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NICKEL Cristina S. da Silva – DNPM/GO - Telephone (62) 3241-5044 – E-mail: firstname.lastname@example.org Maurício Ribeiro de Andrade - DNPM/GO – Telephone (62) 3281-8044- E-mail: email@example.com I - WORLD SUPPLY – 2007 The Brazilian company Cia. Vale do Rio Doce holds the biggest percentage of the world reserves of nickel with a participation of 43.80% in the total, followed by the Russian company Norilsk and Nickel (23.26%), by Australian companies Broken Hill Proprietary Company-BHP (17.82%) and Minara Glencore (5.81%). In Brazil, CVRD has two projects in Pará called Vermelho and Onça Puma with a forecast of an average capacity of production of 50.000 t/year of lateritic nickel. The Brazilian measured reserves total 624.448.949t and are distributed in the States of Goiás (44.43%), Pará (31.05%), Piauí (22.10%), Minas Gerais (2.06%) and São Paulo (0.36%). World Reserve and Production (1) 3 (2) Specification Reserves (10 t) Produtions (t) (p) (r) (p) Countries 2006 % 2005 2006 % Brazil 9,611 6.7 74,198 82,492 5.1 Australia 27,000 18.7 189,000 191,000 11.9 Cuba 23,000 15.9 72,000 73,800 4.6 Canada 15,000 10.4 198,000 230,000 14.3 Indonesia 13,000 9.0 160,000 145,000 9.0 New Caledonia 12,000 8.3 112,000 112,000 7.0 South Africa 12,000 8.3 42,500 41,000 2.5 Russia 9,200 6.4 315,000 320,000 19.9 China 7,600 5.3 77,000 79,000 4.9 Philippines 5,200 3.6 26,600 42,000 2.6 Dominican Republic 1,100 0.8 46,000 46,000 2.9 Colombia 1,000 0.7 89,000 90,000 5.6 Botswana 920 0.6 28,000 28,000 1.7 Other Countries 7,690 5.3 106,500 128,200 8.0 TOTAL 144,321 100.0 1,535,798 1,608,492 100.0 Source: Mineral Commodity Summaries-2007; Notes: (1) Includes measured and indicated reserves, in nickel contained; (2) Data on the production of Ni contained in ore; (p) Preliminary data; (r) Reviewed data II - DOMESTIC PRODUCTION Anglo American produced 487.555t of nickel ore with a content of 2.13% in its mine located in Barro Alto- GO and 27.636 t of alloy FeNi, processed in its plant installed in Niquelândia-GO. The group Votorantin Metais totalled its production at 5.014.012t of nickel ore with 72.133 t of Ni contained and 16.891 t of matte, through the companies: Cia. Níquel Tocantins S.A., located in Niquelândia-GO, Mineração Serra da Fortaleza, in Fortaleza de Minas – MG and in association with Prometálica S.A., in the municipality of Americano do Brasil-GO, highlighting Cia. Níquel Tocantins, which participated with 87.75% of the total production of ore, having sent 45.646t of nickel carbonate to the unit of São Miguel Paulista-SP for the process of electrolysis. Another highlight was Mineração Serra da Fortaleza, which attained 70.66% of the total production of matte. Cia. de Níquel do Brasil produced, in Liberdade – MG, 1.644 t of nickel concentrate with content of 1.5%. III – IMPORTS Imports of nickel totalled 8.236t under the forms of in semi-manufactured goods (66.08 %) coming from Russia, Cuba, Australia, Finland and Canada; in chemical compounds (1821%) coming from Germany, Finland, Belgium, France and China, and manufactured goods (15.49%) coming from Canada, the United States, the United Kingdom, Germany and Sweden, which brought about an expenditure in foreign exchange of about R$ 354.877.460.00. The continuous increase in the production maintained a growing reduction of the entry of the metal in the country, vis-à-vis the previous year, at 73.12%. IV – EXPORTS Exports of nickel totalled 28.867 t, most of them under the form of semi-manufactured goods (97.45%); manufactured goods and chemical compounds together participated with 2.54%, which has as a result US$ 370.526.713.74 in incoming foreign exchange, highlighting ferro-nickel that featured a growth of 66% in its negotiation value. Anglo American exported 4.317 t of alloy FeNi for Germany (15%), totalling an entry of foreign exchange of about US$ 32,340,486.00, meant for the manufacture of stainless steel. Serra da Fortaleza exported 12.761,97 t of matte for Finland, totalling US$ 96,685,023.61 in the negotiation of the metal with a view at obtaining electrolytic nickel. Cia. Níquel Tocantins sent 9.825 t of electrolytic nickel for Japan (59.5%), Singapore (17.3%), Argentina (9.0%), Korea (7.2%) and the United States (7.0%), totalling US$ 241,826,628.00 in incoming foreign exchange, used in the production of stainless steel, and in the steel industry and smelter industry. The increase of the sales on the domestic market reduced by 39% of the volume negotiated vis-à-vis the previous year. V – DOMESTIC CONSUMPTION Anglo American allocated 85% of the its production to the domestic market distributed among the states of Minas Gerais (86%), São Paulo (8%) and Rio Grande do Sul (5%) achieving a billing of R$ 493.616.693,00, and ACESITA was the biggest consumer, having absorbed 74% of its production. Cia. Níquel Tocantins commercialised 11.308 t at the average price of R$ 53.019.00/t of electrolytic nickel, distributed among Minas Gerais (58%), São Paulo (34%) and Rio Grande do Sul (8%) for the manufacture of stainless steel, the steel industry, super alloys, the smelter industry and galvanoplasty. The mining company Serra da Fortaleza does not commercialise its production on the domestic market. Salient Statistics - Brazil (r) (r) (p) Specification 2004 2005 2006 Ore / Nickel contained (t) 3,893,045 / 44,928 4,845,695 / 74,198 5,503,211 / 82,492 Ni- contained in carbonate (t) 18,406 21,116 21,630 Ni- contained in Matte (t) 5,950 6,005 5,416 Production: Ni- electrolytic (t) 19,742 20,714 21,339 Ni- contained in alloy Fe-Ni (t) 6,409 9,596 9,814 Metal and manufactured (t) 16,514 9,902 6,718 3 Imports: (10 US$-FOB) 150,753 163,244 155,007 Chemical Compounds (t) 1,021 1,298 1,500 3 (10 US$-FOB) 2,851 5,968 8,490 Mineral Goods (concentrate) (t) 195 0 0 3 (10 US$-FOB) 26 0 0 Metal and manufactured (t) 26,375 30,451 28,663 Exports: 3 (10 US$-FOB) 146,525 274,426 369,756 Chemical Compounds (t) 295 313 204 3 (10 US$-FOB) 389 541 771 Apparent (t) 21,761 15,154 19,984 (1) Consumption Ferro Nickel* (US$/t-FOB) 2,595.14 5,143.98 7,531.04 Average Price: Electrolytic nickel** (US$/t-FOB) 10,251.90 16,699.53 23,771.00 Sinters of nickel oxide*** ( US$/t-FOB) 8,529.76 13,277.41 10,994.05 Source: DNPM-DIRIN, SECEX-D.T.I. Notes: (1) Production + Imports - Exports was used as calculation basis: Production: 36.569 t, Imports: 6.718 t (except chemical compounds, because we did not obtain data on Ni contained); Exports: 23.303 t (Cia. Níquel Tocantins 9.825 t, Anglo American: 1.542 t and Min. Serra da Fortaleza: 11.936.10t); (*) Average base price exports; (**) Average base price exports (***) Average base price imports; (r) Reviewed (p) Preliminary VI - ONGOING AND/OR FORECAST PROJECTS The measured and indicated reserve of Cia. de Níquel do Brasil contains of 3.813.182 t of nickel ore with an average content of 1.25%, totalling 43.252,56 t of nickel contained. The company intends to attain the production of 15.000t of ore in the next three years, with investments forecast of about R$ 106.000,00, distributed among acquisition and/or refurbishing of equipment (94.34%) and labour health and safety (5.66%). Grupo Votorantim and Prometálica (joint venture) the main shareholder of which is the Brazilian company LMS Empreendimentos Ltda (77% of the quotas) and Brazilian Resources (23%) forecasts investments in project Americano do Brazil of about R$ 82 million, in the production of 600 thousand t/year of nickel ore to produce 100 thousand t/year of processed concentrate in the plant of Mineração Serra da Fortaleza; the company currently generates 270 direct jobs and circa 1.400 indirect ones. Votorantim will invest R$ 738 million in a factory of ferro-nickel in Niquelândia and in the flexibility of the energy matrix of the current unit, by putting in place a furnace for oil coal. The plant will expand its production capacity in 10.6 thousand t/year, attaining a production of 40 thousand t/year of nickel, generating 420 direct jobs and another 2 thousand indirect ones, and the production will be exported for Europe, China and Japan. Anglo American has approved a project for the production of ferro-nickel in Barro Alto (GO). The investment forecast will be of US$ 1.2 billion. At the stage of construction, the venture will generate approximately 3 thousand direct jobs and 750 new positions at the stage of operation. The production capacity of Barro Alto will be of 36 thousand t/year of nickel contained in the ferro-nickel alloy for 26 years. RTZ forecasts two more projects to guarantee an initial share of 5% of the world production. One of the mines is located in the American State of Michigan (the only mine of primary nickel of the United States) with construction scheduled for the end of this year. The mine will be able to produce 136 thousand t. of nickel. In Indonesia, the investment will be of 2 billion dollars, with a view at producing 45 to 50 thousand t. of nickel starting from 2012. VII - OTHER RELEVANT FACTORS When it acquired the Canadian company INCO, in 2006, Companhia Vale do Rio Doce (CVRD) inherited the company GORO located in New Caledonia, and it intends to complete the nickel project by the end of 2008, at an approximate cost of US$ 3 billion. The expectation is that the venture will be ready for operations in the last quarter of 2007. In Brazil, in the State of Pará, the company started hiring companies for the works of land movement and for civil works involved in project Onça-Puma, for which the forecast of investments is of US$ 1.4 billion, to enter into operation starting from the end of 2008 or the beginning of 2009, at a scale of 55 thousand tonnes /year of nickel. The nickel project of Vermelho awaits the environmental permit, with investments forecast of about US$ 1.2 billion. Phelps Dodge, Inco Limited and Falconbridge Limited will announce a merger that should generate synergies of US$ 900 million a year until 2008, to create one of the world’s largest mining companies, the Phelps Dodge Inco Corporation, operating in over 40 countries and with circa 40 thousand employees all over the world. The three companies had combined gross revenues of US$ 6.3 billion in the first quarter of the year. The nickel business of the company will have their headquarters in Toronto, in Canada.
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