LONDON (Commodity Online): The complex rose on Wednesday (apart from tin), experiencing gains of between 1-1.5%. A moderate improvement in broad risk appetite combined with indications of improved levels of Chinese buying and price signals indicative of domestic market tightness, provided the basis for the positive performance.

In terms of metal-specific developments, Finnish miner Talvivaara released its H1 results yesterday, which showed Nickel production year-to-date at 8.2Kt. While this represents a more than doubling versus the same period in 2010, the company had indicated originally that nickel production would be between 30-35Kt this year, although that had previously been revised down to 22-28Kt. Now the company has indicated that the actual output for the year is likely to be closer to 22Kt, owing in part to an extended maintenance and upgrade stoppage in April through May.

In addition, there was a degree of caution in terms of the 2012 production forecast which had previously been set at 50Kt of nickel, with the company stating the near-term progress in the reclaiming and stacking of the primary heap over the next 2-3 months will determine whether this has to be revised. Such downward revisions, if they occur, will be important for the nickel market balance next year and beyond.

Talvivaara's facility had been expected to offer close to 60Kt annual nickel production 2015, although technical challenges at the project certainly pose question marks over the attainability of such a level of output. Given we are forecasting a 35Kt surplus in 2012 and then a 33Kt surplus in 2013, if downgrades to any projects not least Talvivarra, will begin to push us into territory where the market balance justifies higher price levels than previously anticipated.

Elsewhere, on the supply-side, it has been reported that mining firms operating in Peru and new President, Ollanta Humala, have come to an agreement on new system of royalty taxation (Reuters). Under the new system, companies would pay royalties based on their operating profits instead of their sales with a view to negatively impacting competitiveness.

The new royalties' structure would likely apply a sliding scale to miners’ operating profits, while even companies with tax stability agreements signed in the 1990s have agreed to accept the changes. The apparent environment of conciliation between the negotiating parties certainly paints a far more constructive picture than when Humala's initial election prospect raised concerns of nationalisation or aggressive hikes on the mining taxation framework.

Finally, Terramin Australia has reported that it will soon understand the damage caused by an electrical disruption at the ore grinder located at its Angas Lead and Zinc mine in South Australia. The company had originally expected to produce 47Kt of zinc and 18.5Kt of lead in 2011, but the disruption clearly points towards downside to these figures.

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