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WA set for $300m nickel bonanza

A DECISION will be made next year which could inject hundreds of millions of dollars into the WA economy, providing some relief for the hard pressed construction and fabricating industries.

WMC is studying a proposal to increase nickel output from its giant Mt Keith deposit by 60 per cent, with an investment likely to total about $300 million.

The company has firmly rejected any plan to move into lateritic nickel production, in which three new WA ventures faced early technical difficulties (now largely overcome).

Instead it will continue to expand its nickel sulphide operations, with the most ambitious phase the likely increase in production at Mt Keith to 70,000 tonnes of contained metal a year, from the current rate of 48,000 tonnes.

The company is steadily increasing recovery rates from its low-grade ore body and now aims to increase these from current levels of about 73 per cent, to close to 80 per cent, lifting output for only marginal extra cost.

Just two years ago recovery rates were only 60 per cent, which in grades which average 0.54 per cent throughout the ore body meant that yields per tonne were particularly low.

With recoveries now nearly 20 per cent above that figure unit costs have fallen.

Mt Keith was launched in 1994 with the first phase producing 28,000 tonnes of metal a year, but this was quickly doubled, and the improvements in recovery rates have added another 20 per cent to original design capacity.

WMC estimates it has 500 million tonnes of ore, with 2.7 million tonnes of contained nickel; at the proposed higher production levels, the project would have a life of well over 25 years.

The expansion requires a massive operation with the processing plants treating 18 million tonnes of ore a year, up from current levels of about 11 million tonnes, requiring the addition of a third production module.

Mt Keith was discovered more than 30 years ago, during the hectic Poseidon nickel boom, but had been thought to be too low in grade to justify development.

Even today, executives of leading overseas nickel miners visiting the site are incredulous that it can be operated profitably.

WMC has proved its great reserves, and new technology, can make it one of the most profitable mines in the industry, despite the fact that its ore is the lowest grade in the world.

An independent study predicts that the nickel division will earn net profits this calendar year of $578 million, compared with $110 million last year.

WMC claims that it has reduced costs in the division by more than a third in the past three years, and they are now the lowest in the world.

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