Nickel sector tells two tales

This week’s announcement that First Quantum Minerals plans to close its Ravensthorpe nickel mine, at a cost of 450 jobs, has overshadowed several positive developments in the nickel sector.

Other miners, such as BHP Nickel West, Independence Group and Western Areas, have made substantial investments in their operations in Western Australia.

Independence Group’s Nova mine, built at a cost of $443 million and due to be officially opened next month, has a workforce of 400 people, almost as many as Ravensthorpe.

The other miners are focusing their investments on processing operations.

The biggest of these was Nickel West’s commitment, announced at the Diggers & Dealers conference yesterday, to invest $US43.2 million ($A54 million) on a nickel sulphate plant at its Kwinana refinery.

That follows a commitment by Western Areas to invest $17.5 million on a mill recovery enhancement project next to its Cosmic Boy concentrator.

The project will enable Western Areas to produce an additional higher-grade nickel sulphide product that can be used in batteries – the same market Nickel West is targeting.

Nickel West asset president Eduard Haegel said nickel was the main ingredient in the lithium-ion batteries used in the fast-growing electric vehicle market.

“The attractiveness of nickel-rich batteries is their higher energy density, which allows cars to travel greater distances between charging, as well as their lower costs,” Mr Haegel told Diggers & Dealers.

“We believe there is going to be a very large increase in nickel sulphate demand over the mid term, in order to support this new energy revolution.”

Nickel West’s stage 1 project will produce 100,000 tonnes per year of nickel sulphate, making it the world’s largest exporter.

Mr Haegel said the company may double capacity with a stage 2 expansion, which would have a lower but similar cost.

The nickel sulphate opportunity adds to a string of good news for Nickel West, which was on the brink of closure a few years ago before lifting efficiency at its various operations.

In contrast to the good news at Nickel West, the Ravensthorpe mine produced laterite nickel and was considered a relatively high-cost operation.

Toronto-based First Quantum said the closure was due to the persistently low nickel price – the same factor led local companies Panoramic Resources and Mincor Resources to mothball their WA nickel mines last year.

The Ravensthorpe closure will affect about 240 employees and a similar number of contractors employed by Bunbury-based Piacentini & Son.

First Quantum said it would work closely with its employees and key contractors to mitigate the impact and manage carefully the staged shutdown of operations.

The cost to suspend operations and enter care and maintenance is estimated at $10 million, with subsequent annual maintenance of approximately $5 million.

Piacentini’s other contracts include Galaxy Resources’ Mt Cattlin lithium project, also located near Ravensthorpe.

The lithium sector is booming, once again because of fast-growing demand for long-life batteries.

Tianqi Lithium, Pilbara Minerals and Altura Minerals are currently investing about $1 billion in lithium projects in WA, with the prospect of substantially more to follow as the likes of Kidman Resources pursue their projects.