Nickel price on the rise, but Cuba has limited benefits

Nickel price on the rise, but Cuba has limited benefits



CUBA STANDARD — After a three-year decline, world nickel prices are on

the rise again, providing respite for cash-strapped Cuba.



Nickel, used in stainless steel production, is Cuba's No. 1 export

commodity.



Nickel prices have been rising due to supply concerns, after Indonesia

restricted unprocessed ore exports, and the European Union and the

United States have imposed economic sanctions against Russia, Nickel

Investing News reported.



The London Metal Exchange price for three-month delivery rose to $16,230

per metric ton early this week to an 11-month high, up more than 20

percent since Jan. 9. This fits "the definition of a bull market,"

Nickel Investing News said.



Analysts are divided as to how sustained the price rise will be. Daniel

Belchers of Threadneedle Investments sees nickel rising as high as

$18,000 to $20,000, but Toronto-based analyst Donald Rumball, believes

nickel's current upswing likely won't last long, because Russia will be

able to sell China, Indonesia, Vietnam and other countries, despite

sanctions.



Higher nickel prices are adding to a rebound in tourism this winter

season for higher foreign-exchange revenues by Cuba. Even so, anaemic

GDP growth expected for this year and unrest in Venezuela continue to

put downside pressure on the country's cash flow



Also, Cuba is unable to realize big gains from the price rise. Amid low

nickel prices last summer, a Venezuelan joint venture suspended

construction of the Las Camariocas ferronickel plant in eastern Cuba

that was originally planned to come online this year. Also, early this

year state company Cubaníquel reduced production at its 100-percent

owned facility — the Ernesto Che Guevara plant — for maintenance and

capital improvements.



Meanwhile, Cubaníquel and Sherritt International Corp. in October agreed

to build a third acid treatment plant at their Pedro Soto Alba mining

and processing joint venture. As the Moa facility barely broke even in

2013, the $65 million 2,000-ton/day acid plant will eliminate the need

to buy sulphuric acid, reducing nickel production cost by 20 percent,

the Toronto-based company predicted in its third-quarter report.



Sherritt said the joint venture had obtained project financing of $65

million from a "Cuban financial institution." Construction is to begin

in the second quarter of 2014, with operations expected to start in

third-quarter 2015.



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