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NEWS RELEASE: Koniambo Nickel produces first nickel metal; on track to achieve full production rate by the end of 2014 Koné, 11 April 2013

Xstrata Nickel’s Koniambo Nickel project has gone into production with first metal tapped this week.

Production marks a key milestone for this complex $5 billion greenfield project in New Caledonia, which has been under construction for the past six years and has been a flagship component of Xstrata’s organic growth programme. At the height of its construction more than 6,000 people were employed in building the project and its associated infrastructure.

First metal production signals the start of Koniambo Nickel as a multi-decade, tier one asset with long-term cash costs at the bottom of the second quartile. At peak production the mine will further cement New Caledonia’s position as one of the most important nickel producers in the world and provide steady employment for approximately 800 workers, with a focus on local employment, and indirect employment for thousands of others.

Ian Pearce, Chief Executive of Xstrata Nickel, said: “All components of the mining and smelting process have now been successfully tested, leading to production of metal from Line 1. The production of first nickel metal at Koniambo after six years of complex design and construction is a huge achievement and a source of great pride for all of our employees. We are on track to deliver the full production rate of 60,000 tonnes per annum by the end of 2014 as scheduled, while maintaining excellence in terms of environmental and safety performance at this world-class industrial complex.”

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Swiss firm to invest $80M in PolyMet’s Iron Range mine – by Dee Depass (Minneapolis-Saint Paul Star Tribune – April 10, 2013)

http://www.startribune.com/

PolyMet Mining’s long-awaited plans for a copper-nickel mine in Minnesota’s Iron Range received welcome news Wednesday when a Swiss-based commodity trading and mining firm pledged to invest $20 million and help raise another $60 million in new equity financing.

The involvement from Glencore AG, which includes $20 million in bridge loans and up to $60 million in new equity, is expected to be finalized in June, pending regulatory approvals in the United States and Canada.

The investment will allow PolyMet to complete the lengthy environmental review and permitting process that has already been six years in the making at a cost of $50 million to date. Environmental permits and state regulatory approvals are required before mill work and mine construction can begin.

“So this is a pretty exciting day for us,” said PolyMet CEO Jon Cherry. Glencore’s financing arrangement will involve the issuance of new stock to existing and new shareholders through a secondary offering process known as “a summary of rights offering.” It is not yet known how many PolyMet shares Glencore will ultimately own, but it will not exceed 49.99 percent.

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First Nickel nears target – by Carol Mulligan (Sudbury Star – April 11, 2013)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

The president and chief executive officer of First Nickel won’t come right out and say Lockerby Mine is in full production, but Thomas Boehlert strongly hints at it. The mine formerly owned by Falconbridge reached 60% production in 2012, costing about $37 million to operate with $36 million in revenues.

In public guidance released in the first week of April, the company said it expected to have reached full production in the first three months of 2013 — after that time period had already passed.

“We have no reason to change that expectation,” Boehlert said Wednesday in an interview with The Star. In public guidance issued at the start of this year and last week, the company said it expected to “be there,” in full production, mining 10 million pounds of nickel a year, by the end of March.

“We have no reason to change that expectation,” Boehlert repeated. “So, you can interpret that as you like.” The junior miner has been on a roller-coaster since it purchased Lockerby in 2004, operating it until the 2008 economic meltdown and the collapse of metals prices forced layoffs and essentially closed the operation.

This year will still be a challenging one, said Boehlert, but the junior miner’s future is looking bright.

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FEATURE-Profit eludes accident-prone Finnish nickel mine – by Terhi Kinnunen (Reuters U.S. – April 10, 2013)

http://www.reuters.com/

SOTKAMO, Finland, April 10 (Reuters) – Talvivaara CEO Pekka Pera still has the one euro coin he used to buy the rights to ore deposits at the company’s nickel mine in Sotkamo, eastern Finland, a decade ago.

While the previous owner saw no future for the site, Pera was so sure it would succeed with the help of a pioneering metals extraction process called bioheapleaching that he bought the coin back as a keepsake.

But after waste water leaked last year, pushing up uranium levels in nearby lakes and rivers, and repeated failures to meet production targets, the mine is now saddled with debt and burning through cash. Investors are uncertain whether they will ever see a profit from what is supposed to become Europe’s biggest nickel mine.

A new leak from its waste pond last Sunday was the latest in a series of troubles which analysts say show the company has overestimated the benefits of the rarely-used bioheapleaching method, and underestimated its risks.

“During the last three to four years, there have been so many problems and they haven’t had success in ramping up production,” said Pohjola analyst Jari Raisanen. “I think nobody really knows what the future is.”

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Excerpt from “The History of Mining: The events, technology and people involved in the industry that forged the modern world” – by Michael Coulson

To order a copy of The History of Mining, please click here: http://www.harriman-house.com/products/books/23161/business/Michael-Coulson/The-History-of-Mining/

THE RISE OF THE GULAGS AND NORILSK

The Soviet years of central control and direction saw a major push to develop the vast country into an economic powerhouse to match the West. These were the Stalin years and the expansion of the mining industry was often achieved by the use of labour transported to the Gulags of the eastern USSR. In these transportations dissident professional and manual workers alike were settled in camps, often for decades, until the death of Stalin in 1953 led to most of them being closed by 1960.

The Gulags had a number of key political functions, but economically they played an important role in the establishment of heavy industrial complexes for steel, manufacturing and mining, including mining of coal, iron ore and base metals. Gold production was also an important activity given that the rouble was unconvertible and the USSR was not a major manufacturing exporter like Germany or the UK, but was from time to time a heavy importer of food stuffs and advanced machinery, and therefore in need of convertible assets.


 

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Voisey’s Bay heading underground – Deal includes $100 million from Vale over next three years – by Ashley Fitzpatrick (St. John’s Telegram – March 30, 2013)

http://www.thetelegram.com/

Vale is taking its mining operation in Voisey’s Bay underground. Construction work for the underground mine is slated to start in 2015, with first ore expected by 2019.

The commitment to the mine extension came as part of a new deal struck between Vale Newfoundland and Labrador and the provincial government.

The deal assures the current mining at Voisey’s Bay can continue uninterrupted while the company’s new, $4.25-billion processing facility at Long Harbour is completed.

It means mining operations at Voisey’s Bay can continue until at least 2035. “It’s an important mine and extending it is important for us and the industry, generally. It’s a fabulous win-win,” said Gerry O’Connell of Mining Industry NL, who spoke with The Telegram immediately following the announcement of the deal.

“(And) with these kinds of mines, you never know. I meant they could go on for — Sudbury’s been going for 100 years,” he said.

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NEWS RELEASE: [Newfoundland and Labrador] Government Secures Commitment from Vale for Underground Mine

Executive Council
Natural Resources
March 28, 2013

A commitment to an underground mine at Voisey’s Bay is the centerpiece of amendments to the Voisey’s Bay Development Agreement announced today by the Government of Newfoundland and Labrador and Vale Newfoundland & Labrador Limited (Vale).

“The commitment secured by our government with Vale will ensure more jobs and benefits are created right here in Newfoundland and Labrador for our people,” said the Honourable Kathy Dunderdale, Premier of Newfoundland and Labrador. “The new mine will provide many hundreds of construction jobs after sanction in 2015, and even more operational employment than the current mine after first ore is achieved in 2019. This is another example of this government’s continued commitment to ensuring that Newfoundlanders and Labradorians benefit from the development of our natural resources.”

The Provincial Government extracted extra value with other improvements including enhanced industrial and employment benefits and additional revenue to the Provincial Government of approximately $100 million over three years.

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Voisey’s Bay underground mining deal reached – CBC News North (March 28, 2013)

http://www.cbc.ca/north/

Vale, Dunderdale reveal details on extending life of massive Labrador nickel find

In return, the government will allow Vale to export more Voisey’s Bay ore for the next three years without it being processed inside the province.

The government will get financial compensation of $100 million for the exemption involving nickel extracted from the mine on Labrador’s northern coast.

The agreement significantly extends the commercial life of the Voisey’s Bay mine, which is considered one of the world’s largest nickel finds. Former owner Inco shipped its first concentrate from the Voisey’s Bay mine in 2005. Two freelance prospectors working for Vancouver-based Diamond Fields Resources discovered the massive deposit of nickel, cobalt and copper in 1993.

Until now, production has focused solely on the surface of the mine. Vale had estimated that it can run the surface phase of the mine for about 14 years. The agreement on opening the underground mine effectively extends the life of Voisey’s Bay by another 15 years.

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Cuba hopes to keep nickel output above 60,000 tonnes – by Marc Frank (Reuters U.S. – March 26, 2013)

http://www.reuters.com/news/us

HAVANA, March 26 (Reuters) – The Cuban nickel industry plans to produce around 62,000 tonnes of unrefined nickel plus cobalt in 2013, according to local and foreign company reports, following the closing of one of three processing plants last year.

The provincial radio station of Eastern Holguin, Radio Angulo, reported on Monday evening that the Cubaniquel-owned Ernesto Che Guevara plant in Moa, after experiencing production problems over the last few years, was now running up to speed.

The station quoted the plant’s manager, Rogelio Polanco Fuentes, as stating, “the plant is in condition to meet this year’s plan of 23,700 tonnes.”

Canadian mining company Sherritt International, a joint venture partner with Cubaniquel in the only other open plant, the Pedro Soto Alba, also in Moa, recently reported 2012 output as 38,054 tonnes and said it expected a similar performance in 2013.

State monopoly Cubaniquel and Sherritt are also partners in a Canadian refinery where output from the Pedro Soto Alba plant is shipped, and after refining is marketed by yet another venture between them.

China and Europe also purchase Cuban nickel products, the country’s most important exports and one of its top foreign exchange earners after technical services and tourism.

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[Minnesota] Iron Range’s copper-nickel mining poses opportunity and possible threat – by Dan Kraker (Minnesota Public Radio – March 26, 2013)

http://minnesota.publicradio.org/features/

HIBBING, Minn. — After more than a century in which iron mining has played a central role in the economy and culture of northeastern Minnesota, a new kind of mining is poised to join the taconite industry.

Generally known as copper-nickel mining, for the two main metals companies want to extract, the process is hailed for bringing much-needed jobs to the region. But opponents prefer to call it “sulfide mining,” for the kind of ore the metals are found in — and because unearthing sulfide can cause toxic water pollution.

It’s a matter of mere geologic chance that northeast Minnesota could hold world-class deposits of both iron ore and copper and nickel.

Geologists have determined the Iron Range formed in what had been a tropical sea two billion years ago. The Duluth Complex, where most of the copper-nickel deposits lie, took form nearby a billion years after that, when North America tried to split apart near present day Lake Superior.

Those deposits formed when molten rock deep in the earth called magma encountered rocks containing sulfur, said University of Minnesota – Duluth geologist Jim Miller.

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‘There will be more nickel needed’ – by Carol Mulligan (Sudbury Star – March 21, 2013)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

There’s good news and bad news emerging from China when it comes to nickel production, says a mining analyst with a keen interest in Sudbury.

The bad news is Chinese nickel production is at a record high as the country imports cheap sources of laterite and converts it into low-percentage nickel, said Terry Ortslan. “Nickel pig iron (NPI) production we speak,” said the Montrealbased analyst. “And it’s not any mom and pop operation. It’s been very sophisticated, high-technology operations with big furnaces, and serious investments have gone into it.” The good news is the nickel being made in China is costing $6 or $7 a pound because of the cost of power to convert the ore and the cost of raw materials.

Because of the amount of stainless steel needed for expansion and development in China, nickel pig iron can only “contribute so much nickel to the whole equation. There will be more nickel needed in China and elsewhere,” and that could benefit Canadian producers such as Vale, said Ortslan. He has long been outspoken about the high cost of capital and operating costs at nickel operations in Sudbury, “but what we’re seeing now with the Chinese costs is they aren’t very low, as well,” he said.

That causes Ortslan to speculate on the need for “major expansion plans in the traditional areas” such as Sudbury where nickel is produced. Vale Ltd. has been focused on cutting costs at its operations around the world, including Canada, laying off 30 non-union employees this week in the latest round of belt-tightening.

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Australian Nickel: a short history – by Simon Cowling* (Australian Government Bureau of Resources and Energy Econmics – March Quarter 2013)

Click here for the original with graphs and charts (pages 114-123): http://www.bree.gov.au/documents/publications/req/REQ_MAR2013.pdf

Nickel, through its various uses, plays a large part in the development of capital infrastructure in economies worldwide. Due to its resistance to corrosion, nickel is primarily used in the production of stainless steel and alloys which are an integral ingredient for many infrastructure projects. To a lesser extent, nickel is also used in the production of nickel-metal hydride rechargeable batteries and electroplating other metals, such as steel for uses in construction and automotive purposes.

Australia is one of the largest nickel suppliers to the world market. The establishment of Australia’s nickel industry, however, has not been straight-forward and the industry has faced numerous challenges. The nickel market is characterised by extreme volatility evidenced by large and rapid swings in demand, production and, ultimately, prices. This review provides an overview of how key events in nickel markets since the 1960s have affected the development of Australia’s nickel industry.

The early days—pre-1965

The Australian nickel industry first emerged at the start of the 20th century with mining starting at the Zeehan field in western Tasmania in 1910. This followed the development of technologies that employed nickel as an alloying agent in steel towards the end of the 19th century (Mudd 2010) Between 1910 and 1938, approximately 568 tonnes of Nickel was intermittently produced from nickel copper sulphide ore extracted from the Five Mile group of mines in Tasmania (Mudd 2007).

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High-achieving First Quantum chief Philip Pascall keeps a low profile – by Matt Chambers (The Australian – January 26, 2013)

http://www.theaustralian.com.au/business

WHEN the publishers of the Harvard Business Review this month said Origin Energy’s Grant King, at number 88, was the only one of its top 100 global chiefs of 2013 based in Australia, it wasn’t quite right.

Ten spots ahead of the Origin boss, at number 78, is an intensely private mining chief executive and chairman who has built an African-focused $10 billion copper miner from an office in Perth.

From the same office he is now trying to turn his company into a top-five global copper miner through a hostile $C5.1bn ($4.9bn) takeover of Canada’s Inmet.

The man is Zimbabwe-born Philip Pascall, whose 1.3 per cent stake in the copper miner he co-founded is now worth about $120m. The company is the Canadian-listed First Quantum Minerals, whose original shareholders have seen the company grow by $US9bn under Pascall’s tenure and, according to HBR, had total returns of about 2000 per cent in that time.

HBR listed Pascall’s location as Vancouver. But the technical base of First Quantum is West Perth, where the respected process engineer and fellow founder Martin Rowley — a former Bond Group executive — are based.

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COLUMN-Nickel, an old-fashioned story of boom and bust by Andy Home (Reuters – March 1, 2013)

http://uk.reuters.com/

(Andy Home is a Reuters columnist. The opinions expressed are his own)

LONDON, March 1 (Reuters) – Remember the commodities super-cycle?

That wonderful all-embracing bull narrative of structural step-change in commodities demand coupled with “stronger for longer” pricing? It was good while it lasted.

But as mining companies write down the mega investments predicated on that “stronger for longer” bit and shareholder pressure for returns rather than volumes forces a mass changing of the guard in the sector, the super-cycle seems set to go the way of other deflated grand ideas. File between dot-com revolution and great moderation.

Yet, it was always a problematic construct. Consider the example of nickel.Structural step-change in demand led by China? Tick.

Chinese production of stainless steel, the largest component of nickel usage, boomed by 27-28 percent per year over 2009-2010, according to figures from the International Stainless Steel Forum.

Stronger for longer pricing? Nope. Nickel prices peaked in 2007 and have never looked close to reaching those lofty heights again.

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Big change needed to save [Australian] nickel producers – by Sarah-Jane Tasker (The Australian – February 25, 2013)

http://www.couriermail.com.au/

THE majority of Australia’s nickel producers continue to struggle to turn a healthy profit, and analysts say there is little relief in sight unless there is a fundamental change, such as BHP Billiton closing its West Australian operations.

While BHP has no plans to close its Kambalda nickel west operations, market observers say it would take that level of industry event to provide any relief to the sector this year.

“BHP doesn’t have to run loss-making operations,” one respected mining analyst said. “They are a 100,000-tonne producer, so it’s a big change for the nickel market if its operations are put on care and maintenance. That would materially change the outlook for the nickel market and could aid the juniors.”

BHP reported last week that underlying earnings before interest and taxes for its aluminium and nickel division had fallen $US219 million ($213m) to a loss of $US285m for the first half.

Western Areas, Australia’s lowest cost producer, reported on Friday a sharp fall in its first-half profit on the weaker nickel price and on the back of a non-cash impairment charge.

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