CVRD invests big in Canadian nickel (October 15, 2007)

In the largest annual investment program ever undertaken by a mining company in the world, Companhia Vale do Rio Doce (RIO-N) has approved a budget of US$11 billion for 2008 a portion of which will be channeled into nickel projects in Canada.

CVRDs Sudbury-based Totten mine will receive US$66 million for development. The new nickel mine in northern Ontario will cost a total of US$362 million and is forecast to start production in the second quarter of 2011.

The mine will have a nickel-producing capacity of 8,200 tonnes per year, 11,200 tonnes copper and 82,000 troy oz. of precious metals from the platinum, gold and silver families.

The second-largest metals and mining company in the world has outlined a further investment in 2008 of US$110 million to build a nickel refinery at Voiseys Bay in Labrador and Newfoundland. The nickel refinery is slated to produce 50,000 tonnes per year of nickel.

Operations are forecast to begin in the fourth quarter of 2011 at a total project cost of US$2.17 billion.

Currently the nickel concentrate produced at Voiseys Bay is shipped for smelting and refining to CVRDs operations in Thompson, Manitoba and Sudbury, Ontario. The copper concentrate is then sent directly to clients.

CVRD is also boosting its investment in copper in New Caledonia in the South Pacific. Its Goro project which commenced construction this year — boasts one of the largest deposits of lateritic nickel in the world.

CVRD plans to invest US$723 million there next year. Operations are slated to begin at the end of 2008.

Goro is expected to have nominal production capacity of 60,000 tonnes per year of nickel and 4,600 tonnes per year of cobalt. The project has an estimated capex of US$3.2 billion.

Closer to home, CVRD plans to invest US$581 million next year on Onca Puma in the Brazilian state of Para and US$91 million on its Vermelho mine in the mineral province of Carajas.

Onca Puma will exploit deposits of nickel laterite and should reach a nominal capacity of 58,000 tonnes per year of nickel contained in ferrous-nickel, its final product. Production is forecast to begin in January 2009.

The Vermelho mine has a nominal production capacity estimated at 46,000 tonnes per year of metallic nickel. The mine is expected to be completed in the first quarter of 2012.

At mid-day in New York, shares of CVRD were trading at US$34.87 a share, down $1.05 on a trading volume of 11 million.