Patricia Grogg IPS
Nickel retained its first place among Cuban exports in 2006, its earnings boosted by unprecedented high prices on the international market, although output was lower than the government had hoped.
Over the past year, the price of nickel ore rose by 157 percent to today’s market value of more than 30,000 dollars a ton. On Dec. 15, it was quoted at 34,800 dollars a ton on the London market.
However, experts are now warning that the predicted slow-down in the U.S. economy in 2007, and a temporary oversupply of nickel on the global market, may bring nickel prices down in the near future.
Nickel has been Cuba’s top traditional export product since 2000, and in 2005 it was once again the country’s top source of foreign exchange, along with services and the biotechnology sector.
However, Canadian firm Sherritt International announced an estimated shortfall of 3,000 tons at an ore-processing plant it operates in partnership with Cuba. This means that the national production target of 76,700 tons for this year, a modest increase over production in 2005, is unlikely to be met.
The Cuban-Canadian joint venture Moa-N�quel (formerly Pedro Soto Alba) S.A. said in its report for the first quarter of 2006 that it would have to readjust its planned output target of 33,000 tons for 2006 downwards to 30,000 tons, because of bottlenecks in the production process, apparently in the first quarter.
“So far, strong prices have compensated for the decline in production,” a Cuban researcher who wished to remain anonymous told IPS. Total Cuban nickel production in 2005 amounted to 75,900 tons, similar to output for 2004, and a very modest increment of 1..1 percent was planned for 2006. Given the upward trend in international prices, which crossed the 20,000 dollar a ton mark in 2000, the Cuban government designed an ambitious plan for a gradual increase in production.
Last year, Cuba reached an agreement with Sherritt International for expanding production at the Moa-N�quel plant, and incorporating the latest technology at a Canadian cobalt-nickel refinery, financed with more than 500 million dollars contributed equally by both partners.
The expansion of the Moa-N�quel plant was intended to increase output by 16,000 tons year, or about 50 percent, by the end of 2008.
But Sherritt itself has now announced that the plans to increase Moa-N�quel’s capacity will have to be reviewed, and are now forecasting staged production increases of 4,000 tons for 2008, 9,000 tons in 2009, and a further 3,000 tons by 2011.
The Cuban-Canadian joint venture owns the processing plant at Moa, in the eastern Cuban province of Holgu�n, a refining facility at Fort Saskatchewan, in the western Canadian province of Alberta, and a trading corporation in the Bahamas.
Two other nickel processing plants, the Ren� Ramos Latour and the Ernesto Che Guevara facilities, operated at full capacity in 2005, according to informed sources consulted by IPS. They are both owned and operated by the Cuban state Uni�n del N�quel company.
Cuba has substantial nickel and cobalt reserves located in Moa and Nicaro, in the province of Holgu�n.
Proven nickel reserves are estimated at 800 million metric tons, and probable reserves at two billion tons. Cuba’s cobalt reserves, meanwhile, account for approximately 26 percent of the world’s total reserves.
Official statistics indicate that the island’s processing capacity is about 70,000 tons a year, including all three processing plants.
Expansion plans for the industry include building a ferronickel plant, a compound of iron and nickel used almost entirely in the manufacture of stainless steel. The plant will be built jointly with China, according to an agreement signed in 2005 during Chinese President Hu Jintao’s state visit to Havana.
The ferronickel factory, also to be located in Moa, is expected to produce 68,000 tons a year of iron-nickel alloy. Conceived as a joint venture, Cuba will own 51 percent of the shares and the Chinese Minmetals group the remaining 49 percent.
There are plans for China to invest in a fifth processing plant, to be built close to the ore reserves at San Felipe in the eastern province of Camaguay, which would increase Cuban nickel production to 120,000 tons a year (up from its current 76,000 tons) in the future.
China is to invest over one billion dollars in the Cuban-Chinese San Felipe project, according to the agreements signed by Cuban President Fidel Castro and President Hu in Havana.
Without going into details, Venezuelan President Hugo Ch�vez said in Caracas on Dec. 14 that Venezuela and Cuba are planning to manufacture stainless steel with Cuban nickel and Venezuelan iron.
At present, it is estimated that China absorbs half of Cuba’s total nickel output, and would be capable of buying up the other 50 percent, according to experts, because China is the world’s top producer of steel, and its industry is still expanding.
Experts concur that until the day when oil starts gushing from the underwater reserves in the Cuban zone of the Gulf of Mexico—China is also involved in oil exploration there—nickel is important as collateral for the loans Beijing has given Havana in recent years.
China is now Cuba’s second largest trading partner, after Venezuela. Trade between Cuba and China was worth more than one billion dollars in 2006, and the Asian giant is providing the Caribbean country with large amounts of soft credit.
According to the U.S. Geological Survey, world nickel production stood at 1.5 million tons in 2005.
Russia, the United States, Canada, Australia, Norway and Cuba are the world’s foremost producers of nickel, a non-ferrous metal used in a large number of industrial processes.
Stainless steel manufacturing uses about 60 percent of the total production of nickel, which is also employed in the chemical, petrochemical, electronic, aerospace and automobile industries.