New Caledonia, often called the "Sudbury of the south Pacific" because of its enoromous nickel reserves, is a French-controlled island in the south-west Pacific Ocean about 1,200 kilometres east of Australia. The massive CVRD Inco owned Goro nickel project, located at the southern end of the New Jersery-sized island is expected to produce 60,000 tons of nickel per year when completed.
If Stompin Tom Connors had included New Caledonia in his
travels, he might have written a song called the "Nickel
Laterite Blues." The first line in the song might have been,
"Goro, Goro, oh, oh, oh how my pocket book aches when I hear
that word."
Earlier this year, the largest construction project in the
south Pacific had been shut down for a few weeks by vandalism
commited by a small group of indigenous Kanak protesters, the
Rheebu Nuu.
Last week, CVRD Inco announced that the Goro project had been
delayed until late 2008 and that costs were expected to
increase by $850 million (US) to $3 billion.
A few days earlier a French court ordered the company to stop
building part of the nickel project due to environmental
issues. The construction of a waste storage site was to stop
immediately or face a daily fine of $40,000.
The problems at Goro and a general strike on the island by the
militant New Caledonian Confederation of Union Workers that has
almost completely shut down nickel production at Societe Le
Nickel (SLN), a subsiduary of French miner Eramet has caused
the three-month price of nickel to hit a record high of $33,755
per tonne or $15.31 per pound Monday.
Exploding Chinese demand combined with very few new projects
coming on stream have created global shortages causing the
price of nickel to surge about 150 percent since the start of
the year.
Just a quick geology-101 lessen on nickel laterites for the
novices. Nickel laterites are, generally speaking, divided into
two types, limonite and saprolite. The saprolite nickel
laterites are processed using pyro (fire) technology. Inco's
very successful Indonesian facilities and Xstrata Nickel's
operations in the Dominican Republic use this type of
process.
Goro, on the other hand, is a limonite deposite that will use a
chemical method called high-pressure acid leaching (HPAL) for
processing. New Caledonia has both limonite and saprolite
nickel deposits. There is a large smelter in the capital Nouméa
that is owned by Eramet that processes saprolite ore from a
number of mines using pyro technology.
In addtion, Xstrata Nickel and its partner SMSP announced last
week that the Koniambo Project in New Caledonia's north
province will continue.
The project was under review by the new owners. The enormous
Koniambo orebody contains both saprolite and limonite ore.
Initially, the saprolite ore will be mined and processed using
the same technology used in the company's Dominican Republic
operations. Production is targeted to begin in 2009/2010 and is
expected to be about 60,000 tonnes of nickel per year.
The never ending troubles with Goro's nickel laterites are by
no means confined just to CVRD Inco.
The two other major nickel laterite projects (limonite-HPAL) in
the world - BHP-Billiton's Ravensthorp in Australia and CVRD
Inco's Vermelho in Brazil - are dealing with cost blow-outs
and/or environmental delays and/or labour shortages.
About 72 percent of the world's nickel resources are found in
laterite deposits, mainly in tropical locations like Indonesia,
Cuba, Brazil and New Caledonia.
The only way these projects will be built and make money is if
the price of nickel stays at a much higher level than at the
beginning of this century.
In the mid-1990s, when supposedly low-cost nickel laterite
projects were first coming on stream in Western Australia,
there was enormous fear in the Sudbury Basin that the local
mines could not compete. The past decade has confirmed that the
Sudbury miners will remain among the most competitive and
innovative in the world. In addition, the political stability
of this region will ensure continued mining investments over
the next few decades.
Sixteenth century Saxon miners in present day Germany used to
think nickel ores were cursed and called the mineral
"kupernickel or the "Devil's copper" as they could not separate
the valuable red metal from the then worthless nickel. They may
have been right, at least in the pocket book.
Stan Sudol is a Toronto-based communications consultant and policy analyst who writes extensively on mining issues.  [email protected]
