AMM - By Millicent Dent
New York 04/10/2016 - Sherritt International Corp's Moa nickel-cobalt joint venture in Cuba is shut due to the threat of Hurricane Matthew.
Hurricane Matthew - an 'extremely dangerous' category 4 storm, with wind speeds approaching 140 miles per hour - is set to make landfall on Cuba later today.
"Cuba has preemptively taken measures in anticipation that the hurricane is going to hit there. We have no idea how long it'll be shut down for," Sherritt’s director of investor relations, Flora Wood, told American Metal Market.
But a short shutdown will have little impact on production, Wood added. "If you think of the number of maintenance days per quarter, three days wouldn’t make much difference," she said.
Several nickel traders agreed there will not be a major impact on global production or prices as long as the shutdown does not last more than a couple of days.
Producers typically account for hurricane season in their production forecasts and allow for seasonal stops of 3-5 days in their calendars, according to one European trader.
Even a long-term closure would only have a moderate impact, a second European trader said, since Cuba produces a mixed sulphite for cobalt and nickel, which is refined in Canada. Canada can keep producing the material for a while. As well, there are already a lot of briquettes stored in London Metal Exchange-registered warehouses in Asia, the trader added.
"Whatever deficit we had this year, we need an even bigger one because there’s a lot of every shape in the market. Any type of closure is good," a US nickel trader said.
The Moa joint venture produced 8,290 tonnes of finished nickel in the second quarter and is expected to produce 33,500-34,500 tonnes over the full year, according to the Toronto-based company's second-quarter earnings report.
In addition, the mine produced 1,952 tonnes of finished cobalt in the second quarter and is expected to produce 3,300-3,800 tonnes of the material for the full year.
The LME's three-month nickel contract closed the official session at $10,210 per tonne ($4.63 per pound) on October 4, down 0.4 percent from $10,250 ($4.65 per pound) on September 20.
(Additional reporting by Perrine Faye and Charlotte Radford)
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