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<p><strong>Global Supply Disruptions: Coffee, Grains, and Protein</strong></p><br/>

<p><strong>Nickel Pig Iron Export Ban in Indonesia</strong></p><br/>

<p>CHARL MALAN: We continue to see a significant ban on nickel pig iron out of Indonesia, which has put great pressure on supply, and obviously prices have trended upwards as a result. Let me give you some context behind nickel supply. Nickel production around the world is a very profitable industry at about $20-$30,000 per ton. The Chinese, through their ability to extract iron ore out of nickel, created a new product called nickel pig iron, which made a profitable industry of nickel pig iron at about $12,000 per ton. Clearly that put pressure on the traditional supply of nickel. What we have seen over the last few years is deterioration of the traditional supply of nickel, whilst the supply of the cheaper nickel pig iron out of Indonesia has increased. It has increased so much that over the last five years this industry has gone from essentially zero production out of Indonesia to reaching about 30% of global nickel supply at the end of 2013.</p><br/>

<p>Why is that important? Indonesia has placed a ban on nickel pig iron ore exports. In other words, any ore that's not processed or beneficiated within the country's borders is restricted from being exported to China, where it then gets produced or reproduced into nickel. What we've had from the end of last year through the beginning of this year is essentially 30% of the world's nickel supply being cancelled, and that has meant that the nickel market was in a deficit. The cancellation of export contracts was not a new phenomenon. We all knew that it could potentially take place because of legislation in the Indonesian parliament. We never truly thought that Indonesia would implement a ban because of the impact it would have on GDP if it stops overall nickel pig iron exports. However, Indonesia did ban exports on January 13, 2014. Thirty percent of the world's nickel pig iron production has been cancelled. Prices reacted from around $13,000 a ton to as high as $22,000 a ton over the same period of time. We believe the ban will be in place for quite some time because there are parliamentary elections taking place, and there will be a new president in place in the next couple of months. We anticipate this ban to be in place until the beginning of 2015. </p><br/>


<p>MALAN: What happens going forward? I do believe we have a couple of scenarios that will impact supply going forward. First of all, if this ban gets reversed will nickel pig iron ore be exportable again? If that's the case, I do believe nickel pig iron exports will ramp up quickly and a reverse effect will take place in the price. However, because of the beneficiation and the benefits of generating revenues within the country, I believe we could get some sort of law in place that would allow the export of nickel pig iron, but in a processed form, so that the country can generate some of its revenues in beneficiation and keep it for themselves. I believe if that's the case, and I do believe that's the higher probability case, that we will continue to have a shortage of nickel supply in the global context for at least another 12-24 months.</p><br/>

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