A Nickel's Worth Of Change

INTRODUCTION A nickel doesn't buy much anymore. That's even true in the cost of recovering nickel -- the commodity. A 5[C] per pound (11 [c] per kilogram) increase in the nickel price won't cover a 10-percent increase in fuel costs for processing laterite ores, nor will it cover a 10- percent increase in wages for recovering nickel from a sulphide ore. It won't even cover a 5- percent increase in the capital cost necessary to mine and process ocean nodules. The basis for this statement and a quantitative analysis of the variations in costs to recover nickel from different types of nickel ores will be discussed in this paper. During the early part of the 1970's, the interest in nickel and its potential development was shifting from Canada to the Pacific Basin area. Canadian growth rate was slowing and each additional increase in nickel capacity was very expensive (Argall, G.O., 1970). Laterite ores were attractive to developers since they were easy to mine at a low labor cost, and technologies were being developed that would allow the recovery of nickel in marketable forms (Mohide, T.P., Warden, C.L., Mason, J.D., 1977). During the last decade, new laterite production was achieved in the Philippines and Botswana, and a significant increase in production from Indonesia and New Caledonia occurred. However, recent reports on nickel identify numerous problems plaguing the industry, i.e., high energy costs that are forcing shutdowns (INCO, 1980), (Mohide, T.P., Warden, C.L., Mason, J.D., 1977), high Canadian sulphide mining labor costs (Anon., 1976), and rapid inflation of nickel capital costs (Anon., 1981b). No definitive study has been made to determine how sensitive the total cost of production is to rising energy, labor, or capital costs, or to identify to what extent increased byproduct revenues could be used to offset these production costs. The purpose of this paper is to quantify the effects of increases in energy, labor, capital costs, and by-product credits on the future cost of production from nickel reserves and/or resources. METHODOLOGY OF ANALYSIS In order to evaluate the sensitivity of nickel production costs to changes in energy, labor, and capital costs, and in byproduct revenues, an analysis was made of existing and proposed nickel operations, their costs, and their sensitivity to change. The data for these analyses were obtained from numerous sources including international govern¬ment and university publications, professional journals, company reports, private communications, U.S. Bureau of Mines contracts, and estimates by Bureau of Mines personnel. These data were collected, in part, as an ongoing effort of the U.S. Bureau of Mines Minerals Availability System (MAS) to systematically measure and classify identified mineral resources according to their respective extraction technologies, economics, and commercial availability. The MAS Program is currently evaluating the present and potential availability of nickel to the United States in relation to mining, beneficiation, smelting, refining, leaching, transportation, infrastructure, environment, land use, labor, productivity, technology efficiencies, operating capacities, deposit life, and political factors. As a summary of this data, the following briefly describes nickel ore types as each relates to energy, labor, capital, and byproducts. Sulphide Operations Nickel is currently available from sulphide deposits. Roughly 55 percent of the current world nickel production in market economy countries is from sulphide ores, although only about 20 percent of the known land-based nickel reserves and/or resources are sulphides (INCO, 1981). In 1979, the Western World sulphide reserves were estimated at about 9.2 million metric tons of nickel (Little, A.D., 1979). Sulphide ores are typically mined underground, thus resulting in high mining costs; however, these ores can often be upgraded by flotation prior to final nickel recovery and require about one-third of the energy required to recover nickel from laterites (Anon., 1981c). In addition, nickel in sulphide ores may be associated with economically recoverable byproducts, which include copper, cobalt, gold, silver, and other precious metals. Laterite Operations Forty-five percent of current nickel production is from laterite deposits. Laterite deposits account for 80 percent of the known land-based nickel reserves and/or resources (INCO, 1981). In 1979, the Western World laterite reserves were estimated at over 35 million metric tons of nickel (Little, A.D., 1979). Nickeliferrous laterites are residual soils formed by weathering, typically under tropical or near tropical conditions. They can be easily mined by open-cut methods, but generally cannot be beneficiated; thus, recovery of nickel must entail processing of the total mined ore. Usually, these ores have high moisture content (20 to 30 percent by weight) that result in additional fuel costs to dry the ore. Nickel silicates, garnierites, are, processed by pyrometallurgical methods; limonite nickel oxides are normally leached. Byproduct cobalt is not recovered from most ferronickel operations, and is only recovered to a limited extent from many leach operations.