppliers in the Philippines, New Caledonia, Australia and even Russia.

Little did the consumers know that outside these nickel-abundant regions an emerging Toronto-based mining firm is transforming Vietnam’s small region into a nickel-mining hub.

Asian Mineral Resources (CVE:ASN) has been in the commercial production since 2013. It started out as an exploration firm in 2004 and listed on the TSX Venture Exchange in Canada and by 2006 it already obtained mining license from the Vietnamese government to commence intense drilling and evaluation program on the Ban Phuc Reserve.

However, in 2008, the firm’s operations were temporarily put on hold the Vietnamese government increases export tariffs, which was aggravated by base metal’s declining price at the time. Add to this the super typhoon that battered the mining site, located 160 km-far from the capital city Hanoi where the storm made landfall.

After being put on an extensive care and maintenance the company reopened in 2013 as a full-blown nickel mine and sought another exploration license over highly promising Song drift the following year.

The Ban Phuc reserve has produced 6,400 tonne nickel, 3,200 tonne copper and 200 tonne cobalt as a byproduct in 2014. AMR predicted that this number would dramatically increase to 9,900 tonnes of nickel equivalent in 2015.

AMR CEO Evan Spencer announced that in addition to the firm’s efforts in Ban Puc expansion, it would also commence explorations and drillings on 16 identified regional targets included in the “50km2 exploration license within the 150km2 concession” it obtained from the Vietnamese government.

Nascent mining firms as better alternative

The Indonesian ore ban has indeed disrupted the global nickel commerce as its absence meant suppliers had to reconsider importing nickel from other countries that offer lower-grade ores. This was a blow to consumers because this would force them to add cost to processing to obtain the same quality the Indonesian ore offered. This also meant that they had to tap smaller firms to mitigate the losses incurred from the supply deficit.

One of the most promising nascent firms today is Amur Minerals (AIM: AMC), a Russian firm whose Kun-Manie exploration gives suppliers hope in case the 2015 deficit finally kicks in.

The Kun-Manie Reserve has increased by 25% to 39.2 million ore tonnes containing 219,000 tonnes of nickel and 58,100 tonnes of copper, making it amongst the largest nickel sulphide projects in the world.

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