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Ardent Listener
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 Posted - 05/26/2008 : 20:13:36
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Nickel players find the going tough
May 26, 2008
Page 1 of 2
WHEN it comes to nickel, investors should be aware there are two distinct types: sulphides and laterites.
Nickel sulphide mining can be a tough and dangerous business, as the underground mines in Western Australia often have to deal with tricky geological conditions and variable grades. Compared to the mining, putting sulphides through a concentrator and then sending the product to a smelter and refinery, is a relative breeze.
In laterites, the opposite is true. This type of nickel occurs close to the surface in relatively consistent grades and is amenable to open-cut mining. But extracting the nickel from the ore is a technically complex process involving leaching it with acid - often at high temperatures.
Given the choice between the two types of nickel mining, most companies would opt for sulphides, which are much cheaper to develop. But the lack of big nickel sulphide discoveries in recent years has pushed miners to examine laterite projects more closely. Many sulphide mines produce less than 10,000 tonnes a year, while a laterite operation can produce up to 60,000 tonnes a year.
At the opening of BHP Billiton's $US2.2 billion Ravensthorpe laterite operation last week - an innovative combination of atmospheric leaching and high-pressure acid leaching - the company acknowledged most of its future nickel projects were likely to be laterites rather than sulphides.
Smaller companies are following suit. With laterites widely acknowledged as the future of the nickel industry, The Drum has examined some investment options.
Off to a slow start
When it comes to standalone investment opportunities in nickel laterite in Australia, Minara Resourcesis the only miner in production. But it is also a prime example of the technical difficulties of processing laterite ore.
The Murrin Murrin mine in WA is a 60/40 joint venture between Minara and Swiss commodities trader Glencore. But Glencore also holds a 53 per cent stake in the miner.
Since entering production nine years ago, the high-pressure acid leach plant has never reached its intended production rate of 40,000 tonnes a year. It expects to produce 34,000 to 38,000 tonnes this year, following a maintenance shutdown last year, which was meant to fix some of the plant's problems. After completing a $70 million test program, Minara recently approved a $300 million heap leach project. It could deliver an extra 8000 to 10,000 tonnes of production starting from late next year, but the downside is the process is much slower than the leaching in the high-pressure acid leaching plant and the recoveries are lower.
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Nickel players find the going tough
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