Gorham nickel


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Gorham nickel

  1. 1. Three  case  studies  demonstra0ng  Gorham  &  Partners’   recent  work  on  nickel  market  and  product  strategies     Summer  2013   Gorham  and  Partners  Nickel  Case  Studies    
  2. 2. What  Gorham  does   Slide  2   • Over  20  years’  experience   • 10  years  focusing  exclusive  on  mining  and  metals   Global  metals   and  mining   consultants   • We  supplement  engineering-­‐led  evalua>on  projects  with   • Data-­‐driven  compe>tor  analysis   • Deep  understanding  of  end-­‐users  and  other  par>cipants  in  the  value  chain  (gained   through  face  to  face  mee>ngs  and  economic  modelling)   Focus  on   strategic   ques0ons   • For  junior  miners,  securing  finance  post  the  global  financial  crisis  is  the  key  challenge   • Gorham  has  a  twofold  approach  to  assist  in  the  search  for  funds   • Through  our  rigorous  work  down  the  resource  value  chain,  we  are  able  to  iden>fy   and  introduce  non-­‐tradi>onal  investors  who  will  directly  benefit  from  the   development  of  your  project   • We  also  have  a  rigorous  process  to  introduce  exci>ng  mineral  projects  to  a  wide   range  of  high  net  worth  global  investors,  currently  struggle  to  iden>fy  higher  risk/ return  opportuni>es  for  their  porMolios   Alterna0ve   paths  to   funding  
  3. 3. Evalua0ng  the  product  and  commercial  op0ons  for  nickel   and  the  cobalt  by  product  from  the  Alpha  mine     May  2012   Gorham  and  Partners  Nickel  Case  Studies  1      1
  4. 4. What  we  set  out  to  deliver   Slide  4   Accurate  and  detailed   analysis  to  support   detailed  feasibility   study   1.  Market  analysis  for   nickel  hydroxide   precipitates  (NHP)  vs   nickel  market   2014-­‐2018   2.  Customer  tes0ng   and  development  for   NHP  and  cobalt   (10-­‐20  interviews  for   NHP,    5-­‐10  for  cobalt)   3.  Op0mal  strategy   for  commercialisa0on   of  cobalt  by-­‐products     4.  Price  outlook  NHP/ nickel  metal/selected   cobalt  product   op0ons   5.  Recommended   strategy  for  Alpha   6.  Sales  forecast  for   Alpha,  2014-­‐18  
  5. 5. How  we  went  about  it   Slide  5  
  6. 6. What  we  found   Slide  6   Drivers   of  global   Ni   market   Ni  price   outlook   2014-­‐21   Market   impact  of   non-­‐ferrous   Ni  alloys   Impact  of   nickel  pig   iron  on   ferronickel   market   Economics  of   direct  feed  vs.   intermediate   products   Customer   preferences   for   intermediate   Ni  products   Economics  of   alterna0ve   cobalt   products   Op0mal   product/ market   strategy  for   Alpha   Price   forecasts  for   chosen   strategy   Resultant   sales   forecasts   for  Alpha    
  7. 7. What  we  wrote   Slide  7  
  8. 8. What  happened   •  Reframed  Alpha’s  view  of  the  market  for  intermediate   products   •  Opened  possibility  for  radically  different  go-­‐to-­‐market   op>ons,  with  huge  implica>ons  for  feasibility  study   •  Increased  price  forecasts  for  contained  Ni  and  Co  metal   •  Improved  compe>>ve  outlook   •  Changed  geographic  focus  for  marke>ng  effort   •  Opened  doors  to  new  sources  of  partnership  and  finance   Slide  8  
  9. 9. Evalua0ng  the  product  op0ons  for  laterite  nickel  from   the  Sigma  mine     December  2012   Gorham  and  Partners  Nickel  Case  Studies  2      2
  10. 10. What  we  set  out  to  deliver   Slide  10   Evaluate  alterna0ve   product  op0ons  for   new  laterite  nickel   project  (Sigma  mine)   1.  Quan0fy  degree  to   which  stainless  steel   producers  will  shi]   towards  lower  grade   Ni  feeds   2.  Evaluate  feedstock   alterna0ves  for   relevant  stainless   steel  producers   3.  Outline  latest  view   of  global  nickel   outlook  and  client’s   posi0on  within  that,   including  compe0tor   analysis   4.  Price  for  nickel   based  on  refreshed   understanding  of   supply  and  demand   5.  Compara0ve   evalua0on  of  product   op0ons  for  the  Sigma   mine   6.  Evalua0on  of   strategic  op0ons  for   Sigma’s  parent   company   7.  Recommended   course  of  ac0on  for   Sigma  
  11. 11. How  we  went  about  it   Slide  11   Ni   NPI   FeNi   STS   Scrap   Associa0on  +   Expert   9   9   8   9   9   Ni  Producer   2   1   1   1   0   STS  Producer   13   7   9   13   9   Trader   2   2   1   0   1   Recycler   1   0   0   0   1   Product   Info   Value   Chain  Level   Structure  of  the  inves0ga0on   Interviewing  5   experts  on  the  G&P   nickel  expert  panel   Market  inves>ga>on     •  8  Interviews  in  China   •  8  Interviews  in  India   •  5  Further  Asian  interviews   •  5  Interviews  in  ROW     Desktop  research     Quan>ta>ve  and  qualita>ve   analysis  
  12. 12. What  we  found   Slide  12   1.  Will  STS   producers   switch   feeds?   2.   Alterna>ve   STS  feeds:   2a.   Stainless   steel  scrap   2b.  Nickel   Pig  Iron   2c.   Ferronickel   2d.  Nickel   Oxide   2e.  MSP   and  nickel   metal   3.Nickel   supply,   demand   compe>tor   analysis   4.  Nickel   price   forecast   5.   Evalua>on   of  op>ons   for  Sigma   project   5.   Strategic   op>ons  &   rec.s  
  13. 13. What  we  wrote   Slide  13  
  14. 14. What  happened   •  Sigma  project  is  under  development  for  one  of  the  top  5   global  Nickel  producers   •  Clarified  product  op>ons  available  to  Sigma,  highlighted   importance  of  considering  end  user  economics  and   preferences  in  final  decisions   •  Established  framework  for  client  to  make  that  decision   when  needed   Slide  14  
  15. 15. Evalua0ng  the  Commercial  and  Processing  Op0ons  for   the  Lambda  Nickel  Project       October  2008   Gorham  and  Partners  Nickel  Case  Studies  2      3
  16. 16. What  we  set  out  to  deliver   Slide  16   Evaluate  alterna0ve   product  op0ons  for   new  laterite  nickel   project  (Lambda)   1.  What  markets/ applica0ons  should   Lambda  aim  at?   2.  Which  products/ process  routes  should   Lambda  make/ follow?   3.  What  compe00ve   environment  will   Lambda  be  facing  in   2015  onwards?   4.  What  price   structure  will  Lambda   be  able  to  achieve  for   its  full  product  range   in  2015  onwards?  
  17. 17. How  we  went  about  it   Slide  17   Forecasted costs for the duration of the investment Revenue stream from selected product -market combination (s) NPV of each product - market combination Sales forecasting Demand forecasting Benchmarking the forecasted sales (Competitor Analysis) Price forecast for Ni products in their selected markets Expert interviews on the forecasted sales Interest rate forecast Nickel price forecast Market characteristics Supplier power • Company size • Financial strength • Resource bank • Potential for differentiation • Specific customer ties • Power of suppliers’ suppliers Customer power • Customer concentration • Financial health • Ability to switch materials • Ability to switch suppliers • Sensitivity to price • Access to captive supply Strength of Ni Product • Availability of substitutes • Relative price of substitutes • Range of substitute application • Environmental regulation • Technical vulnerability Degree of rivalry • Strength of competition • Potentially realisable sales • Sustainability of sales Market & sales evaluation model - Porter’s 5 Forces or Product market dynamics analysis Competitor analysis Demand supply price analysis Client’s task G&P task • Size • Growth • Stability • Geography • Demand-supply balance • Uniformity of product • Barriers to entry Value chain and process option analysis simplified versions of the Porter model What Markets/Applications shouldSNPaimat? Which Products/Process RoutesshouldSNP make/follow? WhatCompetitive EnvironmentwillSNP befacingin2015 onwards? WhatPriceStructure willSNPbeableto achieveforitsfull productrangein 2015onwards?
  18. 18. What  we  found   Slide  18   1.  Which  are   the  most   aerac>ve   products  and   markets   2.  How   compe>tors   will  be   posi>oned   3.  Impact  of   new  wave  of   laterite   producers  on   produc>on   op>ons   4.  Medium   term  price   outlook  and   scenarios   5.  Outlook  for   sulphur   6.  Outlook   for  Cobalt   7.  Strategic   evalua>on  of   product   op>ons  for   Lambda   8.   Recommended   ac>ons  
  19. 19. What  we  wrote   Slide  19  
  20. 20. What  happened   •  Lambda’s  owners  subsequently  sold  a  controlling  stake  in   the  project  to  one  of  the  global  nickel  majors,  beeer   posi>oned  to  exploit  the  market  opportuni>es  iden>fied   •  The  project  remains  on  track  for  development   Slide  20  
  21. 21. About  Gorham  and  Partners   A  specialist  consul>ng  prac>ce  with  a  successful  20  year  track  record  advising  the  global   metals  and  mining  sector  on  strategic,  commercial,  financial  and  marke>ng  issues.    In  addi>on   to  the  nickel,  we  advise  clients  across  all  the  main  metals  and  precious  metals  sectors   including  copper,  zinc,  lead,  chromium,  molybdenum,  cobalt,  steel,  stainless  steel,  gold,   pla>num  and  diamonds   We  address  the  big  strategic   issues  faced  by  nickel  businesses,   especially  product  mix  and   market  strategy.  Our  insights  into   rapidly  changing  markets  have   led  to  a  new  approach  to  seeking   finance  for  early  stage  projects   Demand/supply  and  pricing  studies  not  just  for  Ni   and  Co  metal,  but  all  alterna>ve  intermediate   products  |  In-­‐depth  understanding  of  end-­‐user   demands  and  trends  |  Customer  segmenta>on   and  alterna>ve  ‘go-­‐to-­‐market’  strategies  |   Analysis  of  the  product  and  market  strategies  of   compe>tors  |  Commercial  and  marke>ng   sec>ons  of  pre-­‐feasibility  and  feasibility  studies  |   Market  entry  strategy   Successful  consul>ng  projects  for   our  nickel  and  base  metals  sector   clients  which  add  value  to  their   businesses   Including        Rio    Tinto    |    Sherrie    |     ENK    |    BHPBilliton    |    Corus    |  Rotex   Minerals   Deep  experience  advising  and   managing  strategic  projects   in  the  sector  –  we  partner   you  to  find  the  answers  you   need   Alec  Campbell  –  25+  years  advising  senior   management  with  special  focus  on  metals   and  sales  and  marke>ng  strategies                                   J-­‐P  Mar0ns  -­‐    20  years  advising  senior   management,  ex  senior  strategic  manager  in   Rio  Tinto                                                                                       Khush  Nathadwarala  –  6  years  consul>ng   exclusively  to  the  mining  and  metals  sector   Slide  21  
  22. 22. Contact  us   A  |  104  Lancaster  Gate  London  W2  3NT   P  |  +44  (0)20  7298  5180   F  |  +44  (0)20  7298  5189   E  |  consult@gorhampartners.com     W  |  www.gorhampartners.com   Slide  22