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More than 80% of nickel production is used in alloys. When alloyed with other elements, nickel imparts toughness, strength, resistance to corrosion and various electrical, magnetic and heat resistant properties. About 65% of world nickel output is consumed in the manufacture of stainless steel, which is used widely in the chemical industry, motor vehicles, the construction industry and in consumer products such as sinks, cooking utensils, cutlery and white-goods.


Australia's Economic Demonstrated Resources (EDR) of nickel decreased by 13.8% from 24.0 million tonnes (Mt) to 20.4 Mt in 2011 as a result of mining companies updating their resources. About 87% of Australia's EDR is in 15 deposits. Australia's EDR of nickel can be subdivided as follows:

  • About 34.5% of Australia's EDR comprise Reserves as defined under the Joint Ore Reserve Committee (JORC) Code.
  • About 26.8% is made up of published JORC Code compliant Measured and Indicated Resources in operating mines, in deposits being developed for mining and in deposits which have published scoping/feasibility studies with positive results.
  • The remaining 38.7% of Australia's EDR are in deposits with Measured and Indicated Resources of similar tonnage, grade and ore type which are being mined elsewhere in Australia, but have not completed a scoping/feasibility study.

Western Australia (WA) retains the largest nickel resources with 90.7% of total Australian EDR. New South Wales (NSW) is the second largest with 4.9%, followed by Queensland (Qld) with 4.4% and Tasmania (Tas) with 0.1%. The EDR in WA comprises both sulphide and lateritic deposits, while EDR in NSW and Qld are associated with laterite deposits.

Subeconomic Demonstrated Resources account for about 9.5% of total Identified Resources in 2012. At the same time, Paramarginal Resources increased from 2.4 Mt to 3.5 Mt, while the Submarginal Resources decreased from 1.3 Mt to 0.6 Mt. A total of 69.3% of the subeconomic nickel resources are in WA.

Inferred Resources decreased from 19.4 Mt to 18.4 Mt in 2011 with WA maintaining its dominance with 91.2% of the total followed by NSW with 3.4%.

The ratio of Inferred Resources to EDR in 2011 was 0.9:1.

Accessible EDR

Currently, all nickel EDR is accessible for mining. At the rate of production in 2011, Accessible Economic Demonstrated Resources (AEDR) of nickel is sufficient for about 95 years.

JORC Reserves

About 35% of AEDR is made up of Joint Ore Reserve Committee (JORC) Code Reserve. The remaining 65% of EDR represents resources assessed by Geoscience Australia from the Measured and Indicated categories of industry reported mineral resources as defined under the JORC Code and other classification systems used by companies not listed on the Australian Stock Exchange.

Total JORC Code Reserves of nickel are adequate for 33 years at current rates of production.


Expenditure on nickel-cobalt exploration for 2011 as reported by the Australian Bureau of Statistics was $262.1 million, an increase of 11.2% on 2010. WA attracted most of this expenditure with $252 million.


All of Australia's nickel production in 2011 was from WA and amounted to 215 kilotonnes (kt), up from 170 kt in 2010, as reported by the Australian Bureau of Resources and Energy Economics (BREE). The value of all nickel products exported was $4.097 billion and was Australia's ninth most valuable mineral export commodity. Australia was the world's fourth-largest nickel producer behind Russia, Indonesia and Philippines accounting for 11.8% of estimated world mine production.

World Ranking

Based on figures published by the United States Geological Survey and the latest Australian resource figures, world economic resources of nickel increased to 76 Mt in 2011 from 75.6 Mt in 2010. Australia's share of world economic resources of nickel was 26.8% in 2011. It remained the largest holder of economic resources followed by New Caledonia (15.8%), Brazil (11.4%), Russia (7.9%) and Cuba (7.2%).

Russia was the largest producer with 280 kt (15.4%), followed by Indonesia and Philippines each with 230 kt (12.7%) and Australia with 215 kt (11.8%).

Industry Developments

In its Resources and Energy Quarterly 2012, BREE reported the average price for nickel in 2011 was about US$22 854 per tonne, an increase from about US$21 800 in 2010. In its 2012 annual report, BHP Billiton Resources Ltd noted again that the Chinese market has become a significant source of global demand for commodities. In the 2011 calendar year, China represented 61% of global seaborne iron ore demand, 39% of copper demand, 40% of nickel demand, 43% of aluminium demand, 48% of energy coal demand and 10% of oil demand. China's requirement for these commodities has been driving global materials demand for the past decade.

The major sulphide nickel mines, which are owned by BHP Billiton's Nickel West, continued operating at Leinster, Mount Keith and Cliffs north of Kalgoorlie in WA. Smaller sulphide nickel mines in WA continued to be operated by Mincor Resources NL, Panoramic Resources Ltd, Western Areas NL and Independence Gold NL. Xstrata Nickel Australasia Pty Ltd closed down its sulphide nickel operations at Cosmos in 2012 but continued its small nickel mine at Sinclair, WA. Minara Resources NL's Murrin Murrin lateritic nickel mine continued to operate in 2011 and First Quantum Minerals Australia Nickel Pty Ltd began production of nickel from its lateritic nickel operation at Ravensthorpe in October 2011.

Nickel sulphide deposits

BHP Billiton reported that its WA operations produced 109 000 tonnes of nickel during 2011 with most sourced from the Mount Keith, Leinster and Cliffs mines. Production was down from 123 800 tonnes in 2010 because of restrictions in hydrogen supply at Nickel West's Kwinana refinery, which is resulting in an increasing proportion of nickel matte being exported to overseas customers.

Most of the nickel ore treated at the Kambalda, Leinster and Mount Keith concentrators is smelted at the Kalgoorlie nickel smelter into nickel matte containing about 67% nickel. The mill and concentrator at Kambalda are supplied with third party ore and produce concentrate containing about 14% nickel. About 43% of the nickel matte was sold to overseas customers during 2009-10 compared with 60% in 2010-11. The nickel matte not sold overseas was refined at BHP Billiton's Kwinana nickel refinery to produce London Metal Exchange (LME) accredited nickel briquettes, nickel powder and other intermediate products such as cobalt-nickel-sulphide. The Kwinana nickel refinery has a capacity of 65 000 tonnes per annum (tpa) of nickel metal. BHP Billiton reported that a new hydrogen plant at its Kwinana refinery was successfully commissioned in the first half of 2012.

OJSC MMC Norilsk owns the Lake Johnston operations 500 kilometres (km) east of Perth, WA, and includes the Maggie Hays mine which re-opened in 2011. Norilsk noted in its annual report for 2011 and in its production report for 2011 that re-launch work at its pit and concentrator at the Lake Johnston project was completed and the concentrator was started in normal mode and its designed capacity was achieved in the second half of 2011. The ore for the concentrator is sourced from the Maggie Hays mine and the total nickel production in 2011 amounted to 1748 tonnes. The company investigated options for adapting existing nickel processing facilities at Cawse for the use of new hydrometallurgical technology. The plant was expected to be re-oriented towards the processing of sulphide feedstock from Norilsk's Australian sulphide nickel deposits. Norilsk is planning to produce a nickel hydroxide with a nickel content of about 50%, which bypasses smelting by directly refining the semi-product. The use of this technology is expected to reduce the costs of refined metal.

Xstrata Nickel Australasia Pty Ltd operates the Cosmos nickel project in WA which is made up of a concentrator at Cosmos and mines at Tapinos and Prospero. Another operation, the Sinclair Mine, which has its own concentrator, is about 100 km southeast of the Cosmos operations. In September, Xstrata announced the suspension of operations at Cosmos project and introduction of a care and maintenance schedule in response to adverse market conditions, including a prolonged period of low nickel prices and a strong Australian dollar. Evaluation of the newly-discovered Odysseus, Odysseus North and Odysseus Massive deposits at Cosmos was continued, with a view to completing a feasibility study by the first quarter of 2014 to enable an investment decision, which would depend on market conditions. Despite the situation at Cosmos, operations at Sinclair continued at normal capacity.

Xstrata reported that the impact of mining more disseminated ore bodies with inherent lower nickel grades was offset by substantially increasing the amount of ore treated by 46% to 778 073 tonnes.

Xstrata announced that metal in concentrates produced in 2011 from the Cosmos and Sinclair operations, amounted to 17 034 tonnes of nickel, 881 tonnes of copper and 396 tonnes of cobalt23. Additional information in the company's Preliminary Results 2011 noted that of the nickel produced, about 11 000 tonnes was from the Cosmos operation and about 6000 tonnes came from the Sinclair mine. The concentrate is transported by truck to the coastal town of Esperance in southwest WA and shipped to the Xstrata nickel smelter in Sudbury, Ontario.

Western Areas NL nickel mine at the Flying Fox deposit in WA produced 17 546 tonnes of nickel in concentrate in 2011. Open cut mining at the company's Spotted Quoll deposit produced 14 448 tonnes of nickel and an additional 197 tonnes of nickel in concentrates was produced from the underground ore drive at Spotted Quoll. All ore mined at Spotted Quoll is treated at the Cosmic Boy concentrator, which was upgraded during the first half of 2010 to a capacity of 550 000 tpa. The Cosmic Boy concentrator also treated the ore from the Lounge Lizard deposit. In March 2012, Kagara Ltd announced that it had completed the sale of its Lounge Lizard deposit to Western Areas. The nickel concentrate from the Cosmic Boy plant is delivered under off-take contracts to BHP Billiton in Kalgoorlie and to the Jinchuan Group in China.

During 2011, Panoramic Resources Ltd's underground mine operation at Savannah in WA produced 8343 tonnes of nickel, 4534 tonnes of copper, and 453 tonnes of cobalt. Nickel concentrates produced at the Savannah plant are contracted for sale to the Jinchuan Group in China. Panoramic continued to explore for extensions of the Savannah deposit below the 900 metre (m) structure and on 17 September 2012 reported drill intersections in two holes of:

  • 9.7 m at 2.55% Ni, 0.52% Cu and 0.16% Co, and
  • 8.5 m at 2.2% Ni, 0.51% Cu and 0.12% Co.

In 2011, Lanfranchi (WA) produced 10 205 tonnes of nickel and 903 tonnes of copper. On 12 April 2012, the company reported that drilling from the new hanging wall drill drive, testing the down-plunge extension of the Lanfranchi orebody, intersected broad zones of strong matrix and massive sulphide mineralisation including best intersections in three holes of:

  • 13.66 m at 9.31% Ni,
  • 12.59 m at 7.6% Ni, and
  • 9.32 m at 6.3% Ni.

The ore from the Lanfranchi operation is processed at the Kambalda nickel concentrator owned by BHP Billiton.

Mincor Resources NL nickel production for 2011 was reported under two groups of operations in WA. They are the North Kambalda operation made up of the Otter Juan and McMahon and Mincor's 70% interest in the Carnilya Hill mine. The operations yielded a combined production in 2011 of 3812 tonnes of nickel, 241 tonnes of copper and 47 tonnes of cobalt. The Southern Kambalda operations produced 4979 tonnes of nickel, 481 tonnes of copper and 90 tonnes of cobalt, from the Mariners and Miitel operations. The Carnilya Hill mine was closed in March 2012. The ore body was discovered by Mincor in 2006 and mining commenced in early 2008. A total of 339 849 tonnes of ore at 3.18% Ni was produced, at a life-of-mine cash cost of $4.96 per pound payable nickel.

Independence Group NL reported total production for 2011 of 9001 tonnes of nickel and 687 tonnes of copper from its McLeay, Victor South, Moran and Long mines in WA.

Fox Resources Ltd continued metallurgical testing for a possible bacterial heap leaching operation to treat nickel and copper resources from the Radio Hill mine and the nearby Sholl deposit in WA. The bacterial culture used to leach the metals from the sulphide ore is a mixed bacterial culture indigenous to the Radio Hill site. In mid-2010, the company announced updated Indicated and Inferred Resources of 4.22 Mt at 0.65% Ni and 0.76% Cu for its Radio Hill mine. An Indicated and Inferred Resource of 5.78 Mt at 0.54% Ni and 0.67% Cu was also reported for the Sholl B2 deposit. In September 201124, Fox Resources released a preliminary scoping study, revised from March 2011 for its heap leaching project. The heap leaching operation is expected to have a net present value of $73 million (8% discount rate) and an internal rate of return of 31% over the nine year life of the mine. The project is estimated to produce a net operating cash flow of $125 million with project revenues of $815 million over the initial mine life. In early 2012, Fox completed two drill holes adjacent to the existing trial pit at Radio Hill. The intersections are as follows:

  • Hole 11RHDD123 - 1.0 m at 0.41% Cu and 0.29% Ni from 31.6 m;
  • Hole 11RHDD123 - 0.95 m at 0.41% Cu from 47.05 m;
  • Hole 11RHDD123 - 2.3 m at 0.40% Cu and 0.67% Ni from 49.2 m; and
  • Hole 12RHDD124 - 8.9 m at 0.63% Cu and 0.38% Ni from 83.1 m, including 4 m at 0.82% Cu and 0.48% Ni.

The results will be used in a re-assessment of the near surface mineral resource and mining inventory for the Radio Hill heap leach project.

Poseidon Nickel Ltd announced on 12 November 2012 that the WA Minister for State Development had given conditional approval to resume nickel mining at the Mount Windarra site in the north eastern goldfields of WA. The proposal for the resumption of mining and processing operations at the Mount Windarra site includes:

  • Resumption of nickel mining at the Mount Windarra underground mine;
  • Commencement of nickel mining at the new Cerberus ore body;
  • Construction of a nickel flotation concentrator plant capable of minimum throughput of 700 000 tpa;
  • Construction of a gold tailings re-treatment facility; and
  • Installation of in-pit tailings deposition via a slurry pipeline to South Windarra.

Sirius Resources NL announced that on 21 July 2012 it had discovered the Nova nickel-copper-cobalt deposit in the Fraser Range, WA. The discovery followed drilling the southern end of a 1.2-kilometre long electromagnetic conductor. By September 2012, Sirius had drilled approximately 70 holes over the southern half of this conductor and delineated thick, continuous mineralisation over an area measuring approximately 500 m down plunge and up to 400 m down dip. The mineralisation forms a thick lenticular slab which is up to 60 m thick in the central part. Some of the better intersections (all true width) are:

  • Hole SFRD0061 - 61.68 m at 3.4% Ni, 1.27% Cu and 0.1% Co from 361.82 m, including 22.85 m at 5.83% Ni, 2.03% Cu and 0.17% Co,
  • Hole SFRD0077 - 63.6 m at 3.41% Ni, 1.3% Cu and 0.11% Co from 349 m, including 15.23 m at 7.01% Ni, 2.36% Cu and 0.22% Co from 363 m, drilled approximately 50 m down dip from hole SFRD0061; and
  • Hole SFRD0057 - 38.9 m at 3.23% Ni, 1.46% Cu and 0.1% Co from 393.01 m, including 24.86 m at 4.26% Ni, 1.77% Cu and 0.13% Co from 407.05 m, and including 10.11 m at 6% Ni, 2.75% Cu and 0.19% Co from 413.38 m, drilled towards the lower (eastern) edge of the deposit on the 700N line.

In addition, analyses of some drill samples have indicated platinum (Pt) values of 0.26 grams per tonne (g/t) and palladium (Pd) of 0.12 g/t.

Lateritic nickel deposits

The annual production for 2011 from the Murrin Murrin lateritic nickel plant in WA operated by Minara Resources Ltd was 28 500 tonnes of nickel and 1900 tonnes of cobalt. Another 1500 tonnes of nickel and 200 tonnes of cobalt were produced from third party ores. During 2011, the operation of the plant was hampered by a series of electrical storms, heavy rain and flooding. In addition, failure of an acid plant heat exchanger resulted in production continuing at a reduced rate until the heat exchanger was replaced. Production improved in the second half of the year, reflecting improved plant availability and an increase in processed ore-grade following the ramp-up to full production from the Murrin Murrin East ore body. In October 2011, Minara Resources was taken over by Glencore Investment Pty Ltd and was removed from listings on the Australian Securities Exchange.

First Quantum Minerals Australia Nickel Pty Ltd acquired the Ravensthorpe lateritic nickel operation in WA from BHP Billiton in February 2010. In a media release on 3 November 2011, First Quantum reported that:

  • The plant is performing well and ramping up as planned towards commercial operations before the end of 2011;
  • First production of nickel contained in mixed hydroxide was achieved on 4 October 2011;
  • Re-constructed plants consistently achieving design throughputs; and
  • Both Atmospheric Leach and Pressure Acid Leach plants have been brought on line.

First Quantum Minerals is planning to produce 39 000 tpa of nickel metal for the first five years and 28 000 tpa for the remainder mine life of about 30 years.

The SCONI (previously NORNICO) project in Qld is owned by Metallica Minerals Ltd and includes five key nickel-cobalt laterite deposits at Greenvale, Lucknow, Kokomo, Minnamoolka and Bell Creek. There has been significant interest in the company's potential to become a scandium producer. On 16 October 2012 Metallica announced25 that SCONI's combined resource base of Measured, Indicated and Inferred Resources for the southern deposits of Lucknow, Greenvale and Kokomo stood at 59.5 Mt at 0.51% Ni, 0.07% Co, 64 g/t scandium (Sc) using a 0.7% Ni equivalent cut-off grade (Ni equivalent is calculated using Ni + 1.5Co + 0.01Sc when the resource was estimated in October 2012).

Metallica has entered into a Heads Of Agreement with Bloom Energy to supply up to 30 000 kilograms (kg) of scandium oxide (Sc2O3) per annum (based on production output and Bloom Energy's global usage) with provision to increase supply up to 60 000 kg scandium oxide per annum (at Bloom's election) over the term of the agreement. Metallica has also has entered into a non-binding Memorandum Of Understanding (MOU) with KBM Affilips, Europe's leading producer of master alloys.

Under the MOU, KBM Affilips will assist Metallica with its ongoing feasibility studies and in developing relationships with key aerospace and component manufacturing companies in procuring funding for the development of the SCONI project and enter into commercial negotiations with respect to an offtake agreement governing the sale of scandium from the SCONI project. Based on ongoing discussions with potential scandium oxide end users, Metallica has revised its potential estimates for future scandium oxide demand from SCONI. Metallica announced an updated mine plan and a scoping study, for the SCONI project to allow production of approximately 90 tonnes of scandium oxide per annum over not less than 20 years based on a processing rate of 750 000 tpa of ore. The revised mining plan, which is designed to increase the scandium oxide production level, results in an increased pre-tax net present value of $870 million for the SCONI project (up from $402 million) and increased average annual operating margin of $213 million (up from $179 million).

Metals X Ltd owns the Wingellina lateritic nickel deposit in WA which has a published Probable Reserve of 167.47 Mt at 0.98% Ni and 0.08% Co as published on 6 September 201226. In July 2010, Metals X signed a Mining Agreement with the Ngaanyatjarra Land Council for the Wingellina project. The agreement is subject to regulatory approvals and a mining lease being granted. It is also awaiting completion of final water and environmental studies as well as the majority of its technical studies27. On 20 April 2011, Metals X through its wholly owned subsidiaries Austral Nickel Pty Ltd and Hinckley Range Pty Ltd entered into a Heads of Agreement with China's largest nickel producer, Jinchuan Group Ltd (Jinchuan) to sell to Jinchuan a 20% direct interest in the company's globally significant Wingellina Nickel-Cobalt Project as part of the project's advancement toward future production. In 2012, Metals X signed a non-binding MOU with Samsung C&T Corporation which is to complete an updated bankable feasibility study, provide technical expertise in engineering and assist with the financing and development proposals for the project.

The Barnes Hill project in Tasmania is a joint venture between Metals Finance, Proto Resources and Investments Ltd which owns the tenements. The project is based on a lateritic nickel deposit located in northeast Tasmania and has an Indicated Resource of 5.674 Mt of ore grading at 0.82% Ni and 0.06% Co. The Indicated Resource includes a Probable Reserve of 3.956 Mt at 0.84% Ni and 0.06% Co. In addition, the Barnes Hill deposit has an Inferred Resource of 933 000 tonnes at 0.77% Ni and 0.059% Co. Metals Finance has the right to earn a 50% equity interest in the project through the completion of flow-sheet designs, engineering and feasibility studies, procuring the funding required for implementation of the project and bringing it into production. A definitive feasibility study was completed at the end of June 2012. Proto also appointed Caterpillar Inc. as the equipment supplier to Barnes Hill and concluded a financing arrangement with Caterpillar Financial in Zurich. Proto is currently investigating the proposed processing route at Barnes Hill and expects to produce saleable iron and magnesium products as well as nickel and cobalt. An updated definitive feasibility study incorporated an increase in the throughput for the Barnes Hill project, from 250 000 tpa to 500 000 tpa28.

The combined Measured, Indicated and Inferred Resources for GME's NiWest nickel laterite project comprising the Mount Kilkenny, Hepi, Waite Kauri, Murrin North, Mertondale, Wanbana, Macey Hill and Eucalyptus nickel-cobalt laterite deposits at a cut-off grade of 0.8% Ni amount to 75.73 Mt at 1.01% Ni and 0.06% Co. The deposits are located about 50 km east of the Leonora township in WA and is adjacent to Glencore's Murrin Murrin lateritic nickel-cobalt mine. The area is well serviced with infrastructure, including a gas pipeline, an open access rail line linked directly to ports and a sealed road running through the project area and linked to established mining townships on either side. Over the past five years GME has invested over $15 million defining JORC Code compliant resources, undertaken metallurgical test programs, established water resources and completed pre-feasibility studies and partial feasibility studies on the development of a nickel heap leach operation29.

The previous partner (Vale Inco) in Heron Resources Ltd's Kalgoorlie Nickel Project (KNP) in WA withdrew from the project in July 2009 after spending $34.5 million on feasibility studies. Vale Inco completed a pre-feasibility study on four lateritic nickel deposits of the KNP project and Heron released a summary of the results in February 2009. That summary stated that the study investigated a project sized for up to 36 000 tpa of nickel intermediate product with a mine life of 34 years. A high-pressure acid leach operation was considered to be the best leaching technology with nickel and cobalt extractions of 96% nickel and 93% cobalt. Cash operating cost was estimated to be US$4.42 a pound of nickel (including cobalt credits) and the capital cost was estimated to be US$1.5 billion. Heron Resources completed further metallurgical studies and a detailed mining study that considered optimising individual pits and the sequence for mining. This study evaluated the project performance over three production rate scenarios of 2.5 Mt (Vale Base Case), 3.75 Mt and 5 Mt a year of leach feed. The company announced on 7 July 2011 that it had entered into a collaborative research agreement with the Commonwealth Scientific and Industrial Research Organisation (CSIRO) to undertake a detailed mineralogical and metallurgical study of the ore types at the KNP.


23 Xstrata plc, 2012. Production report 2011. 11 pp.

24 Fox Resources Ltd, 2011. Quarterly activities report for the period ending 30 September 2011. 18pp.

25 Metallica Minerals Ltd, 2012. Announcement to the Australian Securities Exchange, 16 October 2012. 4pp.

26 Westgold Resources Ltd and Metals X Ltd, 2012. Announcement to the Australian Securities Exchange 6 September, 2012.

27 Metals X Ltd, 2011. Annual Report 2011. 126 pp.

28 Proto Resources and Investments Ltd, 2012. Annual report 2012. 109pp.

29 GME Resources Ltd, 2012. Annual report 2012, 70pp.