Socio-Economic Study of Impact of EU Nickel Compounds Classification on APEC Economies Mining Task Force June 2012 APEC Project: MTF 01/2010S Prepared by Nickel Institute 2700-161 Bay Street Toronto, Ontario M5J 2S1 CANADA In cooperation with Ministry of Industry and Trade of the Russian Federation 7, Kitaygorodsky proezd 109074 Moscow RUSSIA For Asia Pacific Economic Cooperation Secretariat 35 Heng Mui Keng Terrace SINGAPORE 119616 Tel: (65) 68919 600 Fax: (65) 68919 690 Email: [email protected] Website: www.apec.org © 2012 APEC Secretariat APEC#212-SO-01.1 2 Disclaimer This report presents the outcomes of a self-funded project undertaken by the Russian Federation supported by Canada for The Mining Task Force of the Asia-Pacific Economic Cooperation Secretariat (APEC Secretariat). The report is based on an analysis by an international consortium of consultants led by Frontier Economics Pty Ltd for the Nickel Institute on behalf of the Russian Federation. The views and findings expressed in this report do not necessarily reflect those of the Russian Federation, Canada, any other APEC member economy, the APEC Secretariat, the APEC Mining Task Force, the Nickel Institute or member companies of the Nickel Institute. Although reasonable efforts have been made to ensure that the contents of this report are factually correct, none of the Russian Federation, Canada, any other APEC member economy, the APEC Secretariat, the APEC Mining Task Force, the Nickel Institute, member companies of the Nickel Institute, Frontier Economics Pty Ltd and its consortium of international consultants accepts responsibility for the accuracy, completeness, currency or reliability of the contents of this report and none shall be liable for any loss or damage that may be occasioned directly or indirectly through the use of, or reliance on, the contents of this report. 3 Table of Contents ABSTRACT .......................................................................................................................................................... I EXECUTIVE SUMMARY ................................................................................................................................. II 1 INTRODUCTION – THE VALUE OF NICKEL TO SOCIETY............................................................ 1 2 BACKGROUND TO THE STUDY ............................................................................................................ 5 2.1 BASIS FOR THE EU CLASSIFICATION .......................................................................................... 5 2.2 PROPORTIONALITY OF THE EU CLASSIFICATION ........................................................................ 5 2.3 SOCIO-ECONOMIC IMPACT ASSESSMENT .................................................................................... 6 2.4 INVOLVEMENT OF APEC ........................................................................................................... 7 3 DESIGN AND SCOPE ................................................................................................................................ 9 4 ASSESSMENT OF IMPACT METHODOLOGY .................................................................................. 10 4.1 ECONOMIC EFFECTS ................................................................................................................ 10 4.2 THE SCENARIOS ....................................................................................................................... 12 4.3 THE MODELLING PROCESS ....................................................................................................... 17 4.4 DATA....................................................................................................................................... 21 5 THE GLOBAL NICKEL INDUSTRY .................................................................................................... 26 5.1 THE NICKEL VALUE CHAIN ...................................................................................................... 26 5.2 NICKEL MINING AND PRIMARY PRODUCTION ........................................................................... 27 5.3 WORLD DEMAND FOR NICKEL: FIRST USES .............................................................................. 28 5.4 END USES OF NICKEL ............................................................................................................... 32 5.5 RECYCLING OF NICKEL ............................................................................................................ 36 6 NICKEL AND APEC ECONOMIES....................................................................................................... 37 6.1 INTRODUCTION ........................................................................................................................ 37 6.2 DATA SOURCES ....................................................................................................................... 37 6.3 NICKEL PRODUCTION AND USAGE IN THE APEC ECONOMIES .................................................. 38 6.4 APEC ECONOMIES SHARE OF NICKEL PRODUCTION AND USAGE .............................................. 40 6.5 THE APEC ECONOMIES IN THE WORLD PRIMARY NICKEL INDUSTRY ....................................... 42 7 CLASSIFICATION OF NICKEL-CONTAINING CHEMICALS IN APEC ECONOMIES ............ 44 8 ASSESSMENT OF IMPACT: RESULTS ............................................................................................... 45 8.1 DEMAND EFFECTS ................................................................................................................... 45 8.2 NICKEL-CHAIN EFFECTS .......................................................................................................... 50 8.3 ECONOMIC EFFECTS ................................................................................................................ 58 9 CONCLUSIONS ........................................................................................................................................ 61 ST APPENDIX A – EU 1 ATP NICKEL-CONTAINING CHEMICALS CLASSIFICATIONS .................. 63 APPENDIX B - THE MODELS ON WHICH THE GTAP-NI IS BASED ................................................... 67 APPENDIX C – MINING AND PROCESSING OF NICKEL ORES ........................................................... 70 APPENDIX D – DETAILED OVERVIEW OF NICKEL VALUE CHAIN IN TARGET ECONOMIES 71 1. AUSTRALIA ............................................................................................................................. 71 2. CANADA .................................................................................................................................. 75 3. CHINA ..................................................................................................................................... 80 4. INDONESIA .............................................................................................................................. 86 5. JAPAN ...................................................................................................................................... 90 6. REPUBLIC OF KOREA ............................................................................................................... 96 7. THE PHILIPPINES ................................................................................................................... 101 8. THE RUSSIAN FEDERATION ................................................................................................... 104 9. CHINESE TAIPEI ..................................................................................................................... 110 10. THE UNITED STATES ............................................................................................................. 115 APPENDIX E – NICKEL-CONTAINING CHEMICALS CLASSIFICATIONS AND MANAGEMENT REGULATIONS IN TARGET ECONOMIES .............................................................................................. 120 5 Abstract This report sets out a quantification of socio-economic impacts on selected APEC economies of a 2009 European Commission decision to classify as hazardous 138 nickel-containing chemicals (1st ATP of EU Classification, Labelling and Packaging regulation). Concerns were raised by industry stakeholders, members of the WTO, the Russian Federation and others at the time as to the scientific methodology employed, and the proportionality of the classifications, given that only 23 of the nickel-containing chemicals were subsequently found to be in use in Europe. In spite of the widespread use of nickel and nickel chemicals in many critical applications, the European Commission carried out no impact assessment on this decision. This report contains the results of a socio-economic assessment undertaken by the Russian Federation with the assistance of the Nickel Institute, which quantified the likely impact of this classification decision on nickel production and demand in a number of nickel producing and consuming APEC economies. The assessment involved extensive data gathering, analysis and modelling based on identified impact scenarios. The study revealed that nickel is highly important for APEC economies. Some 71% of the world’s mined nickel is produced by APEC economies, led by the Russian Federation, Indonesia, Australia, the Philippines and Canada, with China also notable as the eighth largest producer. The proportions of global primary nickel production (69%) and first usage (71%) attributed to