How is Glencore Influencing the Nickel Price Today?

Since Glencore announced plans to reduce its annual zinc and lead output, it's been influencing the nickel price today. Here's how.

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As those watching the zinc space are by now well aware, Glencore (LSE:GLEN) announced in early October that it plans to cut its annual zinc output by 500,000 tonnes. It will also reduce its yearly lead production by 100,000 tonnes. 

The zinc price has understandably reacted positively to the news, and interestingly, the nickel price today has also been boosted by Glencore’s news.

According to Reuters, LME nickel, which hit a seven-year low of $9,100 per tonne this past August, rebounded on the announcement, buoyed by speculation that the major miner may also reduce its nickel output. On October 13, a few days after Glencore’s news was released, the base metal was trading at $10,460; a week later it was still fairly strong at $10,275 for cash buyers.

While that’s good news for nickel-focused investors, it’s important to remember that as yet Glencore has not commented on whether it will indeed cut its nickel output. Hopes are certainly strong that it will do so, however — earlier this year, the commodities giant also announced cuts to its copper and coal production, and Reuters states that nickel has underperformed for the company “even more so than copper and zinc.”

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Investors will no doubt be waiting with bated breath to see if Glencore does reduce its nickel output. After all, if the mere hope that it will do so can provide a price uptick, there’s no telling what an actual reduction could do. As Minelife commodities analyst Gavin Wendt has suggested, “[i]n nickel, as in copper and zinc, an output cut by Glencore could have an immense impact.”

Voisey’s Bay in focus

Equitas Resources (TSXV:EQT) has perhaps released the most news in the nickel space this past month, putting out a steady stream of updates on its Garland nickel-cobalt-PGMs project, located 30 kilometers from Vale’s (NYSE:VALE) Voisey’s Bay mine in Labrador, Canada.

So far in October, the company has closed the first tranche of a private placement announced on September 9, issuing 8,411,393 units priced at $0.125 each for gross proceeds of $1,051,424. Each unit consists of one common share and one share purchase warrant. In addition, Equitas has said that four NQ diamond drill holes across 1,515 meters have been completed at Garland. The goal of the current drill program is to evaluate 10 areas of conductivity that are prospective for nickel-copper sulfides.

Investors have certainly reacted positively to all of the news — year-to-date, Equitas’ share price is up an impressive 70.59 percent, and was trading at $0.145 at close of day Wednesday.

And interestingly, companies in the nickel space seem to think Equitas is worth watching as well. Case in point: Durango Resources (TSXV:DGO) announced on October 5 that it’s acquired three claim blocks adjacent and near to Garland, then said the next day that it’s looking at further prospects with positive historical results in and around the Voisey’s Bay area.

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Other company news

This week, International Montoro Resources (TSXV:IMT) put out an update on exploration at the Pecors anomaly, located at its Serpent River property in Ontario. So far, two drill holes have been completed there.

Geologist Don Hawke said of the results, “[a]lthough only anomalous values for Ni-Cu-PGE’s were received in the two holes, I remain optimistic that the results obtained throughout the recent programs give further evidence that the Pecors target may most a new deposit type (Ni-Cu-PGE’s) in the Elliot Lake mining camp.”

Also this week, North American Nickel (TSXV:NANreleased assays from diamond drilling completed at the mineralized P-032 and P-030 targets, plus other regional exploration targets at its Greenland-based Maniitsoq project. Highlights from P-032 include hole MQ-15-090 with 13.8 meters of 0.79 percent nickel and 0.27 percent copper.

 

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article. 

Editorial Disclosure: Equitas Resources and International Montoro Resources are clients of the Investing News Network. This article is not paid-for content. 

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