TOKYO - Sumitomo Metal Mining Co., Japan's biggest nickel producer, said on Thursday it would build a second nickel refinery by 2021 to boost annual production capacity to 150,000 tons to meet growing demand from developing countries.

A planned refinery, whose location and raw metal suppliers are under consideration, would make Sumitomo Metal one of the world's top five nickel producers, the company said in its mid-term strategy.

Although there is a glut in nickel supply currently, the company estimates that there will be a supply shortage beginning in 2016.

Its production capacity for nickel, used in making stainless steel, is set to rise to 100,000 tonnes a year in the business year starting in April, when it starts handling raw metal produced in a project in the Philippines.

The Taganito project is scheduled to start commercial operations in the autumn of 2013.

Japan's second-biggest copper producer, Sumitomo Metal in the mid-term strategy made no change to its current 450,000-tonne annual production capacity.