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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