Sulphide nickel mines become more expensive

The competitive advantage enjoyed by nickel producers of sulphide deposits has eroded in recent years in favor of laterite operations, and a surge in costs in Canada must take a large part of the blame, says a study published by Brook Hunt & Associates Ltd. of London.

Canadian nickel mine production accounts for about one-third of the western world’s total, and a large portion of the nickel is derived from sulphide operations, the study says. Since 1987, Canadian costs have doubled, from US$1.70 per lb. to US$3.48 in 1991.

The Nickel Mine Cost Study (1982-1995) quotes an average western world nickel mine production cost in 1991 of just below US$3.40.

In 1987, the study says, average sulphide mine costs were US$1.95 compared with laterite mine costs of US$2.44. By 1991, costs for sulphide operations were more than 85% higher (in U.S. dollar terms) while the increase for laterite mines during the same period was less than 25%.

The study says helping to push the Canadian costs higher were an unfavorable movement in the exchange rate, large price-related employee bonuses and, in some cases, falling grades and lower tonnages. Also, depreciation charges and indirect costs associated with an extensive program of capital expenditures since 1988 have sharply increased.