September/October 1989
Eramet-SLN’s Francois G. Sauvage talks about production, pricing, and supply of nickel at his firm and worldwide.
By Si Wakesberg
Si Wakesberg is a New York City-based consultant for the Institute of Scrap Recycling Industries, Washington, D.C.
As vice president of sales and marketing for Eramet-SLN, one of the world's three largest nickel producers, Francois G. Sauvage is frequently on the go, traveling from the 52nd floor of the Tour Maine-Montparnasse in Paris--Eramet-SLN headquarters--to the firm's U.S. offices in Pittsburgh and to its mining plants in distant New Caledonia, an island near Australia. Eramet is an affiliate of Societe Metallurgique Le Nickel-SLN, founded in 1880. It produces ferronickel, nickel matte, nickel, and related products.
SLN's three New Caledonia mining centers are capable of producing more than 5 million metric tons of ore annually. The ore is shipped to the company's Doniambo plant (also on the island) for processing. This plant produces different grades of ferronickel and manufactures nickel matte. Within the next two years, SLN will be relining and repairing some furnaces, which may affect production levels somewhat. Sauvage foresees increased production by 1993-1994 of about 15 percent, to about 54,000-55,000 metric tons per year. He stated that 1988 output was about 48,000 metric tons.
In spite of the volatile political situation in New Caledonia in mid-May, the time of this interview, "mines continue to produce nickel without interruption," Sauvage said. "Elections are scheduled during June and we don't anticipate any developments which may interfere with our mining plans in the near future."
Some material is shipped for further processing to the Le Havre-Sandouville refinery in northern France, where high-purity nickel is produced. This plant has a capacity of 16,000 metric tons, about two-thirds of which are high-purity cathodes. The facility also produces nickel for nickel salts and makes ferronickel in shot form.
Because SLN is a major ferronickel producer, Sauvage said that "at times we find ourselves in Competition with scrap as a source of supply, &specially when the market is slow." But he acknowledged that "we at SLN recognize scrap's major role in the stainless industry as a valuable raw material that can be recycled."
Last year, Charles de Kersaint, who Sauvage succeeded when de Kersaint became executive vice president, took a decisive public stand against the London Metal Exchange (LME) as a pricing mechanism, differing with other nickel producers on the subject. Sauvage agrees with him: "We have not changed our position, We feel that in the long run LME pricing is not in the best interests of our customers, nor of the nickel/stainless industries." He acknowledged that he had heard reports that one North American producer offered material for the second quarter based on a formula of 50 percent of the material for $5.50 a pound and the remainder at LME prices. But, he said, "we are not in favor of such an arrangement ... we favor a pricing system that doesn't fluctuate the way the LME does. We feel such fluctuations are not good for our customers."
Sauvage said recent high nickel prices have posed risks for the industry that may have long-range effects, but he noted that it takes time for substitutions to take hold. "High prices make investments in stainless steel more difficult. What effect all this will have in the next two to three years remains to be seen--but it could be harmful to the nickel industry."
Sauvage said SLN's supply levels this year will be a bit lower "because we have no inventory to draw from and the same appears true for 1990. ... In general, I would say that it has been more difficult to supply our customers in 1989 than in 1988." During the first half of 1989, he said, European mills have been operating at about the same production levels as last year. He doesn't foresee any interruptions in world nickel output in the second half of 1989 or in early 1990.
With nickel prices moving down and with world stocks rising, is the market on its way down? The question was asked about a week or two before the dollar began to strengthen dramatically and the nickel market plummeted to well below $6.00 a pound. Said Sauvage: "It appears that 1989 world supply and demand will generally be in balance, due in part to a consistent destocking activity. There was some easing in demand during the first quarter and perhaps in the first half. But one must remember that producers have low inventories and, should they encounter any production problems, there might once more be market tension which could lead again to higher prices. However, we do not really anticipate that. We expect the market to remain in balance for the rest of this year and we think it may move downward."•
Eramet-SLN’s Francois G. Sauvage talks about production, pricing, and supply of nickel at his firm and worldwide.