The state’s nickel laterite mining sector received a confidence boost from an unlikely source recently when Canadian nickel giant Inco threw its weight behind junior miner Heron Resources’ $1.4 billion Kalgoorlie nickel project.
The state’s nickel laterite mining sector received a confidence boost from an unlikely source recently when Canadian nickel giant Inco threw its weight behind junior miner Heron Resources’ $1.4 billion Kalgoorlie nickel project.
Inco, long considered a sceptic of Australia’s laterite nickel projects, last week signed a letter of intent to enter into a joint venture with Heron, in which it will finance feasibility studies worth $US78 million and arrange all debt and equity financing for development of Heron’s giant project.
In return, Inco will get a 60 per cent stake in the project and the right to buy the project’s proposed 50,000 tonnes of annual nickel production – an amount that makes Heron Australia’s second largest producer.
Inco’s move is believed to be the first time any of the three nickel majors – Inco, Falconbridge or WMC – has been involved with an Australian laterite project since WMC quit the Preston Resources-controlled Bulong operation near Kalgoorlie in the early 1990s.
Inco has been particularly critical of Western Australia’s laterite nickel projects in the past.
While more recently encouraged by BHP Billiton’s decision to develop its $1.4 billion Ravensthorpe laterite nickel project west of Esperance, the Inco/Heron tie up is seen by the market as a much greater endorsement of Australian nickel laterites.
“It is the first time any established nickel major has suggested through its actions that maybe you don’t have to be on the coast and maybe you don’t need a nickel resource grading 2 per cent to justify a stand-alone acid leach development,” Independent Mining Research analyst John Macdonald said.
He said Inco had strongly avoided Australian laterite projects despite being given significant opportunities to take part, instead championing tropical laterite projects.
Inco has been developing its huge $1.8 billion Goro laterite nickel project in New Caledonia, slated to produce 55,000t of nickel annually for the next 20 years.
Inco public affairs director Steve Mitchell denied Inco’s support for Heron represented a change in tack.
Rather, he said, Inco had been “very active” in Australian nickel exploration for several years and the deal was simply another step advancing those opportunities.
Mr Mitchell said Inco’s previous position on WA laterite projects was based on its evaluation of the commercialisation of certain process technologies.
He said the knowledge Inco had gained in laterite mining and processing at both its Goro project, where it has developed its own proprietary pressure acid leach process technology, and its PT Inco operation in Indonesia provided a very strong basis for evaluating, with Heron, the Kalgoorlie project.
“We are very confident in this technology, which we have tested extensively in a pilot plant environment,” Mr Mitchell said.
Despite Inco’s confidence, its technology may need to be modified for WA’s dry climate, which can require different disposal methods of tailings to those used in tropical regions.
Investment confidence in laterite nickel, which is generally found in more abundance but lower grades to conventional nickel sulphide deposits, has been undermined in the past by processing difficulties.
In WA, laterite nickel projects do not have good track records.
The controversial Murrin Murrin operation, which ended Andrew Forrest’s reign at Anaconda Nickel (now Minara Resources), is the only project that operates today, although it has not fulfilled planned production output.
