Nickel

Content maintained by Yanis Miezitis

• Nickel
• Resources
• Accessible EDR
• JORC Reserves
• Exploration
• Production
• World Ranking
• Industry Developments

More than 80% of the nickel (Ni) production is used in alloys. When alloyed with other elements, nickel imparts toughness, strength, resistance to corrosion and various electrical, magnetic and heat resistant properties. About 65% of world nickel output is consumed in the manufacture of stainless steel which is used widely in the chemical industry, motor vehicles, the construction industry and in consumer products such as sinks, cooking utensils, cutlery and white-goods.

Australia's EDR of nickel increased by 8.9% from 23.7 Mt to 25.8 Mt in 2007.

Western Australia remains the largest holder of nickel resources with more than 90% of total Australian EDR. New South Wales is the second largest with 6.1%, followed by QLD (2.9%) and Tas (0.3%). The EDR in WA comprises both sulphide and lateritic deposits while EDR in NSW and QLD are associated with laterite deposits.

Subeconomic demonstrated resources, which accounted for about 5.3% of total identified resources, decreased from 7.1% during 2007. The paramarginal resources decreased from 2.3 Mt to 1.6 Mt while the submarginal resources decreased by 0.1 Mt in 2007. Western Australia has 74.3% of the subeconomic nickel resources.

Inferred resources decreased by 0.3 Mt to 21.9 Mt in 2007. Western Australia maintained its dominant share of Australia's inferred resources with 90.8% followed by QLD with 5.9%.

The ratio of inferred resources to EDR in 2007 was 0.85 to 1.

Currently, all nickel EDR is accessible for mining. At the rate of production in 2007, AEDR of nickel are sufficient for 139 years.

About 25% of AEDR comprise JORC Code reserve. The remaining 75% of EDR represents resources assessed by Geoscience Australia from the measured and indicated categories of industry reported mineral resources, as defined under the Code and other classification systems used by companies not listed on the Australian Stock Exchange.

Total JORC Code reserves of nickel are adequate for 36 years at current rates of production.

Expenditure on nickel-cobalt exploration for the 2007 calendar year, as reported by the ABS, was $251.2 million, a increase of 70% compared with 2006. WA attracted most of this expenditure with $230.6 million. Other States with significant nickel-cobalt exploration included NSW, SA and Tas.

All of Australia's nickel production in 2007 was from WA and amounted to 185 kt, as reported by ABARE. The value of all nickel products exported was $7.5 billion. Australia was the world's third-largest producer, accounting for 11.1% of estimated international nickel output.

Based on figures published by the USGS and modified to incorporate the locally reported Australian resources, world EDR of nickel increased by 7.7% to 68.7 Mt in 2007 from 63.8 Mt in 2006. Australia's share of world EDR was 37.6% in 2007, which was down 0.5% from 2006. It remained the largest holder of EDR followed by New Caledonia (10.3%), Russia (9.6%) and Cuba (8.2%).

Russia was the largest producer again with 322 kt (19.7%), followed by Canada with 258 kt (15.5%) and Australia with 185 kt (11.1%). The fourth largest producer was Indonesia with 145 kt (8.9%) followed by New Caledonia with an output of 119 kt (7.3%).

Australia has several nickel sulphide mines currently in operation. With the exception of the Avebury mine operated by Allegiance Mining NL in Tas, all are in WA. They include BHP Billiton's Leinster and Mount Keith; OJSC MMC Norilsk Nickel's Black Swan, Emily Ann and Maggie Hays; Jubilee Mines NL's (now Xstrata Nickel Australia Pty Ltd) Cosmos; Mincor Resources NL's Miitel, Redross, Mariners, Wannaway; Independence Gold NL's Long-Victor and Consolidated Minerals Ltd's (now Palmary Enterprises Pty Ltd) Beta Hunt operation. Nickel sulphides are mined also by Sally Malay Mining Ltd (now Panoramic Resources Ltd) at the Savannah mine (formerly Sally Malay) and the company continued mining at the Lanfrachi mine in a joint venture with Brilliant Mining Corp. Mining continued also at Australian Mining NL's Blair mine and at the Radio Hill deposit operated by Fox Resources Ltd. New nickel sulphide mines include Western Areas NL's Flying Fox deposit and Mincor's Otter Juan and North Dordie. Three laterite nickel mines were in operation: Norilsk's Cawse, Minara Resources NL's Murrin Murrin and mining operations commenced at BHP Billiton's Ravensthorpe mine. WA also has a nickel smelter at Kalgoorlie and a refinery at Kwinana as well as BHP Billiton's concentrators at Leinster, Mt Keith and Kambalda (which processes ores from third party operators). Another refinery is located at Yabulu in QLD. In June 2008 BHP Billiton announced that the company commenced a rebuild of the furnace at its Kalgoorlie smelter.

According to BHP Billiton's March 2008 quarterly report, its West Australian operations produced 95,500 t of nickel for the 2007 calendar year with most sourced from the Mt Keith and Leinster mines.

Most of the nickel ore treated at the Kambalda, Leinster and Mt Keith concentrators is smelted into nickel matte containing about 68% nickel at the Kalgoorlie nickel smelter. The mill and concentrator at Kambalda are supplied with third party ore and produce concentrate containing about 13% nickel. Some of the nickel matte was sold to overseas customers but most of it was refined at BHP Billiton's Kwinana nickel refinery to produce LME accredited nickel briquettes, nickel powder and other intermediate products such as cobalt-nickel-sulphide. The Kwinana nickel refinery has a capacity of 70,000 tpa of nickel metal.

BHP Billiton's Ravensthorpe project is based on three laterite nickel deposits with a combined proved and probable reserves of 238 Mt at 0.68% Ni. The operation includes development of an open cut mine, hydrometallurgical treatment plant and associated infrastructure. The hydrometallurgical process plant is designed to treat both limonite and saprolite ores and produce up to 220,000 t of mixed nickel-cobalt hydroxide intermediate product containing up to 50,000 t of nickel and 1400 t of cobalt which will be shipped from Esperance to the Yabulu refinery in QLD. The refining section of Yabulu has been expanded to increase production to 76,000 t of nickel and 3500 t of cobalt. BHP Billiton commenced production of mixed nickel-cobalt hydroxide product in October and achieved its first production milestone of 5000 t in the December quarter of 2007. The Yabulu expansion project in QLD was completed in the March quarter in 2008.

BHP Billiton also reported in its March quarter 2008 report that its 360,000 tpa Ni ore project at Cliffs in WA is 58% complete.

On 1 March 2007, as a result of the acquisition of OM Group's nickel business, OJSC MMC, Norilsk Nickel acquired the initial 20% in MPI Nickel (Proprietary) Limited which held 100% in Black Swan and the Honeymoon Well project. Norilsk Nickel then acquired the entire Black Swan operation in WA as a result of its acquisition on 28 June 2007 by LionOre Mining International Ltd, which held 80% in MPI Nickel (Proprietary) Limited.

Norilsk Nickel reported production figures for 2007 of 12,006 t Ni from the Black Swan open pit and the Silver Swan underground mine. Norilsk Nickel's Lake Johnston operations of Emily Ann and Maggie Hays mines produced 6065 t Ni, and the Waterloo mine produced 57,818 t of ore at 3150 t of Ni.

Production from Jubilee Mines NL Cosmos deeps orebody was depleted in early 2007 and amounted to 6845 t Ni. Nickel production continued at the Alec Mairs 1 deposit and mining commenced at the Alec Mairs 2 and Tapinos deposits in early 2007. First production from the Prospero deposit was scheduled for late March 2008. A feasibility study on the Sinclair deposit was completed in December 2008 and a comprehensive review of the metallurgical work on the Anomaly 1 deposit was commenced.

Xstrata Nickel Australia Pty Ltd completed compulsory acquisition of Jubilee on 31 March 2008.

Western Areas NL has seven separate mining and development projects underway plus a major expansion of the Cosmic Boy accommodation village. The company reported that mining at its Flying Fox deposit commenced in November 2007 and by end of the year nickel production amounted to 677 t Ni. Production is expected to reach 8000 t Ni in concentrate in 2008. A feasibility study was commenced on the Diggers South deposit which has indicated resources at the deposit amounting to about 80,300 t of nickel metal (44,700 t 'core' + 35,600 t 'halo'). The company is building a concentrator at Cosmic Boy also which is due to be commissioned in early 2009. In October 2007 the company announced the discovery of the Spotted Quill nickel deposit and by early 2008 it had delineated an indicated and inferred resource of 34,510 t Ni. By mid 2008 the company had a feasibility study in progress for a four year open pit operation.

During 2007, Panoramic Resources Ltd's (previously Sally Malay Mining Ltd) underground mine operation at Savannah (previously Sally Malay) produced 7541 t Ni, 3812 t Cu, and 413 t Co. In early 2008 the company announced initial indicated and inferred resources for its northern ore zone and reported that drilling confirmed the continuation of the main Ore Zone (MOZ) below the 500 Fault. Best drill results in the MOZ include 11.2 m at 1.62% Ni, 40.9 m at 1.63% Ni and 12.1 m at 2.08% Ni. The company also is proceeding with approval processes for the nearby Copernicus deposit (852,000 t at 1.24% Ni) which is being developed in a joint venture between Panoramic Resources Ltd (60%) and Thundelarra Exploration Ltd (40%). Panoramic Resources also holds 75% and is operator of the Lanfranchi joint venture nickel project. In 2007 Lanfranchi produced 5083 t of Ni and 447 t of Cu. Mining of the high grade Winner ore deposit started during 2007 and the company commenced the development of the Deacon orebody which has an indicated and inferred resource of 58,089 t Ni and 5183 t Cu.

Mincor Resources NL operated six nickel mines in WA in 2007, comprising the Miitel, Redross, Mariners, Wannaway, plus two new mines, the Otter Juan and North Dordie mines. The combined metal in concentrate production for these mines in 2007 was 14,235 t Ni, 1227 t Cu and 253 t Co. Small scale remnant mining continued at the Wannaway mine. The company started developing its Carnilya Hill nickel mine and a decision was made to proceed with a $23 million development of the McMahon Project. The company also concluded the acquisition from BHP Billiton of Bluebush Line of tenements which contain numerous nickel occurrences, including those at Cameron, Lawry, Grimsby and Stockwell. Early in 2008 the company reported an estimated inferred and indicated resource of 20,800 t Ni at the Stockwell and Grimsby prospects.

Fox Resources Ltd production from its Radio Hill mine in 2007 amounted to 1466 t Ni and 2344 t Cu. Near mine diamond drilling resulted in intersection of a significant new mineralisation (the F-Zone) including 10.58 m at estimated grade of 1.4% Ni and 3.6% Cu from 106.5 m down hole depth. Significant mineralisation was encountered also at the Bertram prospect, 12 km south of the Radio Hill mine. Fox Resources announced it had executed an agreement with Jinchuan Group Ltd, for all nickel and copper concentrates produced from the company's Sholl B2 Nickel Project.

Allegiance Mining NL reported that by the end of 2007 the company had commenced mining from all three main orebodies at Avebury; Viking, North Avebury and Central Avebury. The ore stockpile at the end of 2007 totalled 45,200 t. Exploration in the immediate mine area intersected 17 m at 1.4% Ni about a 100 m below the base of the current calculated Viking resource. The company also reported high grade intersection, 2.3 m at 2.27% Ni and 1.77% Cu, at Melba Flats on the Nickel Reward prospect. Elsewhere during 2007 the company discovered its first ore-grade intercept outside the Main Avebury mineralised zone. The discovery which was at the company's Foundation Stone prospect, was an intercept of 8 m averaging 1% Ni. Wet commissioning of the Avebury processing plant is expected to take place in 2008.

Zinifex Australia Ltd made a takeover offer for all of the ordinary shares in Allegiance Mining and by 21 April 2008 it had acquired a controlling interest of 85.6% in Allegiance Mining.

Production from Australian Mines Ltd's Blair nickel mine in 2007 amounted to 904 t Ni. During the year the company deepened the main decline and resumed the development of Blair Deeps ore shoots. It is anticipated that nickel resources in Area 57 will be mined out in 2008. The company also reported that exploration at the Marriott nickel deposit increased the nickel resource in this deposit by 25% to 9400 t. The company continued exploration of its Golden Ridge joint venture areas around the Blair mine and announced an inferred resource of 16,000 t for its Goodyear deposit south of the Golden Ridge area.

Independence Group NL reported total production for 2007 of 11,019 t Ni and 802 t Cu from its Long, Victor South and McLeay mines. The company is continuing to explore for extensions of ore south of the Long and Victor-McLeay orebodies.

Consolidated Minerals Ltd reported a production of 2913 t Ni up to 30 September 2007. The production was sourced mainly from the East Alpha and Beta Hunt operations at Kambalda with additional contribution from selective mining from the Armstrong pit. Mining operations also commenced at the 132N deposit at Widgiemooltha. The company announced plans to expand the Kambalda operation towards the end of 2007. Drilling at the Gillet Prospect continued to intersect significant nickel mineralisation including 14 m at 3.34% Ni. Consolidated Minerals Ltd was taken over by Palmary Enterprises Pty Ltd in January 2008 .

In April 2008, Metallica Minerals Ltd updated the lateritic nickel resources of the NORNICO group of lateritic deposits, including Minnamoolka and Bell Creek deposits, to 35.51 Mt at 0.73% Ni and 0.04% Co with a 0.45% Ni cut-off. A feasibility study on the NORNICO project is progressing on a 1 Mt per annum heap leach nickel operation producing 7500 tpa Ni. Metallica is in a joint venture with Metals Finance Corporation to develop the Lucky Break deposit which has 1.022 Mt at 0.8% Ni and 0.05% Co. Experience from the proposed development of Lucky Break is intended to provide information for the much larger NORNICO project. Apart from the NORNICO and Lucky Break projects, Metallica is exploring the cobalt-rich nickel laterite deposit of Kokomo which has indicative grades of 0.6% to 0.9% Ni, 0.12% to 0.25% Co and contains areas of high scandium grades.

Australasian Resources Ltd continued with planning of a proposal for a 5000 t Ni heap leach trial at its Sherlock Bay nickel project.

On 30 July 2005, Heron Resources Ltd signed a definitive farm-in and joint venture agreement with Inco Ltd (now Vale Inco Ltd) providing for the potential development of the Kalgoorlie Nickel Project (KNP). One of the main objectives for Vale Inco in its feasibility studies will be to evaluate whether a plant-scale screen upgrade to 1.5% Ni is achievable. Heron reported that on 5 November 2007, Vale Inco advised that it would proceed with the KNP Step 3 of the prefeasibility study which involves the completion of the study by end of January 2009. Vale Inco will investigate the application of high pressure acid leach, heap leach and atmospheric leach to the extraction of nickel from laterite ores of the KNP. Under the terms of the agreement a feasibility study must be finished by July 2011. The agreement also requires that subject to a positive bankable feasibility study result, a decision to mine must be made before 2013. In January 2008 the company announced that its prefeasibility study indicated that escalating costs did not justify investment in a heap leach process for the Jump-up Dam deposit (outside Heron's KNP project area). Instead, the company decided to evaluate atmospheric leach as a processing option for Jump-up Dam and the surrounding deposits collectively referred to as the Yerilla nickel project.

The annual production for 2007 from the Murrin Murrin lateritic nickel plant operated by Minara Resources Ltd amounted to 27,585 t Ni and 1884 t Co. The mine production was impacted by a planned seven week $100 million plant shut down for statutory maintenance and major refurbishment to upgrade plant performance. The company commissioned a heap leach demonstration plant early in 2007 and the plant is operating to capacity to deliver at the rate of more than 2000 tpa Ni metal and 150 tpa Co metal by the end of 2008. In March 2008 Minara's Board gave approval for a $300 million heap leach expansion which it is anticipated will deliver 8000 to 10,000 tpa of Ni.

OJSC MMC Norilsk Nickel reported an annual production of 4554 t Ni from its lateritic Cawse deposit in WA.

Tectonic Resources NL closed the small mining operation at RAV 8 in September 2005, but with appreciating nickel prices the company continued delivery of small parcels of ore from low grade dumps in 2007. By September 2008 the mine had produced about 53 t Ni and the company announced that all mining activities at RAV 8 have ceased. Tectonic Resources has a farm in agreement with Mincor Resources NL which allows Mincor Resources to explore the RAV 8 tenement area.

Compass Resources NL reported in May 2008 that early commissioning activities have commenced at the Browns oxide project and will continue through June 2008. It is anticipated production for export will be 10,000 tpa of copper cathode, 1000 tpa of cobalt chemicals and 750 tpa of nickel chemicals.

Metals X Ltd is undertaking a detailed feasibility study for the development of its Wingellina nickel-cobalt oxide deposit with an updated financial feasibility study to be completed in July 2008 and a detailed feasibility stage to be completed in mid 2009. The feasibility study is focusing on development of a mine and associated infrastructure to produce 40,000 t of Ni and 3500 t of cobalt metal per annum.

In January 2008, Gladstone Pacific Nickel Ltd announced the results of an integrated definitive feasibility study for its proposed mining operation of lateritic nickel at Marlborough, QLD, and for its proposed nickel processing plant at Yarwun, near Gladstone. The plant is anticipated to process a blend of Marlborough ore (around 30%) with east coast New Caledonian ore (around 70%) to produce about 64,700 t of Ni and 6160 t of cobalt in its first year of production. The first year of full production is expected to be 2015.