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Developing the next major nickel project in Brazil

STAINLESS STEEL

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.

According to the International Nickel Study Group, usage of nickel is correlated with economic development and has continually increased over time. World nickel demand increased from 907,000t in 1990 to 1.465Mt by 2010, an annual average growth rate of 2.3%. Since then the strong growth recorded by the Chinese economy has further accelerated the increase in nickel demand that recorded in only six years, from 2010 up to 2015, an annual growth rate of 5.0%.

Asia is now by far the largest regional market for nickel currently representing 71% of total world demand. China alone accounts for more than half of world nickel demand compared with less than a fifth a decade earlier.

Consensus long-term nickel price forecasts are currently around US$16,400 per tonne of nickel. Wood Mackenzie’s long-term incentive nickel price forecast is around $20,000 per tonne of nickel today.

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

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