The Thunder from Down Under
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 US$1.76 a pound, 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 Canadian nickel giants Inco Ltd. and Falconbridge Ltd., the second and third largest producers after Russian MMC Norilsk, was an upstart Australian company called Anaconda Nickel Ltd.
Andrew “Twiggy” Forrest, Anaconda’s chairman, was well known in Australian mining circles for his legendary salesmanship and determination. One could almost imagine him pounding the table like Nikita Khrushchev and boasting that “he would bury the West with low-cost laterite nickel.”
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 poundamong 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 sulphides or laterite ore. About 72% of the world’s nickel resources are laterites found mainly in tropical locales such as Indonesia, Cuba, Brazil and New Caledonia. The remaining 28% are sulphides primarily located in Canada and Russia. Australia has both sulphide and laterite nickel deposits. In 1968 laterites supplied 28% of global nickel demand, rising to 42% in 2003 and expected to increase to 51% 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 m deep, and require only selective earth moving using truck and shovel technology.
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. New Caledonia’s 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.
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 both an upper dark red limonite and lower bright green saprolite zone. Due to the different 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 higher in iron and lower in nickel, magnesium and silica, which makes this type of laterite conducive to HPAL technology. In most cases, the saprolite zone has higher nickel, magnesium and silica but lower iron content.
Traditionally, saprolite orebodies have been processed with standard pyrometallurgical technology. Since the 1970s, Inco’s Indonesian facilities, and Falconbridge’s FALCONDO MINE in the Dominican Republic have used standard smelting operations to process nickel laterites with great success. The end product is an iron-nickel alloy (ferronickel), or a high grade nickel matte can be produced by adding sulphur.
The Caron hydrometallurgical process can also be used for limonitic ores or a mixture of limonite and saprolite. However, there are some disadvantages including lower nickel and cobalt recovery and energy-intensive pyrometallurgical steps at the front end of the processing cycle.
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 Ltd. 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 Sherritts 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 50.0% (Sherritt) and 50.0% (General Nickel Co. of Cuba) joint venture.
The United States was not pleased and passed the Helms-Burton Act in 1996 that permits lawsuits against companies that do business with previously-owned American assets nationalized in the Cuban revolution of 1959. Sherritt chairman Ian Delaney and other executives are prohibited from entering the United States.
Sherritt’s Metallurgical Technologies Division was spun of to Dynatec Corp. in 1997 (see CMJ April 2005).
In March of this year, Sherritt and General Nickel Co. of Cuba announced a US$450 million investment to expand annual nickel plus cobalt production by 16,000 tonnes to 49,000 tonnes, to be completed by late 2007.
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 270C) 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.
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 electro-nickel, nickel oxide or nickel briquettes.
Intermediate materials like mixed sulphides or mixed hydroxides may also be produced for refining elsewhere.
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. Various analysts predicted that Anaconda would soon become one of the world’s five largest nickel producers.
What went wrong? Perhaps the biggest error besides lack of capital was that Anaconda was in too much of a hurry to get into production, so it could take advantage of Inco’s delays at the Voisey’s Bay project in Labrador. Hence 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, eng
ineering issues, cost issues 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. Andrew Forrest left the company in May 2002 and current CEO Peter Johnston has cleaned up much of the mess. Murrin Murrin is now making a profit, yet a recent fire and 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.)
In early 2002, the OM Group bought the Cawse laterite facility and mineral rights when Centaur Mining and Exploration Ltd. became unable to service it debt. Cawse was the best performing of the three but some feel was too small to take advantage of economies of scale.
In April 2004, LionOre Mining International bought the bankrupt Bulong nickel processing plant while Heron Resources purchased the project’s land holdings.
There is no doubt that the three laterite projects damaged Australias mining reputation, just as the Bre-X scandal negatively impacted Canada’s standing back in 1997. In the early part of this decade no bank or bond dealer would dream of investing in a laterite project anywhere in the world. However, lessons have been learned and Murrin Murrin, Bulong and Cawse have produced a generation of Australian laterite expertise that will be in demand around the world.
In the past year, three, billion-dollar projects in Brazil, New Caledonia and Australia confirm that the future of nickel production will be in laterites.
In July 2005 Brazilian mining giant CVRD announced a US$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.
CVRD has been developing this project for five years and has chosen HPAL technology to process the nickel laterites. An Australian pilot plant has produced LME-grade nickel cathode at an average leaching extraction rate of over 96% based on precipitation and re-leaching of nickel hydroxide. This project will place Brazil among the world’s top 10 nickel producers.
Inco-Goro, New Caledonia
Inco announced the restart of its US$1.9-billion laterite nickel project in Goro, New Caledonia last October. The 60,000 tpa nickel project will produce nickel at cash costs of US$1.10-1.15 per pound after cobalt credits of US$7.00 per pound.
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.
Inco’s plans have been tested for more than two years at a large integrated pilot plant on site at 1/1000th scale, where proprietary pressure acid leach solvent extraction and pyrohydrolysis processes were evaluated. The process produces nickel in the form of nickel oxide and cobalt in the form of cobalt carbonate.
BHP Billiton-Ravensthorpe, Australia
In March 2004, after US$85 million of spending and six years of intensive research, BHP Billiton gave the green light to develop the RAVENSTHORPE NICKEL LATERITE PROJECT in Western Australia at a cost of US$1.4 billion. That figure includes an expansion the company’s YABULU REFINERY in Queensland.
The Ravensthorpe deposit has a high silica content that allows the limonite ore to be upgraded to almost twice the mined grade. The saprolite ore will also be mined. The 25-year project will involve the mining of three orebodies with a combined resource of 253 million tonnes grading 0.69% Ni followed by beneficiation and processing via pressure and atmospheric leaching to produce around 220,000 tonnes of a combined hydroxide intermediate product.
Other potential Canadian projects
In 1998, Falconbridge entered into a joint-venture agreement with Socit Minire du Sud Pacifique S.A. to develop the KONIAMBO FERRONICKEL PROJECT, which is located in the Northern Province of New Caledonia, near the provincial capital of Kone. Koniambo is one of the world’s largest and highest grade nickel laterite deposits. The proposed 60,000 tpa nickel in ferronickel mining and smelting complex would start production in 2009 at the earliest.
Canico Resource Corp. is focusing on the development of the Ona-Puma property located in the state of Para, north-central Brazil. Canico would use off-the-shelf smelting technology to process its saprolite deposits.
Dynatec is conducting a feasibility study on a 60,000-tpa nickel laterite development in Madagascar that would use its own HPAL technology. Skye Resources and Jaguar Nickel are both working on potential nickel laterite projects in Guatemala while Weda Bay Minerals is focusing on the Halmahera nickel laterite deposits in Eastern Indonesia.
In addition Inco Limited has made a significant investment in Heron Resources, an Australian junior working on a potential world class nickel laterite project located in the Eastern Goldfields of Western Australia.
Nickel laterite mining is here to stay. The potential growth in sulphide deposits will not be enough to meet global nickel demands. As the Chinese, Indian and Brazilian economies modernize, an increasingly metal-hungry world will have to depend on laterite deposits to meets its needs.
Special thanks are given to Dr. Ashok D. Dalvi for providing technical help for this article. Dr. Dalvi is director, process engineering and strategic studies at Inco Technical Services Ltd. in Sheridan Park, Ont.
Stan Sudol is a Toronto-based communications consultant and freelance journalist who writes extensively on mining and Ontario issues. [[email protected]]