Based on a positive prefeasibility report by Kvaerner Metals, the Nowegian firm Mindex ASA is gearing up to advance its Sablayan nickel-cobalt project in the Philippines, with a view to beginning production sometime in the period 2002-2003.
Mindex says the study shows that the project has the potential to become one of the world’s cheapest nickel producers. Cash costs, based on an annual capacity of 40,000 tonnes, are estimated to be US30 cents per lb. nickel, after cobalt credits.
An operation of this size would have annual production of 40,000 tonnes nickel and 3,050 tonnes cobalt, and require an investment of US$665 million. Capital costs would increase to US$935 million if production were boosted to 80,000 tonnes nickel and 6,950 tonnes cobalt.
The analysis assumes a nickel content of 1.7-1.24%, a cobalt content of 0.1%, a cobalt price of US$10 per lb., and a nickel price of US$1.85 per lb. The investment includes the construction of a harbor, a power station, 30 km of pipeline between the mine and process plant, and a small community to service the mine.
Mindex notes that the project will benefit from having a shoreline processing plant, which will reduce the cost of imported sulphur, and the byproduct production of ammonium sulphate, a fertilizer used by rice farmers.
However, the study reveals that more work, beyond obtaining the necessary permits and financing, is required before production can begin. For example, drilling was carried out on 200-metre spacings, and Mindex is currently drilling on 100-metre spacings in order to calculate reserves. Results are expected this fall.
The Kvaerner study also points to a few outstanding environmental issues, which Mindex plans to analyze further.
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