Nickel: From Russia, With Love

It's always good to have advanced notice when a somewhat unstable superpower has the potential to gain control over a substantial portion of a key commodity. According to this recent report from Statfor (scroll down to the Russia section), "Russian nickel company Norilsk Nickel raised its offer for Canadian mining company LionOre Mining International Ltd. to $6.3 billion May 23, trumping a bid by rival Swiss company Xstrata of $5.7 billion. Norilsk Nickel's bid comes with the blessing of the Kremlin, which is expected eventually to solidify its control over the company and thus ensure Norilsk Nickel has access to whatever funding it needs to expand abroad. Norilsk Nickel already holds around an 18 percent stake in the global market for nickel production. By the time the Kremlin consolidates control over the company, it could find itself with an even larger and richer prize."

As background for non-manufacturing Spend Management types, Nickel is a commodity in incredibly tight supply for stainless and other applications. I've heard that there's currently only a half-day supply on-hand to meet demand at the moment (and a single truckload is worth around a million bucks -- up over 1000% from a few years ago). I have no doubt that the Kremlin's potential newfound influence over this commodity could prove disconcerting to the Chinese and US governments, among other nations.

Jason Busch

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