Nickel’s Chinese tycoon “Big Short” trips Kiyoyama’s miracle growth

(This story modifies the size of the Morowari Industrial Estate in paragraph 20 and also modifies paragraph 21 to show that the production data is for the entire company, not just for the Sulawesi facility.)

Praveen Menon, Min Zhang, Franciska Nangoy

(Reuters)-Chinese tycoon Xiang Guangda has to find a way to rescue his Tsingshan Holding Group from the crisis after a bet on nickel prices backfires, metal volatility essential to the electric vehicle industry Is increasing. One of the world’s top nickels Producers suffer huge losses in short positions last week after prices soared to over $ 100,000 per ton and the London Metal Exchange was forced to suspend nickel trading. Facing

Tsingshan needs to pay off any outstanding short positions that could be as much as $ 8 billion, or prove that he has enough deliverable nickel to pay back in kind.

China has told Reuters that Beijing could intervene to bail out Aoyama, sources familiar with the matter told Reuters. The two analysts said they had about 100,000 tonnes of nickel in their national inventory.

Kiyoyama and China’s National Reserve did not respond to requests for comment.

Tsingshan was previously aware of market volatility.

Last year, it triggered price cuts with surprising news that it could solve a major bottleneck in electric vehicles by offering battery material manufacturers nickel mats and increasing battery grade supplies in a cheaper way. ..

When the bet price went down, Kiyoyama started building short positions last year. The bet backfired as Russia’s invasion of Ukraine soared metal prices and put pressure on large short-position holders, including Kiyoyama.

“The market felt that (Chinshan) would start moving, but it was probably too early,” said Angela Durant, a nickel analyst at Wood Mackenzie.

Kiyoyama suggests that foreign factors may be pushing up nickel prices. [with related parties]China Business News quoted Mr. Sho’s remarks on March 8. Market turmoil has not affected Kiyoyama’s Indonesian operations, mining sources familiar with the matter told Reuters.

For Indonesia, Kiyoyama is a way to realize its ambition to become a one-stop shop for EV battery raw materials, and the company executed the project at ultra-high speed. Western companies often complained personally about the access and resources Kiyoyama obtained domestically. Ambitious in Indonesia, he wants to make a hub for batteries for electric vehicles. That’s why we see a policy to support the industry. ” “Tsingshan is also seen as a child of the Southeast Asian poster of China’s Belt and Road Initiative, President Xi Jinping’s vast infrastructure program.

In contrast to the privately held Tsingshan, some high-profile projects led by Chinese state-owned companies are stagnant in concerns of high prices, corruption and debt sustainability. https://www.reuters.com/world/china/chinas-belt-road -plans-losing-momentum-opposition-debt-mount-study-2021-09-29

Market disruptor

Founded in Wenzhou in 1988, Tsingshan began manufacturing stainless steel and automobile windows and doors.

But that fate changed when 64-year-old Xiang began exploring the Indonesian market in 2009. Over the next decade, low-cost nickel pig iron has rocked the global nickel industry. We have increased production by establishing a facility in Indonesia, the world’s largest nickel producing country. From nickel sulphate to nickel matte, it is an intermediate product that can be used with both stainless steel and batteries. Tsingshan employs more than 40,000 people and is at the forefront of two major nickel hubs in Indonesia, including the 2,000-hectare Morowari Industrial Estate with an airport. Mineral processing plant, harbor, executive visitor hotel.

The company said it is aiming to produce 1.1 million tonnes by 2023, equivalent to 850,000 tonnes of nickel this year. China’s power (cost) was high, and moving everything to Indonesia was a masterpiece for them. The industry acknowledges much of this success to Sho. He has become known as a market destroyer who can “dominate the world,” Stephen Brown said. He is an independent nickel consultant in Canberra and toured Tsingshan’s production facility with Xiang for two days in 2014.

Mr. Shan said he opposed rising nickel prices and is sticking to being a low-cost producer of nickel and stainless steel.

“I don’t think this crisis will make a big difference in Kiyoyama’s strategy,” he added.

According to market sources, Kiyoyama has reduced its exposure, but it is unlikely that it has fully covered all positions.

The state-owned Chinese newspaper Securities Daily said on March 9 that Tsingshan had deployed “sufficient spot products” for delivery by replacing nickel mats with nickel plates in the domestic market.

The LME permits the delivery of nickel cathodes, including plates and briquettes. “There aren’t many spot nickel products on the market, and Aoyama couldn’t even get 100,000 tonnes,” said a Cantonese-based analyst who didn’t name it. ..

(Additional report by Ed Davies and Dominique Patton, edited by Diane Craft)

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