While low world stocks and the threat of strike action in Canada are pushing nickel prices to record levels, environmental sustainability will be the metal"s long term strength, according to Citigroup Investment Research global commodity analyst Alan Heap.

"Nickel"s inherent value in extending product life cycles, and its recyclability across a range of stainless applications make it unique among base metals," Alan Heap says.

"Right now the market is fixated on the threat of strike action at Xstrata's nickel operations in Sudbury, Canada, affecting about 25 per cent of operations.

"Sudbury produces around 50,000 tonnes of metal a year, or 15% of world primary production.

"This nervousness has caused the world price to reach an unprecedented US$40,000-plus a tonne.

"The Sudbury unions are in bargaining mode as their labor contract ends on 31 January, but there is no certainty when or if there will be a strike.

"In any case once a threshold price is reached, nickel and stainless steel substitutes will emerge in the market.

"Aluminium, though not as good, can substitute for nickel in stainless. Galvanized steel can replace stainless altogether in many applications, as can some corrosion-resistant plastics.

Alan Heap, who will speak on the issue of sustainable mining at the 3rd New Caledonia Nickel Conference in Noumea on 25-30 March, says nickel's inherent appeal to sustainable practices being adopted in many countries will underpin its value in the long term.

"Nickel extends building life cycles with corrosion resistance. Examples are stainless steel clad buildings, such as the Shanghai Hyatt and Petronas Twin Towers in Kuala Lumpur.

"At the end of the life cycle, nickel offers a high level of recyclability: 37% recycled, compared with 12% of copper and 7% of zinc.

"Longer life cycles, low maintenance and recyclability at the end of the life cycle that help reduce the environmental impact of building construction are fundamental to cradle-to-grave policies being adopted in many countries.

"Increasing emphasis on sustainability world-wide will ensure demand remains high for nickel."

Alan Heap says that on the supply side, industry needs to address the issue of toxic waste. By-products in the production of nickel from sulphide ores include sulphur dioxide and sulphuric acid.

"Fortunately, production from laterite ores - found in abundance in New Caledonia and Australia - is more environmentally friendly."