NICKEL PRICES TO RISE OVER NEXT FEW YEARS: AME MINERAL ECONOMICS.

PERTH, Dec 2 Asia Pulse - After plunging 33 per cent in 2001, nickel prices are set to rise over the next few years but AME Mineral Economics warned only the fittest producers would reap the benefits.

"Nickel is set to shine again but not all producers will bask in its glow," AME said in its latest study, Survival of the Fittest.

Unlike other base metal prices which are weighed down by excess production capacity, nickel prices are forecast to rebound to US$3.06 per pound this year, rising through 2003 and 2004 to a peak of US$3.80 in 2005.

A lack of new projects, partly because of "spooked" investors after the poor performance of Western Australia's (WA) three laterite projects, is expected to underpin growing demand for nickel, giving it a far more bullish outlook than most other metals.

However, AME said the threat of WA's new laterite mines, Murrin Murrin, Bulong and Cawse being significant low cost operations forced major producers to undertake major cost cutting initiatives a few years ago.

Nickel giant Inco slashed costs by 22 per cent between 1997 and 2001 while WMC Ltd (ASX:WMC) cut unit costs of sales between eight and 17 per cent each year between 1998 and 2000.

"The bottom line is that for nickel producers, whether long established, recent industry entrants or potential new suppliers, it will now be survival of the fittest," AME said, adding only the world's lowest cost operations ...