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 13.2% from 20.4 million tonnes (Mt) to 17.7 Mt in 2012 as a result of mining companies revising their resources. About 88% of Australia's EDR is in 15 deposits. Australia's EDR of nickel can be subdivided as follows:
- About 42.4% of Australia's EDR comprise Reserves as defined under the Joint Ore Reserve Committee (JORC) Code.
- About 57.6% is made up of published JORC Code compliant Measured and Indicated Resources.
Western Australia (WA) retains the largest nickel resources with 96.0% of total Australian EDR. Queensland (Qld) is the second largest with 3.8%, followed by Tasmania (Tas) with 0.2%. The EDR in WA comprises both sulphide and lateritic deposits, while EDR in Qld is associated with laterite deposits.
Subeconomic Demonstrated Resources (Paramarginal plus Submarginal Demonstrated Resources) account for about 11.0% of total Identified Resources in 2012. Paramarginal Resources increased from 3.5 Mt to 4.2 Mt, while the Submarginal Resources decreased from 0.6 Mt to 0.2 Mt. A total of 75.0% of the subeconomic nickel resources are in WA.
Inferred Resources decreased from 18.4 Mt to 17.8 Mt in 2012 with WA maintaining its dominance with 87.6% of the total followed by NSW with 5.7%.
The ratio of Inferred Resources to EDR in 2012 was 1:1.
Currently, all nickel EDR is accessible for mining. At the rate of production in 2012, Accessible Economic Demonstrated Resources (AEDR) of nickel is sufficient for about 73 years.
About 42% of AEDR is made up of Joint Ore Reserve Committee (JORC) Code Reserve. The remaining 58% 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 Securities Exchange.
Total JORC Code Reserves of nickel are adequate for 31 years at current rates of production.
Expenditure on nickel-cobalt exploration for 2012 as reported by the Australian Bureau of Statistics was $235.7 million, a decrease of 10.1% on 2011. WA attracted most of this expenditure with $228.4 million.
All of Australia's nickel production in 2012 was from WA and amounted to 244 kilotonnes (kt), up from 215 kt in 2011, as reported by the Australian Bureau of Resources and Energy Economics (BREE). The value of all nickel products exported was $4.005 billion and was Australia's eight most valuable mineral and petroleum export commodity. Australia was the world's fourth-largest nickel producer behind Philippines, Indonesia and Russia accounting for 11.4% of estimated world mine production.
Based on figures published by the United States Geological Survey and the latest Australian resource figures, world economic resources of nickel decreased to 72.6 Mt in 2012 from 76.0 Mt in 2011. Australia's share of world economic resources of nickel was 24.4% in 2012. It remained the largest holder of economic resources followed by New Caledonia (16.5%), Brazil (10.3%), Russia (8.4%) and Cuba (7.6%).
Russia was the largest producer with 330 kt (15.4%), followed by Indonesia with 320 kt (14.9%), Philippines with 270 kt (12.6%) and Australia with 244 kt (11.4%).
In its September Resources and Energy Quarterly 2013, BREE reported the nominal average price for nickel in 2012 was about US$17 504 a tonne, a decrease from about US$22 854 in 2011. The average spot price of nickel in 2013 is forecast to decrease by 14% to US$15 103 a tonne, relative to 2012. In the longer term however nickel spot prices are projected to increase over the period 2014 to 2018 and average US$16 250 a tonne in 2018 (in 2013 US dollars).
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. Glencore Xstrata plc closed down its sulphide nickel operations at Cosmos in 2012 but continued its small nickel mine at Sinclair, WA. Glencore Xstrata's Murrin Murrin lateritic nickel mine continued to operate in 2012 and First Quantum Minerals Australia Nickel Pty Ltd continued production of nickel mixed hydroxide precipitate from its lateritic nickel operation at Ravensthorpe in 2012.
Nickel sulphide deposits
BHP Billiton reported that its WA operations produced 104 200 tonnes of nickel during 2012 sourced from the Mount Keith, Leinster (Perseverance) and Cliffs mines. Production was down from 109 000 tonnes in 2012. Western Nickel also operate the Kambalda concentrator south of Kalgoorlie, where ore is sourced through tolling and concentrate purchase arrangements with third parties in the Kambalda region. Leinster and Mt Keith have reserve lives of eight and 12 years, respectively; both have options for further expansion. Cliffs is a high-grade underground mine with a reserve life of four years. The reduction in nickel production during 2012 due to planned maintenance at the Nickel West' Kalgoorlie smelter and Kwinana refinery.
Ore from Mt Keith mine is concentrated at Mt Keith and then transported by road approximately 110 kilometres to Leinster for drying. Ore from Cliffs and Leinster mines is concentrated and dried at Leinster. Dry nickel concentrate is then transported via road and rail approximately 375 kilometres to the Western Nickel's Kalgoorlie smelter. Concentrate from Kambalda is transported via rail approximately 60 kilometres to the Kalgoorlie smelter. Small volumes of concentrate are sold into the external market; however, the majority of volumes are processed into nickel matte, containing approximately 68% nickel. In 2012/2013, approximately 34% of the nickel matte production was exported. The remaining nickel matte is transported, principally by rail, to Western Nickel's Kwinana nickel refinery, a distance of approximately 650 kilometres. The nickel matte is processed into nickel metal in the form of LME grade briquettes and nickel powder, together with a range of saleable by-products.
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.
BHP Billiton announced on 17 December 2013 that due to a seismic event on about 31 October 2013, production at Nickel West Leinster Perseverance underground mine was ceased due ongoing safety concerns.
OJSC MMC Norilsk owns the Lake Johnston operations 500 kilometres east of Perth, WA, and includes the Maggie Hays mine which was placed on care and maintenance in April 2013. The ore for the concentrator is sourced from the Maggie Hays mine and the total nickel production in 2012 amounted to 8975 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 kilometres 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. Mining operations ceased at Sinclair in May 2013 as resources were exhausted but stockpiled ore will continue to be processed.
Xstrata announced that metal in concentrates produced in 2012 from the Cosmos and Sinclair operations, amounted to 11 674 tonnes of nickel, 573 tonnes of copper and 322 tonnes of cobalt1. 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 mined 18 884 tonnes of nickel in 2012. Underground mining at the company's Spotted Quoll deposit produced 8169 onnes of nickel and an additional 2280 tonnes of nickel in concentrates was produced from the open cut operation at Spotted Quoll. All ore mined at Flying Fox and Spotted Quoll is treated at the Cosmic Boy concentrator. 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. As reported in Western Areas' 2013 annual report, total high grade Measured, Indicated and Inferred Resources at 30 June 2013 for the Flying Fox and Lounge Lizard deposits amounted to 1 676 487 tonnes at 5.7% Ni and an additional low grade disseminated Measured, Indicated and Inferred Resources of 4 983 000 tonnes at 0.8% Ni. The Spotted Quoll deposit has Indicated and Inferred Resources of 2 919 200 tonnes of ore at 5.9% Ni. The company also reported, in their September 2013 quarterly report, an initial Indicated Resource of 113 000 tonnes at 9.3% Ni and Inferred Resources of 22 000 tonnes at 11.0% Ni for their Spotted Quoll North deposit. Western Areas noted in their annual report for 2013 that the annual cash cost of nickel in concentrate was A$2.68/lb which puts Western Areas as the lowest cost nickel miner in Australia.
Western Areas is also developing its 'BioHeap' high pH leaching microbial culture. The company reported in its 2013 annual report that testwork on a process stream from the Cosmic Boy concentrator (CBC) was completed and the encouraging results are being used to conduct a preliminary engineering study. The testwork on the process stream from CBC has verified the capability of BioHeap's high pH microbial cultures. The company claimed that this study has the potential for BioHeap to provide unique solutions to concentrators around the world for process streams that world normally be rejected from final concentrates.
During 2012, Panoramic Resources Ltd's underground mine operation at Savannah in WA produced 7360 tonnes of nickel, 4438 tonnes of copper, and 401 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:
- 9.7m at 2.55% Ni, 0.52% Cu and 0.16% Co, and
- 8.5m at 2.2% Ni, 0.51% Cu and 0.12% Co.
In 2012 Lanfranchi (WA) produced 11 897 tonnes of nickel and 1014 tonnes of copper. The ore from the Lanfranchi operation is processed at the Kambalda nickel concentrator owned by BHP Billiton.
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:
- 13.66m at 9.31% Ni
- 12.59m at 7.6% Ni
- 9.32m at 6.3% Ni
On 27 November 20132 Panoramic reported that drilling east of its Deacon deposit in the Lanfranchi group showed that the combination of channel facies lithologies, a strong off-hole conductor and mineralisation all suggests there could be another mineralised channel east of Deacon.
Mincor Resources NL nickel production for 2012 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 2012 of 3500 tonnes of nickel, 283 tonnes of copper and 62 tonnes of cobalt. The Southern Kambalda operations produced 5564 tonnes of nickel, 537 tonnes of copper and 105 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% nickel was produced, at a life-of-mine cash cost of $4.96/lb payable nickel. Mincor reported in their September 2013 quarterly report that both McMahon and Otter Juan are likely to close before the end of 2013.
Independence Group NL reported total production for 2012 of 11 094 tonnes of nickel and 840 tonnes of copper from its McLeay, Victor South, Moran and Long mines in WA. The company noted in its September 2013 quarterly report that it was continuing exploration drilling at Long North and Moran South deposits. Independence also reported in their 2013 annual report that payable cash costs for the 2012/2013 financial year, including royalties, was A$4.34/lb Ni. The nickel ore produced from the Long operation is treated at the BHP Billiton Nickel West Pty Ltd Kambalda nickel concentrator.
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;
- Installation of in-pit tailings deposition via a slurry pipeline to South Windarra.
Poseidon reported in their September 2013 quarterly report that the permitting process has been completed but the company is waiting for improvement in demand for nickel before seeking financing for the project. The company also reported additional new mineralised zones of nickel close to existing mine with true zone widths as follows:
- 8.68 metres at 2.36% Ni,
- 17.53 metres at 3.52% Ni, and
- 3.57 metres at 2.77% Ni
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 metres down plunge and up to 400 metres down dip. The mineralisation forms a thick lenticular slab which is up to 60 metres thick in the central part. On 28 February 2013 Sirius announced another discovery east of Nova named the Bollinger deposit. These discoveries were followed by mineral resource assessments released on 15 July 2013 stating that the combined Indicated and Inferred Resources for Nova-Bollinger totalled 14.6 million tonnes (Mt) at 2.2% nickel, 0.9% copper and 0.08% cobalt for 325 000 tonnes of nickel, 134 000 tonnes of copper and 11 000 tonnes of cobalt (at a 0.6% nickel equivalent lower cut-off). Results of a scoping study for the Nova-Bollinger project was released on 18 September, 2013 which included the following:
- Production of separate nickel and copper concentrates planned to commence in mid-2016 with an initial mine life of 10 years,
- Projected life of mine nickel revenue of A$4.6 billion,
- Projected net cash flow of A$2.8 billion (including capital),
- Estimated cash operating cost of A$1.75/lb Ni in concentrate (after by-product credits),
- Estimated capital cost to first concentrate production of A$471 million including A$51 million of contingency,
- 1.5 Mtpa throughput plant resulting in average annual production of 28 000 tonnes nickel and 11 000 tonnes copper in concentrate
- Mining inventory of 13.9 Mt grading 2.0% nickel, 0.82% copper and 0.07% cobalt for a contained 276 000 tonnes nickel, 114 000 tonnes copper and 9300 tonnes cobalt,
- Definitive feasibility study on track to be completed by mid-2014 enabling underground development and on-site construction to start in the third quarter of 2014.
Lateritic nickel deposits
The annual production for 2012 from the Murrin Murrin lateritic nickel plant in WA operated by Glencore Xstrata plc was a record 33 400 tonnes of nickel and 2400 tonnes of cobalt.
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.
- 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 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 21 October 2013 Metallica announced3 that SCONI's combined resource base of Measured, Indicated and Inferred Resources for the southern deposits of Lucknow, Greenvale and Kokomo stood at 89.1 Mt at 0.58% Ni, 0.06% Co, 48 g/t scandium (Sc) using a 0.7% Ni equivalent cut-off grade (Ni equivalent is calculated using Ni + 1.5Co + 0.01Sc using commodity prices of US$10/lb Ni, US$15/lb Co, and US$1500/kg Sc2O3). Metallica also reported a Measured, Indicated Inferred Resource of scandium totalling 20 Mt at 162 g/t Sc, 0.3% Ni and 0.06% Co. 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 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 20124. 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. Environmental approvals are expected to be finalised in 20135. 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 company reported in their 2013 annual report that in response to falling nickel and cobalt prices and depressed nickel market outlook, a decision was made in June 2013 to defer the expenditure on the updated feasibility for a period of up to 12 months.
The Barnes Hill project in Tas is a joint venture between Metals Finance and Proto Resources & Investments Ltd which owns the tenements. The project is based on a lateritic nickel deposit located in northeast Tas 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 which Inferred Resource of 933 000 onnes at 0.77% Ni and 0.059% Co. Proto released results of an updated feasibility study on 26 March 20136 which estimated construction capital for the project of $78.4 million, operating costs of $5.16/lb (nickel equivalent with cobalt credits) in the first 5 years, $5.75/lb over the first 10 years and a net present value of $143.6 million (12.5% discount rate). The feasibility study is based on commodity pricing of $10/lb Ni and $13/lb Co with foreign exchange parity.
The combined Measured, Indicated and Inferred Resources for GME's NiWest nickel laterite project comprising the Mount Kilkenny, Hepi, Waite Kauri, Murrin North, Mertondale, Wanbanna, 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 kilometres 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. The company released the results of a scoping study on 11 December 20137 which included the following:
- Optimum start up project at 1.5 Mtpa combined heap leach - direct solvent extraction and electrowinning process plant.
- Defined resources support minimum 20 year operation with potential to extend further or scale up production.
- Annual production rate of 14 000 tonnes nickel cathode and 540 tonnes cobalt.
- Based on a nickel price of US$10/lb and an exchange rate of US$1.00 to A$0.85.
- Operating Cost at US$5.68/lb nickel (includes royalties).
- Capital Cost of A$460 million (includes contingency of A$103 million).
- Operating surplus of A$2.8 billion pre-tax (includes capital payback).
- Net present value of A$934 million pre-tax (10% discount).
- Internal rate of return of 37%.
- Pay back on capital in 2 years.
- Capital intensity at US$12.75/lb annual nickel production.
Heron Resources Ltd announced on 18 December 20138 that it has entered into a strategic partnership with the Simulus Group (Simulus) to co-fund the development of an atmospheric leach process together with the acid recovery and recycling for Heron's lateritic nickel deposits. Heron stated that the process has the potential to reduce the capital and operating costs associated with development of its lateritic nickel deposits compared with the high pressure acid leach (HPAL) process employed in the 2009 and 2010 KNP (Kalgoorlie Nickel Project) pre-feasibility studies. Simulus has now commenced testwork on Heron's Siberia limonite ore, and the production of a scoping study to assess the capital and operating costs for a commercial scale nickel laterite processing operation based on atmospheric leaching and reagent recovery within a fairly standardised mixed hydroxide product flowsheet. Heron's total Measured, Indicated and Inferred Resources of its lateritic nickel and cobalt deposits on 18 October 20139 amounted to 655.4 Mt at 0.693% Ni and 0.047% Co.
- Xstrata plc, 2013. Production report for the 12 months ended 31 December 2012. 13 pp.
- Panoramic Resources Ltd, 2013. Company Update - November 2013. Announcement to the Australian Securities Exchange, 27 November 2013, 6 pp.
- Metallica Minerals Ltd 2013. Greenvale mineral resource update & Sconi JORC Code 2012 statement. Announcement to the Australian Securities Exchange, 21 October 2013. 40pp
- Westgold Resources Ltd and Metals X Ltd, 2012. Announcement to the Australian Securities Exchange 6 September, 2012,
- Metals X Ltd, 2013. Presentation to the annual general meeting 2013. 32pp.
- Proto Resources & Investments Ltd, 2013. Barnes Hill optimised feasibility study completed. Announcement to the Australian Securities Exchange, 7pp.
- GME Resources Ltd 2013. NiWest nickel laterite project: scoping study results. Announcement to the Australian Securities Exchange, 11 December 2013, 9pp.
- Heron Resources Ltd 2013. Kalgoorlie Nickel Project update - exclusive partnership with Simulus. Announcement to the Australian Securities Exchange, 18 December 2013, 2pp.
- Heron Resources Ltd 2013. Kalgoorlie Nickel Project updated mineral resource estimate. Announcement to the Australian Securities Exchange, 18 October 2013, 23 pp.