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Nickel Laterites

COLUMN-Goro nickel project is not just Vale’s problem now – by Andy Holm (Reuters India – May 29, 2014)

http://in.reuters.com/

The opinions expressed here are those of the author, a columnist for Reuters. May 29 (Reuters) – It’s hard not to have a grudging respect for Brazil’s Vale when it comes to the company’s Goro nickel project in New Caledonia. Others would surely have walked away from what must be one of the most problematic start-ups in the history of base metals.

Over-budget and years late even before the plant was first switched on in 2010, it has since been plagued by technical set-backs, unscheduled closures and, now, violent attack by locals. Vale has remained commendably undaunted throughout.

Yet each new start has swiftly been followed by new adversity. Even rebranding the operation as Vale New Caledonia (VNC), that tried-and-tested corporate exercise in drawing a line under historical problems, hasn’t worked.

Goro, using the relatively new high-pressure-acid-leach (HPAL) technology, continues to defy Vale’s boundless optimism and to drain money from its bottom line.

Until Jan. 12 this year it was, however, just Vale’s problem. But in the wake of the Indonesian nickel ore ban that kicked in on that date, Goro risks becoming a bigger problem for the entire nickel market.

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COMMENT: Riots at Goro cause $30M in damage – by Marilyn Scales (Canadian Mining Journal – May 28, 2014)

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

It appears that Vale SA has run into a spot of trouble at the Goro laterite nickel mine in New Caledonia. Turns out it was a rather large spot that will take $30 million to repair.

Following a 10,000-litre acid spill that ran into a nearby creek and killed thousands of fish earlier this month, Vale was ordered to suspend operations. This is reportedly the fifth such spill in as many years. The first spill occurred during plant commissioning in 2009. It was a reported 40,000 litres, 2,500 of which found its way into the local river.

The recent riots were sparked when local youths protested the reopening of the plant, even with the promise of more stringent safety precautions. There are many who would like to see the project permanently shuttered. Over 48 hours, activists torched vehicles, equipment and buildings at the mine site. They blockaded the roads near the mine, reportedly using mining equipment including excavators to keep the police at bay.

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Protesters burn vehicles, buildings at New Caledonia nickel mine – by Cecile Lefort and Melanie Burton (Reuters U.S. – May 26, 2014)

http://www.reuters.com/

SYDNEY – (Reuters) – Dozens of protesters caused tens of millions of dollars in damage to vehicles, equipment and buildings at Vale’s nickel mining site in New Caledonia, as anger boiled over at a chemical spill into a local river.

The $6 billion Vale plant at Goro in southern New Caledonia was closed earlier this month after some 100,000 liters of acid-tainted effluent spilled, killing about 1,000 fish and sparking protests at the mine site.

The Vale plant had been expected to produce about 40,000 metric tons of nickel this year, out of global supply of around 2 million metric tons. But it has been beset by problems in recent years, including several chemical spills and violent protests.

Tensions between the local population and Brazil-based Vale escalated over the weekend with young protesters frustrated at the latest spill by the Brazilian-based giant and a lack of response from indigenous Kanak chiefs, according to local media reports. Television footage showed images of burnt mining vehicles and equipment.

“There was damage at the site, but no damage to the plant. We had burned vehicles, one administration building was damaged, but no damage to the plant itself,” Vale spokesman Corey McPhee told Reuters.

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Jakarta jubilant as nickel soars, China plans smelters – by Melanie Burton and Fergus Jensen (Reuters India – May 19, 2014)

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SYDNEY/JAKARTA – May 19 (Reuters) – When Indonesia vowed to halt exports of mineral ore to wring more profit from its rich resources, many predicted the policy would be an economic own-goal.

But in the case of nickel, at least, Indonesia is proving its doubters wrong as the price of the metal soars and Chinese producers starved of raw material begin to ship equipment for processing plants to the Southeast Asian nation.

Just four months after a ban on ore exports, one smelter is under construction and equipment for two others has been shipped from China to Indonesia, including a dismantled blast furnace, industry sources told Reuters.

At least two other firms plan to start construction of processing plants by year-end or shortly after, amid fears that China’s nickel-pig iron industry is running out of raw material.

“It’s been a success,” Energy and Mineral Resources Minister Jero Wacik told Reuters. One Chinese firm that told Reuters it expected to start production by year-end at the earliest said the smelter would produce nickel pig iron with 4 percent metal content, which then would be shipped back to China for production of higher value grades with 10-15 percent metal.

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UPDATE 2-Japan’s Sumitomo Metal sees rising risk of ferronickel output cut – by Yuka Obayashi (Reuters India – May 13, 2014)

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TOKYO, May 13 (Reuters) – Sumitomo Metal Mining Co Ltd , Japan’s biggest nickel smelter, said there was an increasing risk it could cut production of key stainless steel ingredient ferronickel, amid growing concerns about ore shortages.

But for now the firm is still aiming to produce 21,400 tonnes of ferronickel in the year through March 2015, Toru Higo, general manager of nickel sales and raw materials at Sumitomo Metal, told Reuters on Tuesday.

Any cut in ferronickel output could tighten supplies for stainless steel producers in Japan and overseas as they grapple with a cut in the growth outlook in formerly fast-growing developing economies.

Ferronickel smelters have been hit by Indonesian bans on exports of unprocessed mineral ores that took effect in January, with Japan importing around half its ferronickel materials from the Southeast Asian nation in 2013. That ban has fuelled a rise in ore prices and driven up benchmark prices for refined nickel by more than 50 percent so far this year.

“The risk of a cut in production is rising,” Higo said, “It is getting harder to get the kind of ores we want when we want.” Sumitomo Metal has enough contracted supplies of nickel ore for the financial year through March, but is facing quality issues and delivery holdups after a switch to suppliers in the Philippines, he said.

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Goro suspension pushes nickel price to two-year high (Northern Miner – May 9, 2014)

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry.

VANCOUVER – With nickel prices already up almost 40% in 2014, a suspension at Vale’s (NYSE: VALE) Goro mine in New Caledonia has pushed the price of the steelmaking component to a two-year high.

The Goro mine has limited impact on global nickel supplies whether it is running or not, so a stable metal market would react little to the suspension. However, the nickel market is far from stable and so the Goro news acted as fuel on the fire that has been heating up nickel for months.

Indonesia started that fire in January when it banned exports of nickel ore. For years China and Japan have imported raw nickel laterite ore from Indonesia and turned it into nickel pig iron (NPI), a cheaper alternative for steelmakers to pure nickel. The trade amounts to 450,000 tonnes a year, or almost a quarter of the 2-million-tonne global annual nickel market.

The export ban is intended to spur local processing and thereby capture more of the metal’s value domestically, but it will be years until Indonesia develops significant NPI production capacity.

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Nine Nickel Smelters Seen in Indonesia This Yr After Ban – by Yoga Rusmana and Eko Listiyorini (Bloomberg News – May 12, 2014)

http://www.bloomberg.com/

Indonesia forecasts that nine nickel-processing plants may be completed this year after the largest mined producer banned raw ore exports in January, spurring a rally in refined prices to the highest level since 2012.

The plants comprise two ferronickel and seven nickel-pig-iron smelters, according to data from the Energy and Mineral Resources Ministry. One chemical-grade alumina plant is also scheduled to be completed this year, the data showed.

Southeast Asia’s largest economy is seeking to force a move toward processed commodities, betting that repercussions from the ban such as job losses will be offset by investment in new plants and output of higher-value products. The metal used in stainless steel is the biggest gainer this year among the six main metals traded on the London Metal Exchange amid concern that the ban will raise costs and spur a global deficit.

“Greenfield smelters are horribly expensive and drag down the profitability of even the best ore-mining operations,” said Xavier Jean, a credit analyst at Standard & Poor’s in Singapore. The prospects for completions this year are unrealistic, Jean said in an interview.

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China, Japan scramble for nickel after Indonesian ban – by Polly Yam and Yuka Obayashi (Reuters U.S. – May 8, 2014)

http://www.reuters.com/

HONG KONG/TOKYO, May 8 (Reuters) – Nickel buyers in China and Japan are scrambling to secure supplies as soaring prices and a fear of shortages boosts demand for both refined metal and long-term ore contracts.

The price of nickel ore from the Philippines has more than doubled since late February, as supplies have dried up from rival producer Indonesia, previously the world’s biggest exporter.

China, the world’s largest nickel consumer, has recently increased imports of refined metal to help meet higher seasonal demand, say trader and importers, as the price of commonly used alternative nickel pig iron has soared since the Indonesian ban took effect in mid-January.

Nickel demand may get a further boost from stockpiling by China, with refined imports due to start arriving at State Reserves Bureau warehouses before the end of June, sources with knowledge of the matter said.

“Everybody in China is bullish nickel and everybody is hoarding nickel of any kind,” commodities strategist Ivan Szpakowski of Citi in Shanghai said. China, the world’s largest steelmaker, has turned to laterite nickel ores in recent years to produce nickel pig iron, a cheap, low-grade ferro-nickel – an alloy of iron and nickel – used in stainless steel.

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Anglo May Sell Brazil Nickel Unit to Vale, Deutsche Bank Says – by Firat Kayakiran (Bloomberg News – May 8, 2014)

http://www.bloomberg.com/

Anglo American Plc (AAL), which is reviewing assets globally as it tries to return to profit, may offer its Brazilian nickel unit to the nation’s largest miner Vale SA as metal prices increase, Deutsche Bank AG said.

Nickel will probably peak at $27,000 a metric ton in 2017, Deutsche analysts Rob Clifford, Anna Mulholland and Paul Young wrote in a report dated yesterday, raising the bank’s forecast of $20,000 a ton in 2018. The metal has surged 40 percent in London trading this year after leading global miner Indonesia barred exports of raw ores in January.

Anglo’s Barro Alto unit, which missed its target of an annual capacity of 36,000 tons at the end of 2012 because of setbacks at its two furnaces, said last month it aims to reach the mark by 2016. It plans to fix one of the furnaces this year and the second one in 2015. The mine produced 25,100 tons of nickel last year, Anglo said in February.

“We would suspect that Vale, having undertaken a similar rebuild program at its Onca Puma, could be interested in acquiring the Barro Alto operations and may consider taking on the assets prior to the completion of any refurbishment program if that were to be reflected in the price,” the Deutsche analysts said in the report.

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Nickel soars to two-year high on Goro mine halt, shortages – by Eric Onstad and Harpreet Bhal (Globe and Mail – May 9, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

LONDON — Reuters – Nickel raced to its strongest level in more than two years on Thursday as industrial consumers scrambled to secure supplies and speculators extended their buying spree after Vale halted its Goro nickel operations in New Caledonia.

Though the Goro shutdown was not expected to have a major impact on physical nickel supplies, it served to fire up bullish sentiment and chart-based purchases.

The nickel market, which has soared nearly 40 per cent this year, was already nervous about shortfalls from top producer Indonesia and worried about potential Russian supply problems.

“Today we’ve seen some panicked consumer hedging and the hedge funds have already been in there for a while,” said analyst David Wilson at Citi in London.

Three-month nickel on the London Metal Exchange (LME) surged 6.1 per cent to a high of $19,786 a tonne, the strongest since March 2, 2012. It later retreated to $19,451 a tonne at 1421 GMT, up 4 per cent from Wednesday’s close, with trading volumes of over 10,700 lots compared with Wednesday’s full-day volume of 5,121.

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UPDATE 2-New Caledonia says to take legal action over Vale nickel spill – by Cecile Lefort and Melanie Burton (Reuters India – May 9, 2014)

http://in.reuters.com/

(Recasts with statement from New Caledonian provincial government)

May 9 (Reuters) – New Caledonia’s southern provincial government said on Friday it was starting legal proceedings against Vale over environmental damaged caused by an effluent spill at the miner’s nickel operations.

Vale said in an earlier statement that the spill contained some acid, but that subsequent test results carried out on a nearby river and the sea showed conditions appeared to have returned to normal.

The mining giant said it had suspended 80 percent of its nickel production in New Caledonia and planned a complete shutdown later on Friday, helping to send nickel prices up nearly 6 percent. A spokesman for Vale could not immediately be reached for further comment.

The southern province of New Caledonia was starting legal proceedings under its environmental code after the spill had killed about 1,000 fish, and swimming and fishing had been suspended in the area, it said in a statement. The local government did not say when it might allow Vale to resume operations, but said pollution had been contained to a river.

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Nickel at Two-Year High as Vale Ordered to Suspend Plant – by Agnieszka Troszkiewicz (Bloomberg News – May 8, 2014)

http://www.bloomberg.com/

Nickel reached a two-year high in London after Vale SA suspended activity in New Caledonia, stoking concern supply might fall short of reviving demand.

The suspension at the plant was ordered after a spill, according to the island archipelago’s Southern Province government. Nickel surged 41 percent in London trading this year after leading global miner Indonesia barred exports of raw ores in January. The potential for sanctions against Russia also aided prices, according to Societe Generale SA.

“Clearly with the nickel market already tightening on Indonesia and possible sanctions against Russia, this is adding to the general sense that the market is facing a supply shortage over the coming months, if not years,” Robin Bhar, an analyst at Societe Generale in London, said by phone today.

Nickel for delivery in three months gained 4.5 percent to $19,487 a metric ton by 1:48 p.m. on the London Metal Exchange after touching $19,786, the highest level since March 2, 2012.

The spill was yesterday and operations were suspended, Cory McPhee, a Vale spokesman in Toronto, said by e-mail today.

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Glencore Xstrata plumbs new depths at nickel mine – by Neil Hume and James Wilson (Financial Times – May 6, 2014)

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Glencore Xstrata has revealed further problems with one of the “greenfield” projects it inherited through its takeover of rival mining group Xstrata, underlining the difficulties of developing large mines from scratch in far-flung locations.

Koniambo, a nickel mine on the Pacific island of New Caledonia, has been dogged by cost overruns and delays since it was approved by Xstrata seven years ago.

The budget has risen from $3.8bn to more than $6bn, and production forecasts have been revised several times.
Glencore had expected output to reach 26,000 tonnes of nickel this year, rising to 55,000 tonnes in 2015.

But in a trading statement released on Tuesday, the Swiss-based company said Koniambo had produced just 1,000 tonnes of nickel in the first quarter of 2014 because of problems with power supplies and maintenance. “Forecast full-year production levels are being reviewed in light of the quarterly operational performance and the start-up experiences to date,” Glencore said in a statement.

Koniambo is one of several instances where Glencore has had to revise the engineering plans left by the previous Xstrata management team.

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Sherritt International swings to Q1 loss – by Henry Lazenby (MiningWeekly.com – April 30, 2014)

http://www.miningweekly.com/page/americas-home

TORONTO (miningweekly.com) – Diversified Canadian miner Sherritt International on Wednesday reported a first-quarter net loss, as a charge at its new Ambatovy nickel mine, in Madagascar, and financing costs related to a weakening Canadian currency impacted results.

The Toronto-based miner, which specialises in mining and refining nickel from lateritic ores at its operations in Canada, Cuba, and Madagascar, reported a first-quarter loss of C$48.2-million, or C$0.16 a share, compared with earnings of C$23.1-million, or C$0.08 a share.

Earnings were affected by the impact of higher financing outlay related to foreign exchange losses as a result of the weakening Canadian dollar against the US greenback and by depreciation, depletion, and amortisation being recognised at Ambatovy for the first time following the commercial production declaration in January, which totalled C$27.5-million for Sherritt’s 40% share.

The Ambatovy Joint Venture (JV) is a vertically integrated nickel and cobalt mining, processing, refining and marketing JV between subsidiaries of Sherritt (40%), Sumitomo (27.5%), Korea Resources (27.5%), and SNC-Lavalin (5%).

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PRESS RELEASE: Eramet Group: NEW CALEDONIA: AGREEMENT BETWEEN GROUPS ERAMET AND VALE AND SOUTH PROVINCE FOR THE STUDY OF MINING AND BENEFICIATION OF THE NICKEL DEPOSITS AT PRONY AND PERNOD

 Paris, April 7, 2014

NEW CALEDONIA: AGREEMENT BETWEEN GROUPS ERAMET AND VALE AND SOUTH PROVINCE FOR THE STUDY OF MINING AND BENEFICIATION OF THE NICKEL DEPOSITS AT PRONY AND PERNOD.

ERAMET, Vale Canada and New Caledonia’s South Province signed a framework agreement on April 5, 2014 in Nouméa providing for the exploration, study and beneficiation of the nickel deposits at Prony and Pernod in the south of New Caledonia.

This agreement is governed by the Mining Code, passed by the New Caledonian congress in 2009. Under this code, the deposits were classified as “Provincial Technical Reserves”* by South Province on February 12, 2012.

It follows on from the signature by the three entities of a declaration of intent on November 5, 2012 setting out the guidelines of a partnership for the development in New Caledonia of the mineral deposits at Prony and Pernod.

This agreement provides for the creation of a joint venture for the project, owned 34% by South Province, and 33% each by ERAMET and Vale Canada. The joint venture will first undertake the geological exploration works and technical studies required for improving knowledge on the deposits and the operation of the mine.

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