Indonesian politicians have a reputation for not wanting to lose face, especially on national pride issues. So even if the country’s ban is the nickel industry’s only decent pillar, the consensus seems to be that one strong pillar is enough.

“There is absolutely no way in the world that Indonesia will back off,” HDR director Manish Garg said.

“I do a fair amount of work in Indonesia and travel to Indonesia very often. The Indonesian government right now is pro value-add in the country. What’s happening with politics right now, there’s no way in the world they will derail nationalisation policies.

It’s a country with a high level of corruption, but I can’t see [a ban reversal] happening.”

Garg says that with only one of Indonesia’s 47 planned nickel projects actually under construction so far, the window of opportunity will remain open for new Asia-Pacific producers eager to meet a looming supply gap.

This outlook is partially shaped by a weaker-than-expected nickel traffic forecast for some of the region’s most promising backup suppliers. HDR is calling for a “massive” nickel deficit in 2015 followed by a more shortfalls next year.

“There will be some increase in the Philippines, but the increase is not big enough to replace all the tonnes from Indonesia,” Garg said.

“We thought there was going to be more direct shipping ore production from New Caledonia, but it appears the French government has put the brakes on that one too, so there’s not a lot of new activity in New Caledonia.”

Even as Chinese steel demand simmers, the Asian giant still offers nickel market hope in its diminishing port stockpiles and its need to mitigate the pollution effects of blasting low-grade ore blends to make nickel pig iron. So despite some generally anaemic pricing for the commodity this year, the hunt for new higher quality nickel hotspots is in full swing.

With an eye out for the most prospective new candidates in filling any future Asia-Pacific nickel vacuum, RESOURCESTOCKS visited Vietnam’s first nickel mine 150km west of Hanoi.

Toronto-listed Asian Mineral Resources began production at the Ban Phuc underground in late 2013 and has since pursued a measured expansionary exploration program aimed at ultimately establishing a new nickel district on a prolific geological trend extending up to operating mines in southern China.

Massive sulphide production at Ban Phuc has ramped up to a rate of 10,000 tonnes of nickel equivalent per annum at a C1 operating cost of $US2.70 per pound of nickel and recovery rates averaging 85%. Reserve grades average 2.2% nickel and the plant boasts a capacity of 45,000 tonnes per annum. The overall complex occupies a tight footprint adjacent to a mountainous smattering of villages, which contribute to a 93% local workforce.

Although margins are understandably tight after a 40% drop in the nickel price over the last 12 months, the operation has remained cash-positive and AMR chief executive Evan Spencer remains confident about ongoing resource extension drilling at the site.

“We’ve got existing operations and a platform for growth. It’s cash generative. We’ve demonstrated that we can work in Vietnam,” he said.

“We see ourselves as having a first-mover advantage here. We are talking to different people and there are opportunities for future M&A in the country. That could substantially shift our profile very quickly in Vietnam.”

Other emerging Pacific Rim nickel jurisdictions have included Papua New Guinea, where Perth-based Resource Mining Corporation’s Wowo Gap property is developing a 125 million tonne resource at 1.1% nickel, and the Solomon Islands, where Axiom Mining is hoping to become the only ASX-listed tropical laterite miner with its Isabel deposit.

Although Isabel development has been hung up for years in a David-and-Goliath legal battle over access to the site with Japan’s Sumitomo, a recent court victory has opened the door for an accelerated drill program. Some of the latest hits at Isabel’s Kolosori Ridge prospect have included 7.3m at 2.2% nickel from 8.7m and 6.7m at 2.4% nickel from 10.3m.

“The Solomon Islands have some world-class nickel deposits and we [Axiom] want to lead in the supply of nickel laterite into China as the closest, easiest substitute to the ban on nickel laterite in Indonesia,” Axiom boss Ryan Mount told RESOURCESTOCKS.

“I think the Philippines, Solomon Islands and New Caledonia are poised best to capitalise on that situation. They essentially hold some of the largest tropical laterite deposits, and in particular the Philippines, and to lesser extent the Solomon Islands, have a clear shipping route to China.”

Ultimately, diversified Pacific nickel supply via such operations seems both inevitable and tenuously dependent on an elusive sector-motivating event.

After witnessing the joyfully educative relationship
between AMR management and its young Vietnamese staffers, a more globally integrated future for a hemisphere of once-standoffish Asian countries is easy to envision. A saving grace for the nickel price, however, is another story.