By Barry Fitzgerald
CANADA'S First Quantum Minerals says it is well on the way to achieving something BHP Billiton was unable to do despite spending billions - achieve commercial production at the Ravensthorpe nickel/cobalt project.
First Quantum told the Canadian market in its September-quarter activities report that commercial operation status would be achieved before the end of this year, with recommissioned parts of the processing plant and its new elements meeting expectations and design throughput.
Ravensthorpe nickel plant in operation.
BHP spent $3 billion developing the laterite nickel project. It was opened in 2008 as a 50,000-tonne-a-year nickel producer but closed in January 2009 in response to a collapse in nickel prices to $US4 a pound and difficulties in achieving design capacity.
First Quantum acquired the project, 550 kilometres south-east of Perth, for a knock-down price of $US340 million in February 2010 and is spending more than $US200 million bringing it back as the annual producer of 39,000 tonnes a year of nickel in the first five years, and 28,000 tonnes a year afterwards.
The company said problem areas identified before it acquired the project - within the crushing, beneficiation and rejects plants - had been resolved.
When BHP closed the operation, 1800 workers lost their jobs - one of the biggest job hits in Australia from the global financial crisis.
The nickel price has since recovered but, at $US8.38 a pound yesterday, it is well short of its level of more than $US11 a pound six months ago.
First Quantum has said previously it expects cash costs of production at Ravensthorpe of $US5.25 a pound - after cobalt credits at an assumed price of $US12 a pound, compared with the current price of $US28.50 a pound.