The case for low-grade sulfide nickel deposits

Nickel deposits come in two forms: sulfide or laterite. About 60% of the world’s known nickel resources are laterites, which tend to be in the southern hemisphere. The remaining 40% are sulfide deposits. The main benefit of sulfide ores is that they can be concentrated using the fairly simple flotation technique. There is no such technique for nickel laterites. The rock must be completely molten or dissolved to enable nickel extraction. As a result, laterite projects require large economies of scale at higher capital costs to be viable. They are also generally much higher cash-cost producers than sulfide operations. Decades of underinvestment equals few new large-scale greenfield nickel sulfide discoveries — since 1990, the only large greenfield discoveries happened when exploration was going on for other metals: Voisey’s Bay was diamond exploration, Kabanga was gold exploration, and when Enterprise was discovered in Zambia they were looking for copper. Very little project development and exploration has been done over the past few years for nickel. The result has been a limited pipeline of new projects, especially lower-cost sulfide projects in geopolitically safe mining jurisdictions. Increased political risk, population and economic growth are causing the exploitation of lower-grade, larger deposits in riskier countries to mine in. Generally sulfide deposits are found in more politically stable jurisdictions (e.g. Canada, Australia, Greenland) versus laterite deposits (Indonesia, Philippines, PNG, New Caledonia, many parts of Africa). Sulfide minerals require much less energy to liberate nickel than laterites. China is the leading consumer of nickel and is competing for supplies with US industrial demand, as well as India, Russia and Brazil. Exploration and development are subject to bubbles. Capital requirements are huge and the time required to bring in new capacity is measured in decades.

 Richard (Rick) Mills

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