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Daily Nickel & Stainless Steel Prices News Commodity Comments, 4th item down.
Nickel Laterites Margins Squeezed
Some nickel laterite projects, more costly to run than nickel sulfide mines,
are also moving closer to the marginal cost of production.
Laterite deposits, where nickel is usually extracted by heap leaching, face a
double whammy of lower nickel prices and soaring prices of sulfur. Sulfur,
used in the leaching process, has doubled since last year to US$800/ton.
"Nickel laterite projects will also be struggling, like Goro or Koniambo,"
Pervan said, referring to Brazilian miner Companhia Vale do Rio Doce or Vale's
60,000-ton nickel mine in that is due to start production next
year.
U.K-based Xstrata Plc plans to bring Koniambo, the same size as Goro and also
in , into production in 2011.
In , analysts have slashed earnings forecasts for Minara Resources
Ltd.'s (MRE.AU) by more than 30% in response to falling metal prices, and
soaring sulfur costs.
"There will be stress for Minara's heap leach project," said a
Melbourne-based analyst who declined to be named. Minara's A$300 million
expansion at its Murrin Murrin operation is expected to deliver an additional
8,000 to 10,000 tons of nickel per year.
But the market for funding of robust projects is still in good shape,
analysts say. "There is still equity to be had although of course conditions
are tougher than at the start of the year," said Tony Robson, analyst at BMO in
.
Australia-listed Mirabela Nickel Ltd. (MBN.AU) earlier this month secured a
loan facility of US$280 million for its nickel sulfide operation in ,
showing there is still financing available for good projects, the
Melbourne-based analyst said.
But tougher credit market conditions are forcing miners to offermore
accommodative terms while raising equity or debt, he added. "Companies have to
give away more to make things work. This is where they are feeling the pain."