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Monday September 11, 10:18 pm Eastern Time
Flood of new nickel laterite projects unlikely
HELSINKI, Sept 11 (Reuters) - Global nickel production from laterite orebodies using pressure acid-leach (PAL) technology will increase in future, although there will not be a flood of projects following the three trail-blazing Australian developments of the late 1990s, speakers at a nickel seminar said.
Laterite production from Murrin Murrin, capacity 45,000 tonnes a year, Bulong, and Cawse, both 9,000 tonnes a year, has been largely dogged by start-up and commissioning problems with output less than forecast and costs higher than anticipated.
``All three are beginning to improve, but they have a long way to go,'' Peter Johnston, executive general manager nickel, WMC Ltd. (Australia:WMC.AX - news) said at Metal Bulletin's nickel seminar here on Monday.
PAL technology is utilised in laterite orebodies, while more traditional smelting and refining is practised on sulphide resources.
``The supply of nickel will come increasingly from laterites, as opposed to sulphides,'' Burnham Tinker, vice-president corporate development of OMG Group in the U.S. said.
While nickel gradings in sulphides and laterites are typically the same, cobalt grades are two percent in sulphides, but some 10 percent in laterites, adding by-product value.
Ken Hellsten, general manager of QNI Ltd, Western Australia, a wholly-owned unit of Billiton (quote from Yahoo! UK & Ireland: BLT.L), noted that in the three original laterite projects that while capex overruns were not excessive, the provisions for working capital were significantly underestimated at the financing stage.
Capex for Cawse was eight percent above expectations, but working capital requirements were 222 percent higher. For Bulong and Cawse, the figures were 13 and 10 percent, and 288 and 160 percent respectively. Of the three, Cawse has reached 95 percent recovery rates for nickel and cobalt within two years of commissioning, but Bulong and Murrin Murrin are both languishing at recovery levels of 75-80 percent, Hellsten said.
This has impacted on operating costs as well. Cawse at $2.90/lb is a dollar above forecast, while Bulong and Murrin Murrin costs of $4.50/lb are well above projected levels of $2.40 and $1.41.
``They have a long way to go...costs will be higher than forecast, but will fall in time,'' Hellsten said.
Laterite developments are highly dependent on cobalt credits, and prices are seen falling for this metal, so only quality projects will produce adequate returns in future, Johnston said.
``We anticipate that only three or four will get up anywhere in the world...a few years ago over 20 were planned,'' he said.
WMC itself will move into exploiting laterites, but only if there will be a reasonable return.
``If a sulphide (resource) is better, then that is where we will go,'' he said.
Hellsten said that there will be more PAL projects in future, because they are the better option to meet the increased demand that will happen in the market. But financing will be difficult in the short-term, because of the problems the initial three suffered.
``The next (phase) will be conservatively designed, and involve joint venture partners. They will be staged out over the next ten years,'' he said.
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