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New Caledonia nicknamed Sudbury of the south Pacific - Stan Sudol

As mentioned in my previous column, nickel can be produced from either sulphide (Sudbury Basin) or laterite (Goro) ore. About 72 percent of the world's nickel resources are laterites deposits.

As mentioned in my previous column, nickel can be produced from either sulphide (Sudbury Basin) or laterite (Goro) ore. About 72 percent of the world's nickel resources are laterites deposits.

In the past two years, three major, billion-dollar plus projects in Brazil, New Caledonia, and Australia confirm the future of nickel production will be in laterites, using HPAL technology.

In July 2005, Brazilian mining giant CVRD announced a $1.2-billion  investment for its Vermelho Nickel Mine in the Carajas region of northeast Brazil's Para state. Scheduled to start in September 2008, the mine will produce 45,000 tpa of nickel and 2,800 tpa of cobalt over a commercial life of 40 years. (All money values are in U.S. dollars unless indicated.)

In December 2005, CVRD took over Vancouver-based Canico Resource Corp., which was developing the Onça-Puma nickel laterite project in the same region. In addition, last September, Falconbridge announced the discovery of a major new laterite deposit at its Araguaia Nickel Laterite properties also in the state of Para. Over the next decade, Brazil aims to become a major nickel producer through its many laterite deposits.

Inco confirmed the restart of its $1.9-billion  laterite nickel project in Goro, New Caledonia in October 2004. The 60,000 tpa nickel project should produce nickel at cash costs of $1.10 - $1.15 per pound after cobalt credits of $7 per pound. Despite its small size, New Caledonia, nicknamed the Sudbury of the South Pacific, lays claim to 26 percent of the world's total of nickel laterites.

During Goro's development since 1993, Inco has made significant changes to the HPAL technology used in Australia. Some changes include using higher operating temperatures to move feed through more rapidly, using smaller autoclaves, and concentrating nickel and cobalt at an earlier stage of the process with a proprietary extraction technique.

In March 2004, BHP Billiton gave the green light to develop the Ravensthorpe Nickel Laterite Project in Western Australia at a cost of $1.4 billion. That figure includes an expansion the company's Yabulu Refinery in Queensland.

In 1998, Falconbridge entered into a joint-venture agreement with Societe Miniere du Sud Pacifique S.A. to develop the Koniambo Ferronickel Project, which is located in the Northern Province of New Caledonia. Koniambo, located near the provincial capital of Kone, is one of the world's largest and highest grade laterite saprolite deposits. The proposed 60,000 tpa of nickel operation in a ferronickel mining and smelting complex would start production in 2009 at the earliest. Last December, French nickel miner Eramet SA, which has been mining nickel in New Caledonia since the late 1800s lost a court challenge in which it tried to stop Falconbridge from taking ownership of this $2.2 billon project.

Other Canadian junior mining companies with potential laterite projects include Dynatec Corporation's proposal in Ambatovy, Madagascar, Sky Resources in Guatamala, and Weda Bay Minerals Inc., which is working to develop the Halmahera laterite deposits in Eastern Indonesia. In March, French nickel miner Eramet SA has offered $270 million (CDN) in a friendly takeover of Weda Bay.

Problems in New Caledonia

In the world of nickel, the recent vandalism and work stoppage in New Caledonia helped send price shock waves on metal markets that resulted in record highs for this essential commodity.

In early April, a small group of Kanak protesters, the Rheebu Nuu, erected blockades, caused extensive damage to equipment and threatened employees at the Goro worksite. As of April 24, construction at the project has slowly resumed. New Caledonia is a French territory in the South Pacific.

The Kanak Rheebu Nuu, who are supported by the Canadian NGO Mining Watch, claim to be very concerned about environmental issues and also want royalties from the mine. The Kanak pro-independence movement, FLNKS, does not support the Rheebu Nuu's claims for royalty payments. Of the 1,800 workers at Goro, 1,600 are New Caledonian. There have been tremendous opportunities for New Caledonian contractors and other businesses, including the surrounding communities. New Caledonia has one of the highest per capita incomes in the Pacific.

In the Goro agreement, the three provinces of New Caledonia hold a 10 percent equity interest in the project while Inco holds 69 percent interest and Sumitomo Metal Mining and Mitsui own the remainder.

In an April 19th news release the president of New Caledonia, Marie-Noelle Themereau states, "Current metallurgical projects in the north and the south constitute a unique opportunity to create thousands of direct and indirect jobs that the country needs. They also create wealth and bring economic and fiscal benefits….Yet, Rheebu Nuu has chosen to sabotage the site, interrupt traffic and pressure people and to definitely compromise this development, which is so wanted by Caledonians."

Early on Inco decided to use land disposal of mine tailings as opposed to ocean disposal to address public concerns about a potential threat to the island's marine ecosystem and coral reefs. Marine disposal of tailings is commonly used in many other jurisdictions due to cost savings. Extensive re-vegetation programs will take place once the tailings are dry.

Effluent from the plant will be effectively treated and the discharge pipe strategically located to take advantage of ocean currents for rapid dilution. The Goro project has undergone extensive environmental studies required under New Caledonian and French laws. In addition, extensive public reviews and hearings were conducted.

Goro ranks among the world's greatest nickel laterite resources, both in terms of size and grade. Inco says that it plans to be in New Caledonia for 100 years or more. The company intends to hire 90 percent local people to fulfil the 800 jobs required when Goro becomes operational. An extensive training program has been implemented.

One final interesting note on New Caledonian nickel politics: in November 2005, a massive protest rally in Noumea, the capital, was in support of Falconbridge's Koniambo project. The proposed nickel processing plant, which will use traditional pyrometallurgical technology as opposed to the HPAL system, would be an integral pillar of economic development and employment in the rural north of the island. Most of the economic infrastructure is in the south.

To date, no major HPAL project has yet come on stream without going over initial capital costs. The technology is still tricky needing custom technical solutions for each individual ore deposit. That is why Inco had invested time and money in a pilot plant for their Goro project.

In www.miningnews.net , an Australian website, Minara CEO Peter Johnson who miraculously saved the troubled laterite project at Murrin Murrin in Western Australia suggested, "…the market is being overly optimistic about the big laterite operations at Ravensthorpe and Goro being able to quickly reach capacity."

BHP Billiton's Ravenstorpe project, scheduled to start shipping product in 2007, has already seen its cost estimates increase by an additional $400 million to $1.8-billion. That project will establish a cost benchmark with the new generation of HPAL technologies and lessons learned from Murrin Murrin.

However, many analysts feel the long-term price of nickel must rise to reflect the high capital costs of nickel laterite projects. Some even feel that nickel is becoming the new oil due to booming demand and a shortage of future projects. It has been repeatedly stated that "a new Goro is needed nearly every year to match long-term demand growth."

Nickel laterite mining is here to stay. The potential growth in sulphide deposits will not be enough to meet global nickel demands. The technical engineering challenges of making HPAL more efficient and economical will be overcome.

As the Chinese, Indian and Brazilian economies modernize, an increasingly metal-hungry world will have no choice but to depend on laterite nickel deposits to meets its needs.

Stan Sudol is a Toronto-based communications consultant and freelance journalist who writes extensively on mining issues.[email protected]


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