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Nickel |
AIMR 2009 |
Nickel
More than 80% of 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.
Resources
Australia's Economic Demonstrated Resources (EDR) of nickel increased by 2.3% from 25.8 million tonnes (Mt) to 26.4 Mt in 2008.
Western Australia (WA) remains the largest holder of nickel resources with 90.4% of total Australian EDR. New South Wales (NSW) is the second largest with 6.0%, followed by Queensland (Qld) with 3.3% and Tasmania (Tas) with 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 4.3% of total Identified Resources, decreased from 5.3% during 2008. The Paramarginal Resources decreased from 1.6 Mt to 1.1 Mt while the Submarginal Resources decreased from 1.1 to 1.0 Mt in 2008. Western Australia has 72.1% of the subeconomic nickel resources.
Inferred Resources decreased by 1 Mt to 20.9 Mt in 2008. Western Australia maintained its dominant share of Australia's Inferred Resources with 89.7% followed by Qld with 5.8%.
The ratio of Inferred Resources to EDR in 2008 was 0.79 to 1.
Accessible EDR
Currently, all nickel EDR is accessible for mining. At the rate of production in 2008, Accessible Economic Demonstrated Resources (AEDR) of nickel are sufficient for 132 years.
JORC Reserves
About 27% of AEDR comprise Joint Ore Reserve Committee (JORC) Code reserve. The remaining 73% 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.
Exploration
Expenditure on nickel-cobalt exploration for the 2008 calendar year, as reported by the Australian Bureau of Statistics (ABS), was $324 million, an increase of 29% on 2007. Western Australia attracted most of this expenditure with $303.2 million. Other States with significant nickel-cobalt exploration included Qld, SA and NSW.
Production
Virtually all of Australia's nickel production in 2008 was from WA and amounted to 200 kilotonne (kt), as reported by the Australian Bureau of Agricultural and Resource Economics (ABARE) and includes production of 2069 tonne of nickel from the Avebury mine in Tas. 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.
World Ranking
Based on figures published by the United States Geological Survey (USGS) and the latest Australian resource figures, world EDR of nickel increased by 2.5% to 70.4 Mt in 2008 from 68.7 Mt in 2007. Australia's share of world EDR was 37.5% in 2008, which was down 0.2% from 2007. It remained the largest holder of EDR followed by New Caledonia (10.1%), Russia (9.4%) and Cuba (8.0%).
Russia was the largest producer again with 276kt (16.9%), followed by Canada with 250kt (15.3%), Indonesia 211kt (12.9%) and Australia with 200kt (12.3%).
Industry Developments
The combination of the global financial crisis and falling nickel prices placed a number of nickel mines under financial stress. The two major sulphide nickel mines, owned by BHP Billiton's Nickel West, continued operating at Leinster and Mount Keith. Similarly a number of smaller sulphide nickel operations were continued by Xstrata Nickel Australia Pty Ltd, Mincor Resources NL, Panoramic Resources Ltd, Western Areas NL and Independence Gold NL. Minara Resources NL's Murrin Murrin lateritic nickel mine also continued to operate. However, OJSC MMC Norilsk closed all four of its sulphide nickel operations and one lateritic nickel mine in 2008 and 2009. Mining was also suspended at the Radio Hill deposit operated by Fox Resources Ltd while the Avebury nickel sulphide mine was placed on care and maintenance by its new owners – China Minmetals Corporation. The most prominent closures were those operated by BHP Billiton – the newly commissioned large Ravensthorpe lateritic mine in WA together with the extended Yabulu nickel refinery in Qld.
Nickel sulphide deposits
BHP Billiton's has reported that, its West Australian operations produced 85 900 tonnes of nickel for the 2008 calendar year with most sourced from the Mount Keith and Leinster mines. Production was down from 95 500 tonnes in 2007 due to the Kalgoorlie nickel smelter furnace rebuild and maintenance at the Kwinana nickel refinery.
Most of the nickel ore treated at the Kambalda, Leinster and Mount Keith concentrators, all in WA, is smelted at the Kalgoorlie nickel smelter into nickel matte containing about 68% Ni. The mill and concentrator at Kambalda are supplied with third party ore and produce concentrate containing about 13% Ni. 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 London Metal Exchange (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 tonnes per annum (tpa) of nickel metal.
Mining at BHP Billiton's Cliffs high grade underground mine commenced in mid 2008 with an expected reserve life of five years.
Norilsk Nickel reported production figures for 2008 of 14 805 tonnes Ni metal from the ore mined at Black Swan (WA). Norilsk Nickel's Lake Johnston operations of Emily Ann and Maggie Hays mines (WA) produced 8849 tonnes Ni, and the Waterloo mine, also in WA, produced 5814 tonnes of Ni. Norilsk announced on 16 February 2009 that operations at Black Swan and the Johnston operations (Emily Ann and Maggie Hays) have been suspended; this follows earlier suspension of the Waterloo mine in November 2008.
Xstrata Nickel Australia Pty Ltd completed compulsory acquisition of Jubilee on 31 March 2008.
Xstrata announced in its 2008 Annual Report that metal in concentrates produced from the former Jubilee operations (Alec Mairs, Tapinos, Prospero and Sinclair) for the period commencing 1 February 2008 (the date of the completion of the Jubilee acquisition) to 31 December 2008, totalled 7610 tonnes Ni, 303 tonnes of copper (Cu) and 120 tonnes of cobalt (Co). Total ore milled in the period was 262 857 tonnes. In October 2008, the Sinclair mine commenced operations on schedule and budget and continued ramping up the project towards the end of the year. The concentrates from Sinclair were shipped to the Sudbury smelter in Canada for processing in the fourth quarter of 2008. The company announced in its 2009 half yearly report that it was planning to suspend mining operations at Sinclair nickel mine open cut in October 2009 if nickel prices did not improve. The development of the underground mine at Sinclair was suspended in April 2009.
Western Areas NL nickel mine at the Flying Fox deposit produced 4264 tonnes of Ni in 2008. On 11 May 2009 Western Areas NL and Kagara Ltd executed a Heads of Agreement to enable Kagara's Lounge Lizard nickel deposit, which adjoins the Flying Fox deposit, to be mined using access from Western Area's Flying Fox decline. Total mineral resources at Flying Fox (including Lounge Lizard) are approximately 2.5 Mt averaging 5.5% Ni and containing about 140 000 tonnes of Ni. The company will commence site work in September 2009 at its Spotted Quoll deposit for a two year open cut operation with first production to start in the March quarter, 2010. Spotted Quoll mineral resources are approximately 2 Mt at an average grade of 6.2% Ni of which about 16% of the deposit will be mined by open pit and the rest by underground methods. Western Areas commissioned its Cosmic Boy nickel concentrator in March 2009 but is planning already to upgrade the plant capacity from 300 000tpa ore to 550 000tpa by March or April 2010 to treat the ore from Spotted Quoll. The company also reported that the development of the Diggers South and Cosmic Boy deposits will be resumed once the nickel prices stabilise. Western Areas also announced new offtake contracts with BHP Billiton and Jinchuan Group of China for its nickel products.
During 2008, Panoramic Resources Ltd's underground mine operation at Savannah produced 7800 tonnes Ni, 4079 tonnes Cu, and 408 tonnes Co. The Copernicus joint venture mining operation between Panoramic (60%) and Thundelara Exploration Ltd (40%) was suspended in January 2009 and will be restarted once there is a sustained improvement in nickel price. Panoramic acquired the remaining 25% interest in the Lanfranchi mine from its joint venture partner Brilliant Mining Corp in May 2009. In 2008 Lanfranchi (WA) produced 9656 tonnes of Ni and 804 tonnes of Cu. Panoramic announced that in December 2008, its Deacon orebody in the Lanfranchi group contained an Indicated Resource of 2.44 Mt at 2.93% Ni and 0.26% Cu for 71 400 tonnes of contained Ni and 6300 tonnes of contained Cu.
Mincor Resources NL nickel production for 2008 was reported under two groups of operations. The North Kambalda operations comprised the Otter Juan, Carnilya Hill, Coronet and McMahon mines with a combined production in 2008 of 4549 tonnes of Ni, 309 tonnes of Cu and 68 tonnes of Co. The Southern Kambalda operations produced 8624 tonnes of Ni, 791 tonnes Cu and 168 tonnes Co from the Mariners, Miitel and Redross mines. The Miitel mine was placed on care and maintenance in November 2008 and mining was completed at Redross in May 2009, resulting in its closure. During 2008, Mincor carried out a 582 line-kilometre (km), helicopter-borne Versatile Electro-magnetic Survey (VTEM) covering approximately 35km of prospective basal contact along the Bluebush Line of tenements. The company reported that the survey located 12 high priority electromagnetic anomalies indicative of massive sulphides.
Fox Resources Ltd production from its Radio Hill mine in 2008 in north west WA, amounted to 1140 tonne Ni and 1776 tonne Cu. Fox placed the mine on care and maintenance in September 2008 and has embarked on an exploration program to locate additional resources to the south and west of the existing mine workings.
Production from Australian Mines Ltd's Blair nickel mine (WA) in 2008 amounted to 1562 tonnes Ni. The mining operations were suspended on 19 December 2008 as a consequence of low nickel prices and negotiations were commenced for the sale of the mine plant and equipment.
Independence Group NL reported total production for 2008 of 8139 tonnes Ni and 618 tonnes Cu from its Long, Victor South and McLeay mines. In mid 2009 the company reported an Indicated and Inferred Resource of 456 000 tonnes Ni for its newly delineated Moran deposit.
Consolidated Minerals Ltd, owner of the East Alpha, Beta Hunt and the Armstrong mining operations and nickel deposits near Kambalda in WA, was taken over by Palmary Enterprises Pty Ltd in January 2008. Mining operations at the Beta Hunt mine were suspended in December 2008 pending improvement in nickel prices. Production or updated resources figures are not publicly available.
OZ Minerals reported that its Avebury mine produced 2069 tonnes of Ni in 2008, before the mining was suspended on 19 December 2008 due to prevailing low nickel prices. Another 793 tonnes of Ni was produced from stockpiled ore during the March quarter of 2009. Thereafter the mine was placed on care and maintenance and sold to China Minmetals Corporation in mid 2009.
Breakaway Resources Ltd reported on 14 April 2008 an Inferred Resource of 600 000 tonnes of ore at 1.39% Ni, 0.3% Cu and 0.5 grams per tonne (g/t) of platinum group elements (PGE) for its recently discovered Horn deposit.
Lateritic nickel deposits
The annual production for 2008 from the Murrin Murrin lateritic nickel plant (WA), operated by Minara Resources Ltd, amounted to 30 154 tonnes Ni and 2018 tonnes Co. During the year the mining operations were interrupted by loss of gas supplies as a result of a fire at the Apache Energy Varanus Island as well as a planned 12 day shut down. The company stated that, in view of the world recession and consequent contraction in the demand for nickel, it had suspended its heap leach demonstration project after it had produced 1782 tonnes of Ni and 112 tonnes of Co.
OJSC MMC Norilsk Nickel reported an annual production of 4554 tonne Ni from its lateritic Cawse deposit in WA. The Cawse operation was suspended in October 2008.
The new mine at Ravensthorpe, WA was commissioned in May 2008 but this operation was suspended in January 2009 due to falling nickel prices and weakened demand. Similarly, the extended Yabulu refinery in Qld commenced operations in 2008, but was sold by BHP Billiton in July 2009.
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) in WA. 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. Vale Inco completed a pre-feasibility study on four lateritic nickel deposits of the KNP project and Heron released a summary of the results in February 2009 which stated that the study investigated a project sized for up to 36tpa of nickel intermediate product with a mine life of 34 years. A high pressure acid leach was considered to be the best leaching technology with Ni and Co extractions of 96% Ni and 93% Cu. Cash operating cost was estimated to be US$4.42 per pound (lb) of nickel (including cobalt credits), and the capital cost was estimated to be US$1.5 billion. Heron reported that it had been advised by Vale Inco in May 2009 that it would not proceed with the full feasibility study for the KNP. Heron entered into a binding Framework Agreement with Ningbo Shanshan Co Ltd with respect to Heron's Yerilla Nickel Cobalt Project. The Agreement provides for Shanshan to undertake a feasibility study into treating ore from the Yerilla project to produce nickel/cobalt concentrate for further processing in China. A 40 tonne bulk sample of Yerilla ore has been shipped to Changsha, China for this work.
In January 2009 Metallica Minerals Ltd updated the lateritic nickel resources of the NORNICO group of lateritic deposits, including Minnamoolka, Bell Creek and the Kokomo deposits, to 50.83 Mt at 0.72% Ni and 0.06% Co with a 0.45% Ni cut-off. In May 2009, Metallica decided to defer its feasibility study on the proposed NORNICO 1 Mt per annum heap leach nickel operation because of the prevailing low nickel prices at the time. Metallica will continue its work on ongoing metallurgical test-work, enhanced process flowsheet development on the NORNICO's key deposits – Bell Creek, Minnamoolka and Kokomo. Deferral of the feasibility will also allow management to include Kokomo in a reactivated NORNICO feasibility study, once market conditions improve.
Metals X completed the first phase of the feasibility study in mid-2008 and confirmed a project concept for the construction of a nickel and cobalt operation producing approximately 40 000tpa Ni and 3500tpa Co with an initial mine life of 40 years at an operating costs of less than US$3.50/lb of nickel after cobalt credits. The estimated after tax net present value (NPV) based on a Nickel price of US$20 000, Cobalt price of $45 000 and a US$ exchange rate of 0.85 was $A3.4 billion. Metals X considers that although the overall project returns are lower than they were under the assumptions of the feasibility study, the strong operating returns and positive NPV indications 'demonstrate the credentials of Wingellina as a world class mineral deposit', even under the current depressed economic conditions and the long mine life (approximately 40 years).
