Another nickle boom

THE delays in fully commissioning WA’s biggest lateritic nickel deposit, at Murrin Murrin, obscure the long term promise of this new type of project.

By the end of next year the three lateritic ventures, the others Cawse and Bulong, will add significant tonnages to Australia’s nickel output, confirming its pre-eminent place in the world industry.

Industry sources point out that Cawse and Bulong are already close to full production; by next March Anaconda Nickel, operators of Murrin Murrin, will have in place additional equipment that will provide more flexibility to cope with short-term problems in parts of the treatment plant.

At the end of the year, or early in 2002, Murrin Murrin will be producing up to 45,000 tonnes a year, with its chief executive, Andrew Forrest, recently confirming production could be doubled.

The industry sources note that while most Australian investors have a two or three-year horizon in assessing an investment, the two multinationals which now dominate Anaconda’s share register, Anglo American and Glencore, take a 20 or 30-year view.

“And by that standard, Murrin Murrin represents a very good use of capital,” said one executive in a competing nickel operation.

The robust nature of the project’s long term economics was indicated by Forrest at the company’s recent annual general meeting.

He pointed out that the project would break even when operating at only 32 per cent of design capacity (a little below output for the September quarter). A fourth lateritic nickel project at Ravensthorpe, managed by Comet Resources, is not likely to be commissioned for at least three years.

Analysts say Comet, and the ultimate controller of the project, Biliton, are rightly taking a cautious view of planning the mine and particularly processing facilities, to avoid the delays and frustrations associated with the first three laterites.

Ravensthorpe is expected to produce 35,000 tonnes of contained nickel and 1300 tonnes of cobalt a year

Comet claims Ravensthorpe will be one of the lowest cost nickel producers in the world, comfortably accommodating the capital cost of $720 million (another $200 million will be spent by Billiton at Yabulu in Queensland on additional facilities to treat the material).

Feasibility studies conclude that the project will have a gross income of about $316 million a year, of which Comet will earn about $50 million in pre-tax profit.

An analyst who specialises in the nickel industry forecasts that within a decade lateritic deposits around the world will replace sulphide projects as the price makers in the industry.

Certainly WA mines of both types are expected to increase their share of world production from a current figure of 13 per cent, to at least 20 per cent in the next five years.

The local industry has not escaped criticism for the problems facing the new lateritic mines.

Resources Development Minister Colin Barnett warned at a recent nickel conference in Perth that a change in attitude was needed if technical difficulties were to be overcome.

“Mining companies have to take the time to understand the chemistry and all the physical reactions taking place with the material and that role does mean a change of culture in mining.”

Companies would gave to employ specialists including metallurgists, chemists and process engineers for extended periods to iron out potential complications.

“They have to learn to drive, not just switch on the machine and walk away,” he added.

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