The last few years of the 20th century were not very kind to
the nickel industry. In October and December of 1998, the LME
price for nickel dipped to $1.76 a pound (US), the lowest level
ever, if you factor in inflation. The imploding Russian economy
was dumping nickel on Western markets, the Asian currency
crisis was annihilating economic growth and metal demand, and
new lower-cost mine production was threatening to come on
stream.
Of great concern to the soon to be merged Inco Ltd. and
Falconbridge Ltd., was an upstart Australian company called
Anaconda Nickel Ltd.
Anaconda Nickel, together with Swiss commodities house Glencore
International, were building a billion-dollar mine and
processing facility at Murrin Murrin, located 250 km north of
Kalgoorlie in Western Australia.
Using an innovative high-pressure acid-leaching (HPAL)
technology, Murrin Murrin was expected to produce 45,000 tonnes
of nickel and 3,000 tonnes of cobalt annually. The production
costs for the nickel were estimated to be between $0.60 and
$1.25 a pound-among the lowest in the industry.
Two other smaller nickel laterite projects in Western
Australian were also under construction at the same time,
Centaur Mining and Exploration Ltd.'s Cawse Mine at 9,000
tonnes/year (tpa) of nickel and Preston Resources's Bulong Mine
at 7,000 tpa nickel.
At the time, these three projects posed a significant threat
to the traditional dominance of Inco and Falconbridge, whose
nickel production costs were averaging about $1.50 a pound.
Nickel laterites are the future
Nickel can be produced from either sulphide or laterite ore. About 72 percent of the world's nickel resources are laterites found mainly in tropical locales such as Indonesia, Cuba, Brazil and New Caledonia.
The remaining 28 percent are sulphides primarily located in
Canada and Russia. Australia has both sulphide and laterite
nickel deposits. In 1968 laterites supplied 28 percent of
global nickel demand, rising to 42 percent in 2003 and expected
to increase to 51percent by 2012.
Sulphide ores are generally found hundreds of metres below
surface, requiring considerable expense for underground mining
infrastructure. Soft laterites are near-surface deposits, about
15 to 20 metres deep, and require only selective earth moving
using truck and shovel technology.
Over geological time, laterite deposits are produced by
weathering and the action of groundwater that leaves a
concentration of valuable metals. The tropical wet deposits in
Cuba, Indonesia and New Caledonia have higher nickel values and
contain iron oxides. The dry laterites of Australia, formed
over a longer period, have lower nickel content and contain
more clay that poses extra processing challenges.
Laterite deposits usually contain an upper dark red zone
that changes to yellow and is known as the limonite or oxide
layer. The lower bright green zone contains the saprolite or
silicate dominate zone. Due to the various quantities of iron,
magnesium and silica in each zone, they must be processed
differently to cost-effectively retrieve the nickel. In
general, the limonite zone is conducive to HPAL technology
while saprolite orebodies or silicate laterites have been
processed with standard pyrometallurgical methods.
Nickel producer Societe Le Nickel (SLN) which is 90 percent
owned by the French company Eramet, is the grandfather of
saprolite operations. SLN was formed in 1880 and is the
dominate producer on New Caledonia with the 60,000 tpa Doniambo
smelter in the capital Noumea. The facility turns out both
nickel matte and ferro-nickel.
Nickel laterite deposits were first discovered by the French
civil engineer Jules Garnier, in 1864 in New Caledonia.
Commercial production started in 1875 with occasional
interruptions.
The New Caledonia laterites were the world's largest source
of nickel until 1905 when Sudbury's enormous sulphide deposits
took over and single-handedly dominated global production for
the next 70 years.
Since the 1970s, Inco's Indonesian facilities at Sorowako
(1977), and Falconbridge's Falcondo Mine in the Dominican
Republic (1971) have used standard pyrometallurgical operations
to process nickel laterites with great success.
In addition BHP Billiton built a large facility at Cerro
Matoso, Colombia in 1982. The end product from these facilities
is an iron-nickel alloy (ferronickel), or a high grade nickel
matte.
Inco is boosting the capacity of its Indonesian operations
25 percent to 91,000 tonnes by 2009.
Historically, due to the difficulties processing limonite
orebodies, most of the economically successful laterite nickel
operations to date, have focused on the saprolite deposits with
the chief exception of Sherritt International's Cuban Moa Bay
operations, a Communist enclave where the traditional
capitalist rules of profit, loss, supply and demand are all
suspended.
Sherritt and Cuba
High-pressure acid-leaching (HPAL) technology is not new. It
has been carried out successfully at Moa Bay, Cuba, for more
than 35 years. The original process for ammonia pressure
leaching of nickel concentrate was developed by Professor Frank
A. Forward of the University of British Columbia for Sherritt
International in 1948. Sherritt established a research group
headed by Vladimir Mackiw that became internationally known for
their expertise in HPAL technologies.
A refinery was built in Fort Saskatchewan, Alta., originally
to process sulphide concentrate from Sherritt's mine in
northern Manitoba. In 1994, Sherritt, which had been processing
Cuban nickel-cobalt mixed sulphides since 1991, concluded a
deal with Fidel Castro to create a vertically integrated nickel
and cobalt mining, refining and marketing operation, with
facilities at Moa Bay and Fort Saskatchewan. This is operated
as a 50 percent (Sherritt) and 50 percent (General Nickel Co.
of Cuba) joint venture.
Another hydrometallurgical method called the Caron process can also be used for limonitic ores or a mixture of limonite and saprolite.
However, there are some disadvantages and many industry
professionals believe that the process is not economical with
today's high cost of energy.
HPAL technology
HPAL plants require sophisticated equipment and expertise to
work properly and reach full capacity. The technology basically
involves processing ore in a sulphuric acid leach at elevated
temperatures (up to 270ºC) and pressures (600 psi) to
selectively extract the nickel and cobalt from the iron-rich
ore. In most modern plants, the pressure leaching is done in
titanium-lined autoclaves that resemble large metallic cigars
or submarines.
Counter-current decantation is used to separate the solids and liquids.
There are various ways of separating and purifying the
nickel-cobalt solution. The methods include solvent extraction,
electrowinning as well as other methods currently being tested.
The final products are mostly electro-nickel, nickel oxide or
nickel briquettes.
Economic nightmare
Murrin Murrin was the largest of the three Western Australian projects, with plans to expand its capacity from 45,000 to 115,000 tpa nickel.
Analysts even predicted that Anaconda would become one of
the world's five largest nickel producers.
What went wrong? Perhaps the biggest error besides lack of
capital was that Anaconda rushed into production, to take
advantage of start-up delays at Inco's Voisey's Bay project in
Labrador. Anaconda bypassed the demonstration plant stage and
progressed directly from laboratory to full-scale production,
but the dry, clay-ridden Australian laterites proved to be more
challenging than originally thought.
In addition, there were construction design flaws,
engineering issues, cost escalations and the selection of poor
materials that couldn't withstand the corrosive,
high-temperature and high-pressure environment. Combine the
above with disgruntled investors, billion-dollar lawsuits,
billion-dollar losses and the shredding of corporate
reputations and it's amazing that Murrin Murrin is still in
operation. The operation is now making a profit, yet
maintenance problems still plague the facility that has never
reached it 45,000 tpa nickel capacity. (It produced 28,631
tonnes of nickel in the 2004-2005 year.)
The other two smaller Australian laterite producers went
bankrupt.
There is no doubt that the three laterite projects damaged
Australia's mining reputation, just as the Bre-X scandal
negatively impacted Canada's standing back in 1997. However,
lessons have been learned and Murrin Murrin, Bulong and Cawse
have produced a generation of technocrats with laterite
expertise that are in demand around the world and at other
potential Australian projects that must be developed to meet
expanding global demand.
In a future column I will discuss the new laterite projects.
Stan Sudol is a Toronto-based communications consultant who writes extensively on mining and Ontario issues. He can be reached at[email protected]
