CANADIAN miner First Quantum Minerals (FQM) has announced it is well on track to achieving production at its wholly-owned Ravensthorpe nickel-cobalt project. In a statement to shareholders on November 3, the company said the once-troubled Ravensthorpe project would begin commercial operations at the end of 2011.
FQM acquired the project, 550km southeast of Perth, from mining giant BHP Billiton for US$340 million in February 2010. BHP spent US$2.2 billion on the initial development of the project, which was expected to produce 50,000 tonnes per annum of nickel, or about 3 per cent of world capacity. Construction of the mine and processing plant began in 2004, and it was officially opened in 2008 at the height of the Global Financial Crisis. Nickel prices, having reached a high of US$50,000/t in May 2007, had dropped to
less than $11,000/t by this time.
In January 2009, after less than a year in operation, BHP announced it would suspend production indefinitely following massive cost blowouts, delays, difficulties in achieving design capacity and a slump in nickel prices. The decision to close the mine led to US$3.6 billion in write-downs for BHP and the loss of 1800 jobs, which had a major impact on the local economy.
In December 2009, FQM entered into a bidding agreement with BHP and acquired the project three months later, despite having offered the lowest of three bids. It is understood that joint bidders Minara Resources, which runs the Murrin Murrin nickel laterite operation in WA, and China Metallurgical Group offered US$360 million, while Andrew Forrest’s Poseidon Nickel bid US$400 million.
BHP stainless steel material head Gerard Bond said BHP was attracted to FQM’s financial capabilities and the lack of conditions on the company’s bid. FQM has since spent more than US$200 million to bring Ravensthorpe back into production. The company reported that it expected to produce 39,000tpa of nickel in the first five years of operations, and 28,000tpa for the remainder of the life of the mine. At that rate, the company would become Australia’s second largest nickel producer behind BHP.
The project’s three nickel laterite deposits are expected to contain sufficient reserves and resources to support a mine life of more than 30 years. The cash cost of production will be $5.25 per pound of nickel, based on price assumptions of $6.75/lb for nickel and $12/lb for cobalt.
Infrastructure and processing Phased commissioning of Ravensthorpe began in the first quarter of 2011 with the re-commissioning of existing elements. Commissioning of the new elements began in mid-2011, with first ore fed into the crushing plant in June.
An atmospheric leach (AL) plant was commissioned in September 2011, and within a month it was operating at an average of more than 90 per cent of design capacity. Two pressure acid leach (PAL) trains were successfully brought online in October and operated at up to 70 per cent of design capacity during their start-up campaigns, which were shortened for routine precautionary inspections. Ramp up of the AL and PAL was expected to be completed before the end of 2011 and commercial operations were expected to start by the end of 2011.
In its September 2011 quarterly activities report, FQM said the reconstructed crushing plants had met expectations and design throughputs.
“Both beneficiation plants have been re-commissioned, the surge ponds for beneficiated ore have been filled, and reject product from the new beneficiation plant has been successfully dewatered so that it can be readily conveyed and trucked,” the company reported.
“These achievements confirm that the problem areas identified prior to the acquisition of the project, within the crushing, beneficiation and rejects plants, have been successfully addressed.” FQM was expected to employ about 600 employees for the operation. The company owns 160, three-by-two and four-by-two houses in Hopetoun, in the Shire of Ravensthorpe, which will be utilised for employees.
FQM manager government and community relations Dave Coggin said the jobs created by renewed production from Ravensthorpe were welcomed by the local community, after the devastation felt when BHP announced its closure of the mine.
By Kate Christou