Chalice reduces board, costs amid nickel slump

Australia’s Chalice Mining (ASX: CHN) is the latest nickel player forced to cut costs amid a sharp decline in the metal’s price.

Chalice announced a series of measures on Friday including reducing the its board size to four members from six, and cuts on corporate overhead and project expenditures.

The moves, which are to reduce the company’s monthly expenditures from A$2.4 million to A$1 million (US$1.6 million to $672,000), means it will fail to meet its diversity goals. The two board members dismissed were its only female directors — Linda Kenyon and Jo Gaines.

In its 2023 annual report, Chalice said it had 29% female representation on its board and pledged to at least maintain this level. 

“The company extends its sincere thanks to Linda and Jo for their significant contributions over several years and wishes them the very best in the future,” it said in the statement.

Gonneville project

The measures are part of a strategy to maintain a strong financial position while advancing the Gonneville project, as well as pursuing targeted exploration activities. 

Investors reacted positively to the news, with the stock closing 5.1% stronger at A$1.13 a share. This leaves Chalice with a market capitalizations of A$437.66 million (US$295 million).

Nickel prices dropped 40% last year, extending losses into 2024. The metal fell a further 2.02% this week, closing at $16,657 per tonne on Friday, according to data from Markets Insider. 

The market conditions have pressured miners, including the world’s largest mining company, BHP (ASX: BHP), to halt operations and projects, and to reassess their financial strategies.

Anglo American (LSE: AAL) is exploring options to either divest or close down its nickel division, while Glencore (LSE: GLEN) has decided to suspend and sell some of its operations in the islands of New Caledonia.

Australian output

Australian producers have long been key suppliers of refined nickel, which influences prices on the London Metals Exchange. In January 2023, Australia accounted for 72% of the nickel in the exchange’s warehousing network, but by June this share had dropped to 29%.

According to the International Nickel Study Group (INSG), mined nickel production declined by 6% in June compared to the same month last year, reaching an annualized rate of 3.7 million tonnes.

While output increased by 3% in both Indonesia and the Philippines, this growth was outweighed by major declines in other top producing nations such as Russia, Canada, Australia, China, and New Caledonia.

The INSG also noted that global primary nickel supply decreased by 2% year-on-year to 3.4 million tonnes, whiles nickel demand rose by 5% to the same level, resulting in an apparent market surplus of 37,000 tonnes annually.