CANADIAN MINING PERSPECTIVES: Chinese investment sought for Australian nickel complex

QUEENSLAND - GLADSTONE PACIFIC NICKEL of Brisbane is looking to China for investment in its nickel complex in this Australian province. The company has proposed building a nickel-cobalt processing complex at Gladstone (see CMJ Net News, Nov. 5, 2007). The project carries a US$3.4-billion price tag and would produce 126,000 tonnes of nickel and 10,400 tonnes of cobalt per year.

Now Gladstone has announced its intention to tap the Chinese investment market for this undertaking. Negotiations have begun with Chinese state-owned companies to supply a turnkey EPC contract for construction, access to Chinese project funding, long-term nickel sales contracts, and possible participation by the Chinese in "Gladstone share capital".

I am of two minds on this deal.

Gladstone is a TSX-listed company, and I'm not sure I am comfortable with the Chinese government becoming a big part of a Canadian company, although it already has a toe-hole in the oil sands, coal and metals industries of this country. Maybe I could get used to it.

On the other hand, perhaps I should applaud the inclusion of Chinese investors in major international projects. After all, growing Chinese demand for metals plays a very large part in maintaining strong commodity prices. If the Chinese want the metals and have the money, let them shoulder some of the development risk.

We wish Gladstone good luck with its negotiations. Only time will tell if dealing directly with the Chinese becomes a headache or heralds a better way to do business.