Nickel player Axiom’s Ryan Mount eyes China tie-up
Rowan Callick | The Australian | July 19, 2016
A sudden dearth of internationally traded nickel has brought Ryan Mount, the irrepressible managing director of Brisbane-based explorer Axiom, to China seeking potential partners — as customers, investors, or both.
Mr Mount suffered an unexpected reversal earlier this year when the Solomon Islands court of appeal, in an 80-page judgment, ruled against claims of both ASX-listed Axiom and its rival, giant Japanese trading house Sumitomo, to the right to develop a large nickel resource at Isabel in the centre of the Solomon Islands archipelago.
But while Axiom had the registration of one of its two core tenements set aside — due to a technicality that was the responsibility of Solomons government officials, Mr Mount said — it was now free to develop its other, adjacent site.
Mainly in consequence, Axiom’s share price has more than doubled in the past month, to above 30c. “And we have already reapplied for the site” that Mr Mount views as only temporarily lost, he said.
“We are looking to go ahead mining the other site by the end of this year,” with the support of Swiss-Singaporean commodities trading house Gunvor, Mr Mount said. Gunvor has signed up to take half a million tonnes of nickel ore, which will comprise most or all of the first year’s output, and will supply $5 million working capital.
Mr Mount said the aim was to build towards 2 million tonnes annual production, with an 18- year mine life that he was confident of extending considerably.
Once it starts operations, via a company 80 per cent owned by Axiom and 20 per cent by local landowners, this would be the only active mine in Solomon Islands. Nickel is a vital component to produce stainless steel.
Indonesia has placed a ban on the exports of ore, removing 25-30 per cent of global supply and 80 per cent of China’s imports. Only 15 per cent of current Chinese demand is sourced domestically.
And production fell 38 per cent in the Philippines in the first four months of the year. The Philippines has been the top nickel supplier to China since Indonesia banned its export.
Philippines President Rodrigo Duterte has appointed prominent anti-mining campaigner Regina Lopez to head the environment department, and has announced he will review all mining claims, and has referred to problematic mining in Surigao, a province that ships nickel ore to China.
New Caledonia, the other major supplier in the Asia-Pacific, has said it will only supply its traditional markets in Japan, South Korea and Australia, and not start selling to China.
As a consequence interest has been building in the Isabel deposit. Mr Mount said he was spending a lot of time in China because it was both the biggest steel producer and the biggest consumer.
“We see ourselves as setting a standard for the rest of the industry in the country, once the commodity cycle changes,” he said.