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Approximately two thirds of global nickel production is used to produce stainless steel. Ferronickel is preferred by stainless steel mills due to its iron content. Nickel-containing materials play a major role in our everyday lives, including food preparation equipment, mobile phones, medical equipment, transport, buildings, power generation. Nickel-containing materials are selected because - compared with other materials - they offer better corrosion resistance, better toughness, better strength at high and low temperatures, and a range of special magnetic and electronic properties.
Stainless Steel is a reliable, steady growth market that has continued to grow ~4% year on year. Global stainless output is forecast to rise by a CAGR of 2.5% over the 2020-2040 period. China’s steel demand is expected to increase by 8% in 2020, aided by government infrastructure stimulus and a strong property market. China's strong recovery since late February, which continues at a steady pace, suggests positive GDP growth in 2020 despite a -6.8% contraction in the first quarter. This strong recovery in China will mitigate the reduction in global steel demand, due to the Covid pandemic.
Horizonte’s 100% owned Araguaia ferronickel project has been designed to feed into the Stainless Steel industry. The project has a completed Feasibility Study and is fully permitted. The Stage 1 Base Case for the Araguaia project’s Feasibility Study was US$14,000; however, based on the consensus long-term nickel price of $16,400, the project NPV is $691 million generating free cash flow of over US$2.9 billion, giving an IRR of 27%.
Investors can plug-in their own nickel price into our NPV calculator on the Araguaia project page.
Sources:
Nickel Institute
Araguaia Feasibility Study
