GLOBE AND MAIL
THU APR.30,1998
PAGE: B1
BYLINE: ALLAN ROBINSON
Nickel giants hunting for cheaper way to dig: Falconbridge, Inco eye tropical projects
BY ALLAN ROBINSON
Mining Reporter
A glut of nickel has hurt Falconbridge Ltd. and Inco Ltd. of late but the mining giants are looking for ways to get a lot more of it - a lot cheaper.
The search has led Falconbridge and Inco, two of the world's largest nickel producers, to the French territory of New Caledonia in the South Pacific, where they are separately studying the viability of two major nickel mining projects.
The two projects will use radically different technologies, but both Toronto-based companies will be mining nickel-bearing laterite deposits, a type of ore estimated to contain two-thirds of the world's known nickel reserves.
"Changing technology is the next phase for the nickel business," said John Lydall, a mining analyst for First Marathon Securities Ltd. "It's a critically important factor in the nickel business today. The world is changing and everybody has to lower their operating costs. That is the key to survival."
Laterite ores occur in tropical regions where the porous soil is leached by heavy rainfall leaving nickel, iron and cobalt behind. The ore close to the surface left after the sulphides are gone can be easily mined in open pits.
The disadvantage of laterite ores is that typically they are very moist and require huge amounts of energy to dry and refine compared with sulphide nickel deposits such as found in Sudbury, Ont., and at the Voisey's Bay nickel deposit in Labrador. High oil prices in the the 1970s made these types of projects uneconomical. Energy needs continue to be a major cost component of extracting nickel from laterite deposits.
Falconbridge said yesterday that it has signed a joint venture agreement with Societe Miniere du Sud Pacifique SA, a miner controlled by the government of the island's North Province, to explore the Koniambo ferronickel deposit. In return for spending $50-million (U.S.) on exploration and metallurgical studies, Falconbridge will earn a 49-per-cent interest.
"If everything goes well, we expect to have completed the feasibility study within three to four years," said Lars-Eric Johansson, senior vice-president and chief financial officer. The smelter's cost is estimated at $1-billion.
Inco is also planning its first mining venture in New Caledonia, one of the largest nickel producing areas with 20 per cent of the world's known nickel resources. Inco and the Bureau de Recherches Geologiques et Minieres, an agency of the the French government, are constructing a $50-million pilot plant at the Goro project, which is 85 per cent owned by Inco and 15 per cent by the Bureau de Recherches.
Nickel is trading at around $2.50 a pound, down from an average price of $3.73 during 1995 and $3.40 in 1996. Inco, which is losing money, has made massive layoffs and closed some higher-cost mines, while Falconbridge is barely breaking even.
The prices are being driven down by a surplus of nickel, not a lack of demand for it. Mining companies around the world are betting demand will continue to grow and the present glut will disappear in time. And in order to remain cost competitive, the leaders in the nickel business must develop new processes.
Falconbridge plans to produce a nickel-iron alloy at a 54,000-tonne-a-year plant in New Caledonia using a conventional roaster and certain proprietary technology. Falconbridge already produces ferronickel from laterite ore at its mine in the Dominican Republic. Ferronickel is used to make stainless steel.
Inco hopes to have its pilot plant in operation by mid-1999 and be in a position to make a full-scale production decision by 2000. The objective of the trial is to test an acid pressure leaching technology developed by the company, an Inco spokesman said. The technique is used on laterite ores to extract the nickel and cobalt in a solution and then the metals are separated using electricity.
Initially, a commercial plant would be constructed to produce 27,000 tonnes of nickel and 2,700 tonnes a year of cobalt with the potential of doubling capacity.
Already new nickel mines in Australia using new hydro-metallurgical processes to extract nickel are forcing nickel prices lower. Similar processes have also led to the construction of massive new copper mines in South America during the past few years. |
