Nickel is a metal that is used as an alloy to impart strength, corrosion resistance and other electrical, heat and magnetic properties. Accordingly, about 65 per cent of world demand is for stainless steel used in consumer goods, chemical processing plants and construction. A further 20 per cent is used in metal alloys and 7 per cent in nickel plating. A fast growing demand is for nickel metal hydride electrical storage cells anticipated to represent 6 per cent of demand by year 2003.

About 99 per cent of Australia's nickel is produced in Western Australia supplying about 13 per cent of world production. The state produces 140 000 tonnes valued at A$1.0 billion that is projected to increase by year 2000 to 180 000 tonnes per year.


World production of nickel is 930,000 tonnes per year (of which 740 000 tonnes is new nickel). Production since 1990 has remained within 7 per cent of 1 million tonnes. About 230 000 tonnes (one quarter) is produced by Russia, 210 000 tonnes (one-fifth, of which Inco produces 180 000 tonnes) by Canada and one eighth each by New Caledonia and Western Australia (W.A.). While total production has remained steady, the new low-cost producers, notably in W.A., Indonesia and Colombia have promoted closures and intended closures in Canada and the USA and reductions in other countries.

New production is from Russia and CIS with exports of primary forms of 230 000 tonnes (one quarter of world production) in 1998; Cuba exported 60 000 tonnes, Colombia (Cerro Matoso) to produce 35 000 tonnes, PT Inco doubling by 2000 to 68 000 tonnes.

Canada has the Falconbridge's Raglan mine with a capacity of 21,000tpa. Inco owns the Voisey Bay laterite nickel deposit that could produce 120,000 tonnes based on 1000 mt of ore (though some is very deep and expensive to develop). In Jan 2000, though having paid A$4 billion in 1996, the project has been deferred.

Inco also has owns the world's largest nickel deposit at Goro in New Caledonia. It could produce 30,000 tpa by 2003 with acid leaching of the laterite nickel. With high rainfall, the project may have to pump the tailings into the ocean (unlike the WA projects operating in dry, high evaporation rate areas) that may cause environmental problems.)

Russia's large Norilsk project produces 210,000 tonnes based on sulfide deposits.


In Australia until 1998, only sulfide ores have been used which are deep and associated with volcanic rock. The new projects use laterite ores (oxides) which are cheaper to mine enabled by new technologies including high temperature & pressure acid leaching, ion exchange and electrowinning to produce a 99.8 per cent nickel at the one site. Not only using cheaper ores, the laterite ores contain cobalt which is about eight-times more valuable than nickel (to represent up to 40 per cent of the value of total production).

The new developments shifts the centre of production away from Canada to Australia which is set to produce 240 000 tonnes, and possibly as much as 300 000 tonnes per year by 2005 so as to reduce the world average cost of nickel production below US$1 per pound (including the cobalt credit) from US$2.10 per pound in 1998. (Cobalt prices are however falling, to US$10 per pound as 4.5-times as much cobalt is anticipated to be produced within ten years from the new laterite deposits).

World production could then reach 1.2 million tonnes by 2003 of which one-third would be supplied by Australia.

Production in 1999 was with WMC at 120 000 tonnes. Anaconda 40 000 tonnes, Bulong 9 000 and Cawse 8 500 tonnes. By September 2001, Bulong had produced a total of just 524 tonnes of nickel (35 tonnes of cobalt)  meeting 20 per cent of its target.

Sulfide ores

The process of extracting nickel involves crushing and and flotation that concentrates the ore 20-fold to 10 to 20 per cent concentration which is then roasted.

Production by WMC operations are at Leinster, Mt. Keith (60 000 tpa as metal), Kambalda (35 000 tpa) and also at Silver Swan and Forrestania.

About half the nickel ore is processed by WMC at the nickel refinery at Kwinana (54,000 tonnes) the balance is exported.

Mt Keith, 1,100 km north-east of Perth, has reserves of 270 million tonnes (0.55% nickel; mine life 20 years with recoveries of 73%) and is producing 42,00 tonnes of nickel as concentrate per year. WMC production costs have been reduced to US$2.11 per pound (price in March 1998 was US$2.50 per pound).

A biological process using bacteria to extract the nickel (by-passing roasting) is under development and may be applied to the Maggie Hays nickel project.

Titan resources on its Radio Hill mine in the Pilbara is claiming 74 per cent recovery with bacterial leaching.

The Yakabindie project owned by Dominion Mining and Korean company Daewo plan to use the new Activox technology - an oxidative high pressure leaching process.

Laterite ores

The new projects use laterite deposits where by the weathering process, for being closer to the surface, has converted nickel sulfides to oxide ores. There are two important benefits; they contain valuable cobalt and, being closer to the surface, can be produced by open-cut mining. Laterite ores are however difficult to concentrate using more complex metallurgical processes such as the reduction roast and ammonia leach at the QNI refinery near Townsville, Queensland. The new technology being applied in Western Australia uses PAL technology (next) and others use ferronickel reduction in New Caledonia, Colombia and Indonesia.

PAL Technology

The technology is pressure acid leach (PAL) which was developed in Cuba (Moa Bay) in the 1950's using the Sherrit process. It was developed as laterite ores are difficult to concentrate. WMC still has a controlling interest in the Pinares laterite project there (but has refused to participate in laterite nickel boom considering it too risky and citing cost overruns with the current producers).

The process involves acid leaching at high temperatures using sulfuric acid in a high temperature and pressure autoclave to dissolve the nickel and cobalt. (The autoclaves, to 30 m length and 4 m diameter, are produced in South Australia by the Australian Submarine Corporation involving the Detaclad process to bond titanium to steel). The autoclaves use a mixture of ore slurry and sulfuric acid at 280ºC under 5400 kilopascals of pressure.

Subsequent processing varies between the producers influenced in W.A. by the nature of the ores (how much sulfuric acid is consumed by alkaline minerals present) and perhaps even the quality of available process water (while Murrin Murrin has accessible water 50 km away at 2 000 mg/L (requiring the Sherrit process to be modified), Cawse uses water at 180 000 mg/L). A proposal to pipe desalinated seawater from Esperance is under consideration given shortage of even high saline water in the region. bulletMurrin Murrin has accordingly adopted the Sherritt process which precipitates the metals as sulfides, re-dissolution with oxygen under pressure followed by solvent extraction and hydrogen reduction. bulletBulong processing does not involve precipitation of the sulfide using the solvent directly on the cobalt nickel acid leachate with the metal produced by electrowinning (electrode depositing). bulletCawse precipitates the nickel and cobalt as a hydroxide, redissolving with ammonia and refining using solvents and production by electrowinning. PAL presents higher production cost than the processing of sulfide ores (by roasting) but offset by the value of the cobalt (and lower valued ores). In Western Australia, sulfuric acid is provided by imported sulfur (Murrin Murrin) or sulfuric acid (from nearby nickel roasters at Cawse and Bulong).

The major impediment to its wider use is the potential environmental hazard it presents in producing toxic metal salts as a by-product. The drier environment of W.A. underpins the success of this technology which has required other technologies in more environmentally sensitive locations.

Production cost are anticipated to be around US$1.50 per pound before the cobalt credit of US$0.50 per pound. Western world production costs are around US2.10 per pound. The new producers in WA may therefore become targets for takeover by current producers.

In 2001, Herron Resources, which has deposits of nickel in the Goldfields region of WA, has struck provisional agreement for a nickel hydroxide (containing 60 per cent nickel) to be processed by the WMC Kwinana nickel refinery.


Cobalt is used in superalloys (aerospace, turbines) hard metals (tooling), pigments, magnets, chemicals, other alloys and batteries. Cobalt represents an important netback for laterite nickel producers using the more expensive PAL technology.

World cobalt production is 30 000 tonnes having grown sharply from 20 000 tonnes in 1992 during this time its price has halved to around US$25 per kg. Collectively the WA producers are set to produce 6000 tonnes (20 per cent of world production) of cobalt per year valued at US$150m per year.

A feasibility study is being undertaken for a $A35 million cobalt refinery at Cawse to produce 1000 to 2000 tonnes of cobalt as the sulfide.

Murrin Murrin The Murrin Murrin project has a capital cost of A$1.0bn and is operated by Anaconda Nickel and Glencore International 60 km east of Leonora north of Kalgoorlie. In 1999, giant Anglo American acquired 23 per cent of Anaconda.For stage 1, it will require 40 000 tpa of imported sulfur (120 000 tonnes of sulfuric acid) to produce 45 000 tpa of nickel (and 3000 tpa of cobalt). It will use an acid leaching process to a mixed sulfide intermediate product followed by a nickel and cobalt refinery utilising oxygen leach, solvent extraction and hydrogen reduction to metal products. It will have capacity of 100 million pounds per year of high purity nickel and 6.5 million pounds of cobalt metal with a mine life exceeding 30 years. Its costs is around A$1.03 billion including costs for aspects of stage 2.  It will also produce 150 000 ammonium sulfate for fertiliser use. It will require 4.8 petajoules of gas pa. (13 Tjs per day) at stage 1 that will be derived from the Goldfields pipeline (costing A$4.45 per gigajoule including pipeline costs). A new line is being evaluated from the Dampier to Bunbury line to provide 20 terajoules per day for stage 2 and 10 terajoules per day for the Mt Margaret project. (The gas will cost only A$3.00).

Operating costs

In April 2001 (operating at 72 per cent capacity), operating costs per pound of nickel (after credits) were $US1.28 aiming for below $US 1.00 per pound of nickel at 100 per cent design capacity.  Stage 2, once announced to commence year 2000 and would have cost a further A$1billion and increase total production to 115 000 of nickel and 9 000 tonnes of cobalt. (WMC produces at total of 95 000 tonnes) has been deferred indefinitely. Technical difficulties that has cost A$300 million has contributed to this deferral and it will not reach full capacity until 2002.  Another project to produce 45 000 tonnes of nickel at Mt Margaret (160 km north of Kalgoorlie) has indicative reserves of 144 million tonnes of 0.79 per cent nickel and 0.05 per cent cobalt. The project is anticipated to have an output of 60 000 tonnes of nickel and 3 000 tonnes of cobalt. It could be commissioned in 2001. Anaconda would then be producing 20 per cent of world production of nickel.  Anaconda, has acquired 15 per cent of Centaur (August 2000, costing A$10.6m; it already owns 60 per cent of stage 2 [to produce 40 000 tpa]). 

Comment for May 2001

Anaconda said production for the March quarter was 5,714 tonnes of nickel and 361 tonnes of cobalt at Murrin Murrin. "Production recorded in March alone was 2,659 tonnes Nickel and 163 tonnes Cobalt, and production for the month of April is expected to consolidate this improvement, demonstrating the integrity of the company's ramp up schedule," . The company also said its C1 unit cash operating costs fell to $US 1.32/lb nickel during the quarter with a 34 per cent rise in production. "Overall nickel recovery for the March quarter was 83 per cent, a significant improvement on the 74 per cent nickel recovery achieved in the December quarter," Anaconda said.

Comment for May 2001

Anaconda Nickel Ltd plans to divest its interest in the Officer Basin water project and defer work on the Mt Margaret laterite nickel project and Geraldton to Mt Margaret natural gas pipeline projects.

Anaconda's Officer Basin project generated enormous media interest in 2000 when the Perth-based company claimed its discovery of a huge new underground reservoir was big enough to supply Perth for the next 4,000 years. It said the discovery opened the door to enormous potential opportunities for the region and the state and estimated the cost of developing the resource at about $200-300 million. 

Anaconda's 40 per cent-owned Murrin Murrin mine produced 5,565 tonnes of nickel and 293 tonnes of cobalt in the December quarter.It took 2001 nickel production to 24,991 tonnes compared to 12,998 tonnes in 2000 and 1452 tonnes of cobalt up from 922 tonnes in the previous year. During the three month period Anaconda shareholders approved the sale of all nickel production from Murrin Murrin to its joint venture partner and major shareholder Glencore International for the next five years. The company will also sell the Swiss commodities house all cobalt production until at least December 31, 2003.

Anaconda is about to enter arbitration with Fluor Daniel claiming breach of contract for defective design, construction and workmanship, delay costs, extra mobilisation and liquidated damages.


The Cawse project (cost A$350 million) is located 45 km north-west of Kalgoorlie and is operated by OMG. It uses sulfuric acid (250 000 tonnes) to produce 8 500 tonnes of LME-grade nickel and 1 700 tonnes of cobalt as cobalt sulfide. It is an open pit mine processing 500 000 tonnes of ore (2% nickel and 0.5% cobalt). It began January 1999 and in August 2000 was operating at 85 per cent capacity.

In December 2001, the project was sold for around A$20million to US OMG Group owing around A$600million. OMG is the world's largest cobalt producer and the fifth largest nickel producer (also producing derivative products). Indications are that OMG will produce a heavy concentrate and avoid the metal production stage.


The process uses hot 250șC sulfuric acid at 4.5 atmospheres of pressure to dissolve the nickel and cobalt. The process uses about 360 kg of sulfuric acid per tonne of ore processed supplied by the Kalgoorlie nickel smelter and imported sulfur. After autoclaving, most impurities are removed by adding limestone. Magnesia is added to precipitate the nickel and cobalt as a hydroxide slurry. Ammonium carbonate is added to drive off most of the remaining impurities. Cobalt is then precipitated from a leachate as a fine powder (sulfide) while the nickel-rich solution is conveyed to the refinery. At the refinery electrowinning produces 99.8% nickel, targeting 99.8%production cost of US$0.94 per pound was anticipated.

A stage 2 expansion to 40 000 tpa is anticipated.


The Bulong project (costing A$0.25bn) operated by Resolute 35km east of Kalgoorlie) involves high temperature acid pressure leaching followed by solvent extraction and electrowinning. It has reserves of 140 million tonnes of laterite nickel.

Some 250 000 tonnes of sulfuric acid will be required to produce 9 000 tonnes of nickel and 700 tonnes of cobalt. A phase 2 to produce 40 000 tonnes of nickel is planned. The acid will be neutralised for return to earth. Production costs of around US$1.04 per pound are believed to be incurred. In November 1999, Anaconda indicated intentions to purchase Preston's shareholding of 40 per cent. Anglo American, as a share holder in Anaconda, has indicated interest in purchase of Cawse, setting itself up as the major nickel producer in Australia.


Ravensthorpe nickel is a A$1.8 billion project owned by BHP Billiton who acquired the company from Comet in 1999,. It uses Enhanced Pressure Acid Leach technology.  The nickel and cobalt concentrate (mixed hydroxide precipitate) will be shipped from Esperance to QNI's Yabulu nickel refinery, Queensland at rate of up to 50,000 tonnes of contained nickel and 1400 tonnes of contained cobalt in an intermediate concentrate product called mixed hydroxide product. The company will require 500,000 tonnes of sulfur and 40,000 tonnes of magnesia per year from Queensland over the 25 year of the project.

Syerston in NSW

Black Range Minerals has begun a feasibility study in 1999 with a production cost projected of US$0.25 per pound.

WMC Nickel Refinery at Kwinana

WMC operates mines at Kambalda (eight after closure of three in September 1998), Mt Keith and Leinster (Goldfields region) in Western Australia producing 118,000 tonnes (108,000 tonnes after September 1998). Kambalda produces 34 000 tonnes being reduced in September 1998 to 24,000 tonnes employing 550 persons (down from 1200 in 1995). A new low cost mine is being developed at Kambalda expected late 1999.

Production 1998

Nickel Concentrate producers Tonnes pa
Kambalda 33 000
Leinster 44 000
Mt Keith 42 000
Total Nickel Concentrate 119 000
Kalgoorlie Smelter 100 000 nickel matte
Kwinana Refinery 67 000 nickel metal

The cash cost of production has averaged A$2.05 a pound (the price of nickel in September was US$1.83 a pound or US$4000 per tonne having halved in last 12 months).

Processing involves upgrading the ore (1 to 3 per cent nickel) content by crushing and separation by froth flotation to 10 to 18 per cent content. The concentrate is then smelted at the Kalgoorlie nickel smelter to produce a granulated nickel matte containing 70 per cent nickel. About two-thirds of production is processed at the Kwinana nickel refinery.

The refinery has a production capacity of 67 000 tonnes of nickel powder and briquettes using the Sheritt Gordon process. It was established following the nickel discovery in 1966 at Kambalda.


The process involves leaching the nickel matte with ammonia at 85ºC and high pressure which dissolves the nickel as an ammonia complex while precipitating many metal impurities. After oxydrolysis which removes the ammonia, hydrogen is passed through the solution at high pressure and temperatures to produce a nickel powder. Most of the powder is converted to the briquette. Ammonium sulfate is produced as a by-product and sold to fertiliser producers.


Queensland Nickel Industries operates the Yabulu refinery (near Townsville) which produced 7054 tonnes of nickel (6613 tonnes in 1996) and 393 tonnes of cobalt. It has a capacity of 30 000 tonnes per year. The refinery treated 575 000 dry tonnes of ore at 1.49 per cent nickel (cobalt graded 0.17 per cent). Recoveries were 83 per cent for nickel and 40 per cent for cobalt. The project is owned by Billiton, Europe's second largest mining house that is acquiring a stake in Comet at Ravensthorpe. If it acquires an interest in Comet, it will expand to 65 000 tonnes outlaying A$200 million. 

Preston Resources will operate the Malborough (70 km north west of Rockhampton) Queensland laterite project costing A$540 million. It aims to produce 25 000 tonnes of nickel and 2 000 tonnes of cobalt.

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