Falco, Inco rivals in New Caledonia — Metallurgical technologies key to unlocking nickel potential

Not to be outdone by rival nickel producer Inco (N-T), which is advancing an enormous nickel-cobalt resource at the Goro property in New Caledonia, Falconbridge (FL-T) has agreed to participate in the proposed development and construction of a joint-venture nickel project in the South Pacific nation.

Falco’s definitive agreement for the nickel venture follows three years of discussion with La Socit Minire du Sud Pacifique (SMSP), and its controlling shareholder. A breakthrough came earlier this year when SMSP signed a protocol with the French government and others to swap certain nickel assets. Under its terms, SMSP gave up its Poum deposit in return for access to the Koniambo nickel deposit, which will be the cornerstone of the joint venture between Falco and SMSP.

Lars-Eric Johansson, Falco’s chief financial officer, says the next step is to form a joint-venture company, owned 51% by SMSP and 49% by Falco, to advance the project.

“Our partner will contribute the deposit and we will contribute exploration work, metallurgical work and a feasibility study,” Johansson adds. “We expect that these work committments will cost about $50 million.” Johansson says it may take several years for this work to be completed. But if all goes well, the partners will move ahead with a plant, situated in New Caledonia’s North province, which is capable of producing 54,000 tonnes of nickel-in-ferronickel per year. The capital costs of an operation that size are estimated at $1 billion.

“It will be a very big project,” Johansson states.

He points out that the size and scale of the proposed operation would be significantly larger than the company’s 85.26%-owned ferronickel complex in the Dominican Republic, which produces about 32,000 tonnes of nickel-in-ferronickel annually. Total proven and probable reserves there are about 50.3 million tonnes averaging 1.57% nickel, plus possible resources of 13.6 million tonnes averaging 1.55% nickel.

While Falco officials have visited the Koniambo deposit in New Caledonia, the company has not yet reviewed resource calculations. “It certainly looks big, and its grade of 2.6% nickel is twice that of the Dominican Republic,” Johansson says. “We plan to do more exploration, and our requirement is to have at least 25 years of reserves for the size of plant we are envisioning.” Falconbridge also expects to put its metallurgical expertise to work at Koniambo. New Caledonia has two main types of laterite nickel deposit; one (saprolites) amenable to furnace processes, and the other (limonites) amenable to leaching. Some deposits may be amenable to both technologies, depending on the mineralogy and depth of weathering.

While the plant at Inco’s Goro project will involve a combination of pressure leaching and solvent extraction, Johansson says Koniambo is amenable to furnace processes of the type used at the company’s complex in the Dominican Republic. He suspects, however, that portions of the deposit might be amenable to leaching.

At this stage, Johansson believes it is premature to compare costs, as leaching technologies are less advanced than furnace processes (and are, in some cases, experimental). “While some operations in Australia and Cuba are using leaching, they have not been without problems. But we also believe that if you can get things right, these operations can be competitive. We are doing work ourselves in this area.”

Johansson points out, however, that Koniambo will be built using conventional, well-proven technology in which the company has considerable expertise. “We have been in the ferronickel business since the 1960s, and will design and construct the plant in New Caledonia,” he points out. “We expect it will be very low-cost and one of the most competitive plants in operation worldwide.”

Meanwhile, Inco is forging ahead with plans to advance its Goro project in New Caledonia. The major owns 85% of Goro, a partnership with the French government agency Bureau de recherches geologiques et minires.

The main Goro deposit hosts drill-indicated resources of 165 million tonnes of lateritic ores averaging 1.6% nickel and 0.16% cobalt. An initial mining zone with proven reserves of 47 million tonnes has been outlined as a 20-year source of feed for commercial production.

Inco has developed proprietary technologies to process ores from Goro, which incorporate pressure leaching and solvent extraction for nickel and cobalt recovery. At the recent annual meeting, Inco President Scott Hand told shareholders that the process has been extensively tested at the company’s laboratory and at a mini-plant in Ontario.

“A larger plant is being designed for installation at Goro in 1998,” Hand said. “Onsite testing is to proceed in 1999, and in the year 2000 we plan to make a decision on a full-scale commercial plant.”

Inco envisions a plant with an annual capacity of some 30,000 tonnes of nickel, plus cobalt. It is expected to have low costs and provide above-average returns. “The project could easily be expanded to double production,” Hand added.

If developed, these proposed projects in New Caledonia will be closer to Asian markets, and possibly more competitive, than some Canadian projects currently owned by Falco and Inco. Despite the weakness in several Asian economies, experts predict that most demand for nickel and related products will continue to come from Asian countries.

Inco is already busy with a 50% expansion at its 59%-owned Indonesian operations. When completed in 2000, production will climb to 68,000 tonnes of nickel-in-matte per year. Cash costs are expected to fall to well below US$1 per lb.