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|Estimation of operating costs in the nickel production industry requires a detailed analysis of material flows from mine to smelter to refinery. Despite the small number of nickel producers compared to other base metals, the existence of two very different ore types (sulphide and laterite) and a wide variety of mining and processing technologies make the identification of these flows of critical importance if an accurate global picture is to be obtained. Smelting and refining processes in nickel metallurgy have evolved with a high degree of adaptation to specific operating conditions in different locations. Overall costs are calculated by combining individual cost elements for each unit in production chains from mine to saleable metal product. The average cost of western world primary nickel production in 1995 was US$2.07/lb ($4560/tonne). Average operating costs remained virtually unchanged in the three years to 1995 after an 8.5 per cent fall in 1993, but a 3.9 per cent increase to $2.15/lb is expected for 1996. A major factor in this rise results from the lower prices of copper and cobalt this year, reducing the by-product credits available to major producers.|