Falco advances nickel projects

While dry laterite projects in Australia and elsewhere are generating the most news these days, laterite deposits amenable to traditional pyrometallurgical processing techniques are making a comeback too, even in New Caledonia, which hopes to become the next big name in nickel.

For decades, Falconbridge (FL-T), through its 85.26%-owned subsidiary Falcondo, has mined, milled, smelted and refined such ores at Bonao, in the Dominican Republic. The company is now putting that experience to good use in New Caledonia, where it plans to develop a 60,000-tonne-per-year, nickel-in-ferronickel mining and smelting complex.

In 1998, Falconbridge entered into a joint venture with two private companies to evaluate and earn a 49% interest in the Koniambo project. About 70,600 metres of drilling were carried out in 2000, resulting in an inferred mineral resource (suitable for pyrometallurgical processing) estimated at 151 million tonnes grading 2.58% nickel. Environmental and metallurgical demonstration tests also took place, along with scoping studies. A bankable feasibility study, budgeted at US$85 million, is scheduled for completion late next year.

Lars Johansson, senior vice-president, says the company has chosen to take a conservative route at Koniambo. “We will build a ferro-nickel plant [similar to Falcondo], rather than initially pursue high-risk technology,” he says. “This is not to say that we are limited in the future. In fact, the Koniambo deposit also contains huge limonite resources, which are amenable to leach technology, something we could incorporate once the know-how has been proven.”

Johansson says Koniambo compares favourably to many other existing projects. “For example, our average grade at Falcondo is 1.3 per cent; the grade at PT Inco is 1.8 per cent; and the average grade of the three Australian pressure acid-leach projects is 0.95 per cent. While we often hear from investors that size does matter, the mining industry knows that grade matters. The higher the grade, the more likely a deposit will be profitable.”

If all goes well, the company will begin production in late 2005 or early 2006. Power will be met from a new coal-fired plant. Like others active in New Caledonia’s business sector, Johansson has high praise for the island nation’s investment climate. “Recent favourable developments in the tax regime will also benefit us with a 15-year tax holiday,” he says.

Falco is also eyeing a nickel laterite project in Indonesia. Last year, the company signed a preliminary agreement with BHP to evaluate the Gag Island project, 150 km west of Sorong, at the tip of Irian Jaya. The project has measured and indicated resources of 105 million tonnes grading 1.45% nickel, and 135 million tonnes of inferred resources grading 1.3% nickel, contained in both oxide and silicate laterite zones. At last report, Falco had the right to earn a 37.5% interest by spending US$75 million.

Rival Inco (N-T) also produces nickel in Indonesia, through 59%-owned PT Inco. In late 1999, the major completed a US$633-million expansion that added 50% more capacity. Production last year increased 30% to 130 million lbs of nickel-in-matte, as the ramp-up to full production continued.