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CRU has recently published Nickel Cost Report 2022– Nickel costs in the year of soaring inflation. This yearly report covers all aspects of nickel costs trajectory - now, and in the midterm future. While the producers’ margins seem intact, the story of cobalt by-products, current playabilities, and LME price is no longer at a record high – the focus on cost may return.

Nickel CRU Cash costs are set to inflate across all products this year, some more than others. While some can improve grades or recoveries in the short term, any planning decisions delaying stripping or general mine advance will mean extra opex or deferred capital creeping up soon. The cost curve shifts this year are very interlinked with the new NPI capacity addition. When a large proportion of nickel supply is sold at discount, the realization costs on average show a large increase. What we call realisation costs here at CRU, incorporates TC/RCs, payabilties, premiums, and discounts has by far been a significant driver for the costs to increase. The large increase in realization costs nearly undermines the increases across other site cost buckets. Additionally, some cost not noting inflation are merely just a delay that will catch up with the cost curve next year or even in further quarters of this year. Miners and processors have secured a good number of inventories at a lower price (i.e., coke), but will see the unit price spikes further down the line.

Finally, while it's crystal clear that inflation affects nickel, what our analysis shows, is that cash cost has been on the upwards trajectory since 2020, with the largest visible y-o-y % change happening last year.

These are just snippets of the detailed analysis that the report covers. From laterite ore miners’ costs to intermediate payabilities and nickel sulphate cost breakdown, all of this is discussed with our subscribers regularly. To enquire about CRU’s base metals services or to discuss this topic in detail, get in touch with us.

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Author Yuan Gu

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