MADAGASCAR - Two new partners have been found for the large Ambatovy nickel laterite project in Madagascar. One is KOREAN RESOURCES CORP. (KORES), a state-owned corporation leading a consortium of Korean enterprises (including Daewoo International) that will own 27.5% interest in Ambatovy. The other is the Montreal-based engineering and construction group SNC-LAVALIN INC., which will acquire a 5% interest in Ambatovy when the project debt financing closes. The new partners join DYNATEC CORP. of Richmond Hill, Ont. (the project operator with 40% interest) and SUMITOMO CORP. of Tokyo (27.5% interest).
This represents a resolution for the problem caused by IMPALA PLATINUM HOLDINGS dropping its 37.5% interest in Ambatovy the end of 2005. (For background, see "Partner sought for Ambatovy" in the April 2006 issue of CMJ, available to subscribers of our online archives.)
For Dynatec, the priority was to retain as much equity participation in the project as possible, according to president and CEO Bruce Walter in an Oct. 31 news conference in Toronto. His company's 40% interest is possible because of US$852 million in financial support and reimbursement of costs to Dynatec from partners Sumitomo, KORES and SNC-Lavalin. Of this amount, US$598 million is in the form of cross guarantees on Dynatec's share of the guarantees related to project debt financing. The rest is as loans.
Also announced is that the EXPORT-IMPORT BANK OF KOREA will provide US$650 million of the project debt. The partners continue to talk with other lenders, hoping to conclude project debt financing for 50-60% of the total requirements by early next year.
Ambatovy has laterite mineral reserves of 125 million tonnes grading 1.04% Ni and 0.10% Co (at a cutoff of 0.8% Ni). The project is located in eastern Madagascar, the island nation in the Indian Ocean off the coast of Mozambique. Both the mining and processing costs promise to be low. The ore is thicker than most laterites, averaging 40 m, with a strip ratio of just 1.3:1. Like most laterites it needs no blasting but can be scooped with earth-moving equipment. As well, the ore is metallurgically easy to handle, with low magnesium content (less than 1%).
The ore will be slurried with water and transported by pipe 220 km to a process plant near the port of Toamasina, mainly by gravity, with only one pump station. The plant will use high-pressure acid leach technology, already proven in commercial use. As well a refinery will be built. A 27-year life has currently been identified.
The annual design capacity of the operation will be 60,000 tonnes of LME Class 1 nickel metal, 5,600 tonnes of cobalt and 190,000 tonnes of ammonium sulphate. Cash operating costs for the nickel after byproduct credits will be US$0.77/lb during the first 10 years of full production, based on a base case cobalt price of US$10/lb. This places Ambatovy in the bottom quartile of cash costs for nickel mines.
SNC-Lavalin, which has been involved with the project for two years, has been awarded the engineering, procurement and construction management contracts for the project, which is expected to take 32 months to construct. The new capital cost estimate is US$2.5 billion including all relevant infrastructure, the refinery and a US$286-million contingency. If final permits are received in the first quarter of 2007, construction could begin in mid-2007, with mechanical completion in early 2010.
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