Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Nickel 28’s Ramu operations post record production in Q1 (January-March) exceeding the projects design capacity. Ramu Nickel-Cobalt in Papua New Guinea is the company’s biggest integrated operations with an annual design capacity to produce 32,600mt of contained Nickel.


Production increased in Q1 due to lower maintenance, while cash costs minus byproduct revenue was $1.70/lb of contained nickel, lower than $2.05/lb in the prior-year quarter. Higher cobalt prices and increased cobalt payability in Ramu’s mixed hydroxide product (MHP) reduced cash costs.


Improvement in nickel and cobalt payabilities in Q1 indicate increased appetite for MHP, globally, from battery producers, stated the company’s Q1 release quoting chairman Anthony Milewski. Revenues doubled to more than $160mn in Q1 from $80mn in the prior-year quarter.


Amid higher commodity prices, Nickel 28 is expected to generate cash from its Ramu investment by the end of June 2021. In Q1, LME nickel prices rose to an average of $7.97/lb, up by over 10pc from $7.23/lb in Q4 2020. Also, higher cobalt prices rose to an average of $21.71/lb from $15.73/lb in Q4.


In Q1, Ramu produced 8,805mt of contained nickel in MHP, up by 2pc from 8,635 in the prior-year quarter. Cobalt production was 800mt, up 80mt or 11pc from the prior year. MHP shipments remained consistent compared to Q1 2020 at 8,744mt of nickel contained and 785mt of cobalt contained in MHP.


Nickel 28 nickel capacity utilization was 108pc in Q1 against 106pc in 2020 The company holds its full-year guidance for Ramu at 32,000-34,000mt contained nickel output and 2,800-3,200mt of contained cobalt. 


Ramu’s operating and financial performance 
 Q1 2021Q1 2020Q1 2019
Ore Processed (dmt)952,000920,000800,000
MHP produced (dmt)22,84521,17719,653
Contained Nickel (mt)8,8058,6357,663
Contained Cobalt (mt)800720704
MHP shipped (dmt)22,64815,12117,219
Contained Nickel (dmt)8,7446,1086,588
Contained Cobalt (dmt)785522609
Cash cost actual$1.70$2.05$2.44

Nickel 28 holds an 8.56pc joint-venture interest in the Ramu project. In addition to Ramu, Nickel 28 holds a portfolio of 13 nickel and cobalt royalty-based development and exploration projects in Papua New Guinea, Australia and Canada.

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