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Nickel Laterites

Nickel Mining Like its 1864 – by Richard (Rick) Mills (www.aheadoftheherd.com – November 2012)

http://aheadoftheherd.com/

Nickel Sulphide Project Pipeline Empty

Nickel is present in over 3000 different alloys that are used in over 300,000 products for consumer, industrial, military, transport/aerospace, marine and architectural applications.

Nickel’s biggest use, about 65%, is in alloying – particularly with chromium and other metals to produce stainless and heat-resisting steels. Its primary function is to stabilize the austenitic (face-centered cubic crystal) structure of the steel. Normal carbon steel will, on cooling, transform from an austenite structure to a mixture of ferrite and cementite. When added to stainless steel nickel stops this transformation keeping the material fully austenite on cooling. Austenitic stainless steels have high ductility, low yield stress and high tensile strength when compared to carbon steel – aluminum and copper are examples of other metals with the austenitic structure.

Another 20% is used in other steels, non-ferrous alloys (mixed with metals other than steel) and super alloys (metal mixtures designed to withstand extremely high temperatures and/or pressures or have high electrical conductivity) often for highly specialized industrial, aerospace and military applications.

About 9% is used in plating to slow down corrosion and 6% for other uses, including coins, electronics, in *batteries for portable equipment and hybrid cars, as a catalyst for certain chemical reactions and as a colorant – nickel is added to glass to give it a green color.

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Cuba convicts 12 of corruption in nickel industry – by Laura Kane (Toronto Star – August 22, 2012)

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

A Cuban court has convicted a dozen people of corruption in the nickel industry, including two employees of a Cuban-Canadian joint concern, state media announced Tuesday.

Accounting executive Alfredo Barallobre Rodriguez and deputy production director Orlando Carmenaty Olmo of Empresa Moa Nickel SA, a joint operation of Cuba and Toronto-based mining company Sherritt International Corp., were sentenced to six and five years, respectively. Company officials didn’t return requests for comment, and the nationality of the two men couldn’t immediately be confirmed.

High-ranking government officials and an executive at a state-run nickel company were also sentenced in the case, involving a contract for the expansion of the Pedro Soto Alba nickel and cobalt processing plant at the Moa mine. The convictions are the first in a wider crackdown on corruption that has already seen several foreigners, including two Canadians, detained.

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Sherritt as Cuba’s CP – by Peter Foster (National Post – June 29, 2012)

The National Post is Canada’s second largest national paper.

Once a catalyst, underperforming miner needs one now
 
When the recent proxy fight broke out over CP — whose repercussions continued this week with the resignation from the CP board of Rick George — my colleague Terence Corcoran cited another all-too-rare example of a catalyst investor taking on the Canadian corporate establishment. It was Ian “the Smiling Barracuda” Delaney’s successful 1990 fight for control of Sherritt, an historic but failing fertilizer and nickel-refining company based in Fort Saskatchewan, Alta.
 
In fact, the CP link doesn’t end there. Mr. Delaney subsequently guided Sherritt into Cuba, where he declared that he would make the company the island’s answer to … CP! Unfortunately, he spoke truer than he knew. Although Cuba now accounts for only a fifth of its assets, Sherritt has been a less than stellar performer over the past two decades. Meanwhile Mr. Delaney’s adventures as Fidel Castro’s “favourite capitalist” remain one of the more controversial aspects of the company’s recent history.

After Mr. Delaney expanded his Cuban ambitions to embrace a joint venture at Moa Bay, a cucaracha appeared in the ointment in the form of Helms-Burton, U.S. legislation that allowed its citizens, including naturalized Cuban-Americans, to sue anybody “trafficking” in assets expropriated by the 1959 Castro revolution.

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Record Nickel Supply Expanding Glut Thwarts Bull Market Rally: Commodities – by Jae Hur and Ichiro Suzuki Bloomberg.com – February 22, 2012)

www.bloomberg.com

Mining companies and refineries are producing more nickel than at any time in history, expanding a glut that threatens to reverse this year’s rally.

Production will exceed demand by 45,000 metric tons, a 73 percent jump from 2011, Barclays Capital estimates. That’s equal to 46 percent of stockpiles tracked by the London Metal Exchange. Refined output will rise 12 percent, the most in at least eight years, according to Morgan Stanley. Prices, which rose 7.8 percent to $20,170 a ton this year, may fall as much as 13 percent to $17,630 a ton by Dec. 31, the median of 11 analyst estimates compiled by Bloomberg shows.

Metals have returned to a bull market from a 22 percent slump last year on an improving outlook for global growth with manufacturing in the U.S. capping the biggest two-month increase in more than two years in January and unexpectedly gaining in China. With new supply expected from Australia to Madagascar to Brazil, consumption still won’t expand fast enough to absorb the extra metal. Most markets for stainless steel, accounting for 76 percent of nickel demand, remain “depressed,” Deutsche Bank AG said in a report Feb. 15.

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Sherritt CEO [Ian Delaney] reflects on 40 years in the capitalism game – by Jennifer Wells (Toronto Star – January 1, 2012)

The Toronto Star, has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

“You do understand it’s a lottery,” says the fired executive. “You know the whole damn thing’s a lottery.” The fired executive is talking about life, that damn thing, that single ticket you’re given. Punched once, you’re done. Adios.

So the executive, who enjoyed the benefits that come along with a multimillion-dollar salary and a chief executive officer’s title, up and fired himself four weeks ago, an act that has put him in the mood to reflect on the past 40 years playing the capitalism game.

It’s a good year for reflection.

The year the eurozone went to hell in a handbasket. The year of the Occupy movement. The year of economic foreboding. There’s 1 per cent. There’s 99 per cent. There’s one-tenth of 1 per cent. Like this guy. So.

Ian Delaney often reaches for small words and sprinkles them over the boardroom table as if they were full sentences.

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Long-time Sherritt chief Ian Delaney to retire – by Brenda Bouw (Globe and Mail – November 25, 2011)

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.

Ian Delaney, the “Smiling Barracuda” of Bay Street who transformed Sherritt International Corp. into a multifaceted mining company with reaches into Cuba and Madagascar, is stepping down, again, as its CEO.

The 68-year-old business maverick, who still exchanges notes with Fidel Castro and shrugs off his ban from the United States, said he can comfortably relinquish the chief executive officer’s role now that his successors are primed to take over during what he sees as a prolonged period of market volatility.

“They are all firing on eight cylinders, they don’t need me,” Mr. Delaney said in an interview on Thursday after announcing his retirement effective at the end of the year, three years after being “drafted” back to the position. He will be replaced by chief financial officer David Pathe on Jan. 1.

The provocative former Merrill Lynch investment banker will remain as chairman of the diversified Toronto-based resources firm he won control over in a hostile proxy contest in 1990, turning it into Canada’s largest coal producer and the largest independent energy producer in Cuba.

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HudBay sells Guatemala mine to stick to mining techniques it knows well – by Mary Gazze (The Canadian Press – August 8, 2011)

http://www.canadianbusiness.com/

TORONTO – HudBay Minerals Inc. (TSX:HBM) sold a promising nickel mine in Guatemala to focus on Canadian and Peruvian projects the company can develop using mining techniques it has been using for more than eight decades.

Analysts said Monday the sale was a long time coming because the Guatemala project had a different geology than HudBay’s other mines and prospects.’ “We have been expecting a sale of the project for some time – admittedly,” said TD Newcrest analyst Greg Barnes .

“We are somewhat pleasantly surprised that management was able to secure a price for the project that is very close to the value for the asset.” Late Friday, Toronto-based HudBay announced the sale of its 98 per cent stake in the Fenix project to global miner Solway Group for US$170 million.

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Papua New Guinea [Ramu nickel laterite project] and China’s New Empire – by Geoffrey York (Globe and Mail – January 3, 2009)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous impact and influence on Canada’s political and business elite as well as the rest of the country’s print, radio and television media. Please note that this article was orginally published January 3, 2009.

MADANG, Papua New Guinea

When Chinese engineers landed in Papua New Guinea in 2006 to inspect their latest mineral acquisition, they faced an arduous journey through the tropical wilderness. They drove over crumbling roads to the Ramu River, then found natives with dugout canoes to paddle them upstream. Next, they hired another team of locals with machetes to slash a rough trail for eight hours through the steamy jungle, dodging poisonous snakes and malaria-carrying mosquitoes.

“It was terrible,” recalls Wang Chun, the chief engineer. “You couldn’t breathe.”

Today, less than three years later, a series of small Chinatowns has emerged in the jungle — complete with Chinese food, Chinese satellite television channels and crews of Chinese migrant labourers living in cheap dormitory huts. Where once was wilderness, you find the workers of China Metallurgical Group Corp., toiling seven days a week and chattering about their families back home in Beijing and Sichuan.

It hasn’t been easy. The state-owned mining company has dealt with violent clashes with local landowners, striking workers, attacks from the media and unfriendly police who arrested more than 200 Chinese technicians on charges of illegally entering the country.

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NEWS RELEASE: Sherritt Provides Revised Estimates for the Ambatovy [Nickel Laterite] Project

TORONTO, June 14, 2011 – Sherritt International Corporation (TSX: S) today announced, following completion of a review of the estimated schedule and associated capital cost of the Ambatovy Project, that the Board of Directors has approved a revised schedule that anticipates first metal in first quarter 2012 and an associated capital cost estimate of US$5.5 billion, excluding financing charges, foreign exchange and working capital requirements. Sherritt will fund its 40% of the capital cost increase directly from funds on hand.

The 16% (US$740 million) increase from the prior estimate is attributable to:

• inaccurate bulk material quantity estimates (including piping and electrical materials), the additional cost to procure, ship and install the materials, as well as the impact of poor performance by certain contractors (US$300 million, or 41% of the increase);
• additional service costs associated with the extension of the schedule, including site support services (which include food and accommodation), and additional EPCM services (US$195 million, or 26% of the increase); and

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Nickel Sulfide Versus Laterite: The Hard Sustainability Challenge Remains – by Gavin M. Mudd (2009)

Gavin M. Mudd works at the Environmental Engineering, Department of Civil Engineering, Monash University, CLAYTON, Victoria, Australia 3800 (Gavin.Mudd@eng.monash.edu.au)

“A major concern with this increasing proportion of laterite nickel is that, although technology such as HPAL now exists to make processing of laterite ores more viable (technically and financially), it is widely perceived to be at a higher environmental cost.” (Gavin M. Mudd – 2009)

ABSTRACT

There are widespread nickel resources around the world, but divided principally between nickel sulfide or laterite (oxide) resources. Historically production has been dominated by sulfide ores but future production is increasing shifting to laterite ores. The principal reason for this historically is that sulfide ores are easier to process, through conventional mining, smelting and refining, compared to laterite ores which require intensive hydrometallurgical processing (such as high pressure acid leaching or HPAL).

This means that laterite ores typically require substantially more energy and chemicals to produce than sulfide nickel. Given that many major nickel companies report annually on their sustainability performance, such as Eramet, Inco (now Vale Inco), WMC Resources (now BHP Billiton), Norilsk Nickel, there is data available to examine in detail the differences in the environmental costs of nickel sulfide versus laterite.

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The Charges Against Big Nickel [in 1946 by U.S. government] – by Richard Mills (Jun 9, 2011)

Richard Mills owns no shares of any companies mentioned in this report and none are advertisers on his site www.aheadoftheherd.com

As a general rule, the most successful man in life is the man who has the best information

In 1946, in New York City, the Anti-Trust Division of the Department of Justice filed a complaint against Inco and its wholly owned U.S. subsidiary, International Nickel Co. Inc.

Canada’s Inco, at the time, owned 90% of the world’s nickel ore and supplied 90% of U.S. nickel needs.

The charges brought were:

■Conspiracy to prevent competition in the nickel industry
■Fixing prices
■Making cartel agreements with I. G. Farbenindustrie, A. G. and two French companies to prevent competition and peg prices in the world market

The Department of Justice said the nickel industry ceased to be competitive earlier in the century when Charles Schwab arranged a merger between Canadian companies with nickel ore and U.S. companies with the chemical process for separating nickel from copper. Holdings of this combine were consolidated under Inco, Ltd. in 1928.

How ironic that in 2010 the US did not have any active nickel mines. Nickel has a very interesting history and is still extremely important in the everyday functioning of our modern economies.

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Is a Profitable Nickel Laterite (HPAL) Mine a ‘Black Swan’? – by Patrick Whiteway (Canadian Mining Review Blog – January 31, 2011)

Canadian Mining Review: Discussing ideas and issues related to mining in Canada 

Thoughts on mining nickel laterites inspired by two recent books: ‘Linkages of Sustainability’ and ‘The Black Swan.’  

It’s October 2008 and I’m relaxing in a second-row seat of an air conditioned tour bus. It’s crossing the Swan River in beautiful downtown Perth, Australia, when the driver suggests to passangers that the river should be called the Black Swan River. That’s because 300 years ago, he explains, European explorers first visited this part of Western Australia and saw black swans for the very first time. Up until then, the only swans they had seen were white ones. Seeing black swans on this wide, lazy river revolutionized their thinking.

Reading Nassim Nicholas Taleb’s best-selling book “The Black Swan,” could revolutionize your thinking. This book is all about highly improbable events. Taleb skillfully questions how we think about these events that turn out to have serious consequences. He calls them ‘black swans’ and as I’ll show here, they have a significant role to play in the mining industry.

As a Canadian mine engineer who has visited and written reports on many mines in Canada, I can tell you that improbable events, sometimes called simply luck, surprises, randomness or human error, have enormous consequences for the success or failure of many mines. The only successful, high pressure acid leach (or HPAL) nickel laterite operation in Australia is one of my favorite examples.

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Surging costs delay Sherritt [Madagascar Ambatovy nickel] project – by Brenda Bouw (Globe and Mail – June 15, 2011)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous impact and influence on Canada’s political and business elite as well as the rest of the country’s print, radio and television media. Brenda Bouw is the Globe’s mining reporter.

Sherritt International Corp. is the latest in growing list of mining companies to report double-digit cost increases and project delays resulting from surging prices for energy and raw materials.

Toronto-based Sherritt said the total cost of its 40-per-cent owned Ambatovy nickel-cobalt project in Madagascar is expected to rise 16 per cent to $5.5-billion (U.S.). Production, set to begin this summer, is now delayed until the first quarter of next year.

“We find this embarrassing and painful,” Sherritt chief executive officer Ian Delaney told investors on a conference call Tuesday. Sherritt’s stock fell 6 per cent on the Toronto Stock Exchange on Tuesday, its lowest level since last summer.

Rising costs are becoming a huge hurdle for miners as they rush to boost production and capitalize on global demand and metal prices while they remain strong.

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Sustainability In Nickel Projects: 50 Years of Experience at Vale Inco – by S.W. Marcuson, J. Hooper, R.C. Osborne, K. Chow and J. Burchell (December 1, 2009)

The principal author, Dr. Sam Marcuson ( Sam.Marcuson@valeinco.com ) is vice-president, business improvement for Vale Inco Limited, Mississauga, ON, Canada. This article was adapted from a plenary speech made at the CIM Conference of Metallurgists held August 2009 in Sudbury, Ontario. The full paper is available from the author or the conference proceedings.

Looking at the industry’s past and present with a view to projecting into the future can be a valuable exercise for executing and maintaining sustainable development

The first eight years of this century saw rapid growth in the consumption and production of nickel and related commodities. In response to growth in the BRIC countries, but especially China, new projects, many in under-developed countries, were initiated. Nickel pig iron, produced in aging Chinese blast furnaces, unexpectedly emerged. Simultaneously, scientists concluded that global warming is “unequivocal” and human activity is the main driver, “very likely” (>90%) causing most of the rise in temperatures since 1950[1]. These factors point to a future in which sustainable development becomes of paramount interest to the mining and metallurgy industry.

To the practicing metallurgist and operator, “sustainability” may appear as keeping employees safe, meeting prevailing environmental regulations and contributing to social programs contractually agreed to, while maintaining a low-cost operation that meets production and financial targets. But this is a highly simplified view that ignores many of the sustainability concepts.

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An Overview of Nickel in 2011 – Excerpt From Global Mining Finance 2011

Global Mining Finance was created four years ago as an annual book to provide international mining executives and their peers in the financial community with an overview of the industry from a World-wide perspective. For the main website: http://www.globalminingfinance.com/past-editions.html

The following research on nickel was provided by Paradigm Capital, a research-driven investment dealer, providing Research, Trade Execution and Investment Banking services.

Commodity Focus – Nickel

Two-thirds of all nickel produced goes into stainless steel, but is also important in the world of hi-tech where the soft magnetic properties of nickel and its alloys are employed. In this article, Paradigm Capital takes a look at the market for nickel.

Demand: Driven by The Stainless Steel Recovery

Nickel has a high rate of recyclability, This distinction is often made between the use of newly produced metal and recycled scrap. By far the most important first use of nickel is the production of stainless steel which accounts for over 60% of total demand with other first-use sectors being alloys, casting, electroplating, chemicals and batteries. The stainless steel sector is growing at a CAGR of about 5-6% per annum.

The nickel market rebounded strongly in 2010 compared to a very weak 2009, as a result of improved stainless steel demand conditions in combination with an amplified restocking period. In addition, the austenitic ratio (i.e. nickel bearing stainless steel) which has traditionally run at around the 75% level, has slipped lower. This was due to nickel’s meteoric price rise in 2007 to $25/lb. which proved to be the catalyst that triggered substitution, particularly into lower nickel bearing intra stainless steel grades. This proved to be one of the double whammies.

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