A period of expansion and development will begin to pay off for nickel and copper producer
“Falconbridge is well-positioned to move through 1999,” said Hushovd, referring to the company’s two new mines and to improvements in efficiency at its existing operations. The new mines — Raglan in northern Quebec and Collahuasi in northern Chile — both made significant contributions to Falco’s production in 1998 and early 1999.
The opening of Raglan has increased the company’s nickel production by about 19%, to 90,000 tonnes yearly.
Collahuasi, which is expected to produce 393,000 tonnes of copper in concentrate and 50,000 tonnes as cathode this year, is owned 44% by Falco, 44% by
Falco’s bread-and-butter Integrated Nickel Operations, the Kristiansand refinery and the Sudbury nickel mines, turned an operating profit of $9 million. The INO saw its unit production cost rise to US$1.58 per lb. (US$3,480 per tonne) in 1998, up from US$1.56 in the previous year. Although costs per tonne of ore decreased substantially, lower credits for copper and generally lower ore grades both worked against any further cost improvement. In the first quarter of 1999, cash costs fell again, to US$1.43 (US$3,150 per tonne), but the operation posted a loss of $5.5 million.
At the Kidd Creek copper-zinc operation in Timmins, Ont., the average cost per pound of copper produced was US48 cents, and the mine, mill and smelter complex showed an operating profit of US$57 million. In the first quarter of 1999, Kidd made $3.9 million.
Lower energy prices helped to bring down costs at the Falconbridge Dominicana mine and ferronickel plant. Cash costs, which fell to US$1.82 per lb. (US$4,010 per tonne) in 1998 from US$2.17 in the previous year, are expected to decline further, to US$1.60 in 2000 at present oil prices.
Should energy prices increase, as they have over the past two months, the energy component of Falcondo’s production costs would spring back. It currently represents about 45-50% of operating costs, and a 10% increase in oil prices would add about US8 cents per lb. to the operation’s cash cost.
The Collahuasi mine reached commercial production in the first quarter of 1999. It turned an operating profit of $17.4 million, of which Falco’s share is $7.7 million. Unit costs for both Collahuasi and Kidd are expected to be the lowest in the industry.
“With Collahuasi and Raglan completed, our major capital expenditures are behind us,” said Hushovd. He added that the company’s planned capital expenditures will average $175 million annually for “the next few years” and that the company’s cash flow could cover that amount.
Falco is focusing its development plans on the Koniambo nickel laterite in New Caledonia. There, a resource of 132 million tonnes grading 2.46% nickel and 0.06% cobalt has been delineated, and feasibility studies are under way. Cash production costs are estimated to be US$1.25 per lb. (US$2,750 per tonne), with capital costs pegged between US$140 million and US$150 million.
In the Ivory Coast, a laterite nickel deposit containing a resource of 293 million tonnes grading 1.46% nickel is on hold, awaiting development of better infrastructure in the area. The most pressing need is for hydroelectric power.
Hushovd said he hopes Falco will announce, by mid-year, a decision on deeper development of the Kidd Creek orebody. The deep mineralization, which has less copper and more zinc, has been awaiting a production decision for several years.
Hushovd told The Northern Miner that Falco had held discussions with
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