2011 was an interesting year for the Devil's metal
By Patrick Whiteway
Twenty-eleven was an eventful year for nickel, the steely grey metal that is so essential to high end stainless steels and finds a myriad of modern applications from rechargeable batteries to jet engines. The world of nickel had everything a mine engineer could ask for in 2011: Prices gyrated, supply and demand increased over 2010 and the organization that represents companies that mine and refine this 'envrio-metal,' the Nickel Institute, suffered a humiliating defeat in the courts of Europe.
2011 began with the price of nickel hovering above US$11 a pound and ended the year significantly lower at US$8.49. Demand from stainless steel producers in China, which use 25% of all nickel mined on the planet, continued to grow, although at a much slower pace than was anticipated at the beginning of the year by the most bearish of analysts. Meanwhile, nickel producers continued to build supply, thus dragging prices downward.
From where this mine engineer sits, the top nickel stories of 2011 were as follows:
1. Human health and environment classificaitons where upheld in Europe. In July, the European Court of Justice rendered a final decision on a case brought before it by the Nickel Institute. The decision neutered the industry's argument that Europe's reclassification of a wide range of nickel compounds is unlawful. The only winners in this very costly debacle were the over-priced lawers in London and Toronto. The millions wasted could have been used to increase our understanding of how nickel compounds impact human and environmental health;
2. Nickel laterite operations failed to meet expectations. Nickel laterite operations such as Sherritt International's Ambatovy project in Madagascar and Vale's Goro project in New Caledonia, for example, struggled to meet production and capital expenditure targets;
3. 'Social licence to operate' issues slowed new mine building in the developed world. Nickel developments in Canada encountered social challenges with Cliffs Natrual Resources and Noront, two companies in the so-called 'Ring of Fire' nickel-chromium development in northern Ontario, running into "social licence to operate" snags;
4. Supply and demand headed toward imbalance. Nickel prices fell over the 12-month period due to an increase in supply and a slower than anticipated increase in demand brought on by a slumping global economy;
5. Carbon taxes began their inevitable rise to prominence. Australia approved a carbon tax in October and authoritarian China, which is home to the environmental disaster that is nickel pig iron production, signaled it would bring in a carbon tax within the next five years;
6. The new kid on the block made waves. The world's largest metals trader, Glencore Inc., went public in June and signaled its interest in nickel by increasing its grip in Minera, operator of the Murrin Murrin mine, a profitable nickel laterite operation in Western Australia;
7. Cash-rich majors modernized existing operations. Norilsk announced major capital expenditures in Russia and Xstrata and Vale both announced major capital investment plans at their existing nickel operations in Canada: Xstrata announcing it will spend $200 million at Reglan mine in northern Quebec and Vale to spend an equal amount on the Clarabelle concentrator in Sudbury.
Thoughts on mining nickel laterites inspired by two recent books: 'Linkages of Sustainability' and 'The Black Swan.'
By Patrick Whiteway
It's October 2008 and I'm relaxing in a second-row seat of an air conditioned tour bus. It's crossing the Swan River in beautiful downtown Perth, Australia, when the driver suggests to passangers that the river should be called the Black Swan River. That's because 300 years ago, he explains, European explorers first visited this part of Western Australia and saw black swans for the very first time. Up until then, the only swans they had seen were white ones. Seeing black swans on this wide, lazy river revolutionized their thinking.
Reading Nassim Nicholas Taleb's best-selling book "The Black Swan," could revolutionize your thinking. This book is all about highly improbable events. Taleb skillfully questions how we think about these events that turn out to have serious consequences. He calls them 'black swans' and as I'll show here, they have a significant role to play in the mining industry.
As a Canadian mine engineer who has visited and written reports on many mines in Canada, I can tell you that improbable events, sometimes called simply luck, surprises, randomness or human error, have enormous consequences for the success or failure of many mines. The only successful, high pressure acid leach (or HPAL) nickel laterite operation in Australia is one of my favorite examples.
Before my visit to Western Australia, in October 2008, the only profitable nickel mines I had either worked in or visited were high-grade nickel sulphide mines. I had never seen a laterite nickel mine, let alone a successful one. So, to me, seeing a HPAL nickel laterite mine that operates at a profit was analagous to 18th century European explorers seeing black swans for the first time in this same part of the world.
I was very fortunate to be in this beautiful city - boarding a small chartered plane that flew its passengers some 700 km east to the Murrin Murrin mine.
Murrin Murrin is an open pit operation located in the hot, arid region of Western Australia, north of the historically famous mining town of Kalgoorie. Water is such a scarce resource here (the temperature was hovering around 40 degrees Celsius when I visited) it has to be pumped to the mine from many tens of kilometres away.
The mine is run by the publicly-listed company Minara Resources and 40%-owned by Glencore International, the largest metals trading company on the planet which, incidently, has designs to acquire even more nickel production capacity.
At the time of my visit, Murrin Murrin was operating at a head grade of 1.45% nickel and had a targeted production cost of US$4.50. That's the total cost to the company for every pound of nickel that goes out the back gate.
More recently, Minara reported a profit in the first six months of 2010 of US$39.3 million on the sale of 8,707 tonnes of nickel (and 605 tonnes of cobalt), which represents 60% of total production from Murrin Murrin. Profits to Dec. 31, 2010 have not been reported, but total production from the mine in 2010 (to Dec. 31) was 30,514 tonnes of nickel and 2,018 tonnes of cobalt. Production during the period was affected by a 3-week shutdown.
The Murrin Murrin mine has proven and probable reserves of 196 million tonnes grading 1.05% nickel and 0.078% cobalt. In addition, there are 268 million tonnes of measured, indicated and inferred resources, grading 1.01% nickel and 0.074% cobalt. That's enough material to keep the mine running for the next 50 years (at a rate of 40,000 tonnes per year).
Loading nickel ore from a stockpile at Murrin Murrin. This re-handling of ore allows operators to blend ore of different grades to precisely maintain consistent head grades in the HPAL processing plant. (Photo by P. Whiteway)
There are many reasons why Murrin Murrin can profitably recover nickel from low-grade, lateritic soil. Collecting $40 million in an arbitrated legal settlement from the engineering firm that built the processing plant helped to repay the capital cost of the operation, but I wouldn't go into that here.
Today, fantastic operating personell are the main reason this mine is profitable. A high nickel price, above US$12 a pound, is another. The 'black swan' that could change all that is a much lower nickel price. But before examining how that might be possible, lets look briefly at the operation itself.
The unique, technical reason for this operation's success is how nickel is extracted from the oxide minerals in the soil. The technique is called high pressure acid leaching (HPAL for short) and involves mixing crushed ore in sulphuric acid at high temperature and pressure inside of titanium-lined pressure vessels. The nickel is brought into solution and is then won by electrolysis.
There are other methods that have been used successfully to recover nickel from laterites. Pyrometalurgical techniques, for example, are used in Indonesia and the Dominican Republic. These operations produce ferro-nickel as a final product.
But it's here at Murrin Murrin over the past five years that operators have worked out the technical kinks in the hydrometallurgical HPAL process. This has make it possible for other mining companies to convince investors that HPAL can be profitably used to process low-grade laterites elsewhere in the world.
Over the next few years, some metals analysts are predicting that new laterite mines (so-called greenfields projects such as Vale SA's Goro project in New Caledonia, Sherritt Internaitonal's Ambatovy project in Madagascar and MCC Ramu Nico Ltd.'s Ramu project in Papua New Guinea, for example) will contribute 100,000 tonnes of 'new' nickel to world markets this year (2011). The US$4-billion Ambatovy project will produce it's first nickel metal in July/August at the earliest, provided all the moving parts of the project work according to plan.
Success didn't come easy for Murrin Murrin. That story began with Andrew Forrest a visionary Australian who thrives on profiting from highly improbable events, or 'black swans'. He convinced Anaconda bond holders in the United States to put up $420 million to build the HPAL plant at Murrin Murrin -- an amount that turned out to be insufficient.
Flying from Perth to Murrin Murrin, it's easier to envision, than looking at textbook diagrams, how laterites are formed. In the world's tropical climates near the equator and here in the arid region of Western Australia, the Precambrian bedrock has been weathered over the eons to create a 20-metre-thick layer of soil. (In Canada, that layer of soil would have, of course, been pushed south by glaciation 12,000 years ago.)
Our flight path took us over the lush green farmlands near Perth and then, as we progressed further inland to the east, the vegetation began to thin out until there was very little in the way of greenery left, just dry scrubland fit only for kangaroos.
By the time one arrives at the minesite, you can imagine how the landscape below has been cyclically flooded by heavy rains in the winter and then baked in the relentless summer sun in a never-ending cycle over geological time. The subsequent raising and lowering of the water table in annual cycles over hundreds of thousands of years has transformed the Precambrian sulphide mineralization below into the friable soils that are modern nickel-containing laterite deposits.
Today, water is a scarce resource, as is energy to run a nickel recovery plant.
Why are so many low-grade nickel laterite deposits being developed today? Population growth and demand for nickel-containing stainless steel in the world's developing countries is the main answer.
As GDP per capita increases in China (from US$1000 in 2000 to US$7000 in 2009), so too has stainless steel use per capita (1 kg in 2000 to 5 kg per year in 2009).
At this pace, by 2020, it is projected that GDP per capita in China could be close to US$10,000 and stainless steel use could be close to 15 kg per capita, on par with that in Japan, South Korea and Taiwan.
Of the 24-million-tonne global demand for stainless steel in 2009, China accounted for nearly 40%. The growth in demand for stainless steel in China has increased at a rate of 21% per annum in the nine-year period from 2000 to 2009.
The amount of 'new' nickel used in China to make stainless steel has increased at a compound annual growth rate of 30% from 2003 to 2010. Meanwhile, in the rest of the world, primary nickel use has decreased at a rate of 3.4% to 4.3% in the same time period.
The ability of new nickel laterite operations to pay back the billions of dollars that were invested in them is questionable, however. That's because they are exposed to 'black swans' -- highly improbable events that have massive consequenses. The most important of these for laterite mines is a significantly lower nickel price.
Another 'black swan' relates to production costs. When, as is now happening in the U.S., developed nations legislate some form of cabon tax or cap-and-trade system to reduce greenhouse gas emissions, then the mining of nickel laterites could unprofitable very quickly.
For stainless steel producers, one way to reduce carbon dioxide emissions is to use more scrap stainless steel and less virgin or primary, refined nickel. Using primary sources to make one tonne of grade 304 austenitic stainless steel (which contains 10% nickel), 2.30 kg of carbon dioxide equivalent is emitted into the atmosphere. However, if scrap is used, the amount of carbon dioxide equivalent emitted drops 74% to just 0.6 kg.
In the U.S., the percentage of scrap metal in a tonne of stainless steel is about 73% whereas in China, the corresponding percentage is just 27%. That's because there is less scrap available in China (a developing country) than in the U.S.
Unfortunately for the world's climate, the area of the world where the most stainless steel is produced today (China) has the lowest amount of scrap available and is very dependent on coal-fired electricity. That means China needs more primary nickel to produce a tonne of stainless steel and emits more carbon dioxide per tonne of stainless steel it produces as a result compared with producers in the U.S. or Europe.
A third 'black swan' that could impact HPAL operations is the rising cost of fossil fuels.
Unlike the book "The Black Swan", the book "Linkages of Sustainability" is not likely to make it to The New York Times best sellers list. That's because it's far too dry and boring. The book was edited by Thomas Graedel and Ester van der Voet. I mention it here because it presents, for those who are willing to take the time to wade through it, the state-of-the-art thinking of academics about how the Earth's resources (land, water, energy, etc.) are linked and how they constrain sustainable economic development. To me, this book does an excellent job of suggesting that the linkages between resources could create 'black swans' for the nickel industry in the very near future.
"Linkages of Sustainability" edited by Thomas E. Graedel and Ester van der Voet
One contributor to the book is an Australian researcher at CSIRO, Thomas Norgate. He does a masterful job in the book explaining how orebodies being mined today are lower in grade than in the past. This means that more energy is required to liberate the valuable minerals from the waste rock and in so doing, more tailings are generated that need to be empounded. These issues of water and energy availability raise important questions about the sustainability of nickel laterite mining.
Another Australian academic, Dr. Gavin Mudd has attempted to analyse the environmental 'footprint' of nickel operations. As the proportion of nickel derived from laterites vs sulphides continues to increase, so too, says Mudd, will the environmental costs of acquiring 'new' nickel. This throws into question the environmental sustainability of a critical modern metal.
Using data from the public sustainability reports of laterite operators, Dr. Mudd has looked at the direct and indirect energy inputs, water inputs and emissions outputs (especially greenhouse gases such as carbon dioxide) and compared them to sulphide operations.
Dr. Mudd discovered that nickel-producing companies fail to report key data and not all companies follow the same reporting protocols even though a global standard exists (called the Global Reporting Initiative). This made it impossible for him to compare water resource inputs between operations.
That quibble aside, Dr. Mudd found that "With respect to energy, it is clear that laterite projects require a higher intensity to produce nickel than their sulfide counterparts."
There is an even more clear distinction between laterite and sulphide operations when it comes to carbon emissions. All sulphide operations release less than 10 tonnes of carbon dioxide equivalent per tonne of nickel produced, Dr. Mudd found, whereas laterite operations range from 24 to 46 tonnes per tonne.
Electrical energy used at Murrin Murrin is derived mostly from gas-fired generators. This means its unit greenhouse gas emissions are about 20 tonnes of carbon dioxide per tonne of nickel produced. Clearly, sulphide producers are more competitive when it comes to carbon emissions. Sulphide producers in Canada, for example, have a much smaller carbon footprint because the energy used to process sulphide ores in Canada is generated largely by low carbon-emitting hydro electric power plants.
The Big Eddy hydro power plant on the Spanish River near Sudbury, Ontario generates no-carbon-emitting electric power for the sulphide nickel operations of Vale SA.
Given the demands on energy and water resources, is it smart to be mining low-grade dirt (laterites) for its nickel content? Personally, I don't think so.
That being said, are nickel laterite miners pushing the technological boundaries of hydrometallurgy and in so doing, are nickel companies pushing the boundaries of sustainability while risking the health of the natural environment unnecessarily?
On the demand side of the equation: Is China heading towards the same 'culture of excess' as Western society? Is it necessary to use nickel-containing grades of stainless steel in applications where non-nickel-containing grades would suffice?
These are ethical questions that cannot be answered easily, but need to be asked none-the-less.
If you would like to comment on the above, please click on "Comments" below.
REFERENCES
The Black Swan, by Nassim Nicholas Taleb, 2010.
Linkages of Stainability, Edited by Thomas E. Graedel and Ester van der Voet, MIT Press, 2010.
Mudd, G M, 2009, Nickel Sulfide Versus Laterite : The Hard Sustainability Challenge Remains. Proc. "48th Annual Conference of Metallurgists - Pyrometallurgy of Nickel and Cobalt 2009", Canadian Metallurgical Society, Sudbury, Ontario, Canada, August 2009, pp 23-32.
What were the most significant events to impact the nickel industry in 2010?
By Patrick Whiteway
No doubt nickel producers are breathing a sigh of relief today because the price of nickel ended the year above US$11 a pound. That's good news for the new, high-cost producers coming on stream and for existing producers in strike-bound Ontario, Canada that recently came back online.
What events in 2010 contributed to this happy state of affairs?
Following, are my nominations for the ten most important events that kept demand for nickel rolling along and what managed to limit the supply of nickel, thus keeping prices relatively high, so that most producers could have a good chance of making a profit.
1. A year-long strike at Vale SA's nickel operations in Sudbury finally came to an end in July thanks to intervention by the Ontario provincial government.
2. The tug-of-war between two Russian oligarchs for control of Norilsk Nickel continued throughout the year, stifling the world's largest nickel producer from concentrating on productivity and environmental improvements to enhance shareholder value. http://bit.ly/dIBz0d
Vale SA's Goro Nickel Laterite Project in New Caledonia
3. Two major high pressure acid leach (HPAL) nickel laterite operations inched toward full production under the watchful eye of nickel analysts around the world, some of whom doubt these projects can make a buck.
4. Stainless steel production rebounded from the global financial crisis and nickel continued to find new markets in de-carbonizing the global economy through solar energy plants, wind farms, hydro power plants, biomass plants, fuel cell power plants, waste heat power generating plants and carbon sequestering applications.
5. The European Union Court of Justice announced it will decide (probably in 2011) if the recent classification of nickel compounds as carcinogens, mutagens and reproductive toxicants is valid. http://bit.ly/aI8pFW
6. Chinese companies made significant investments in junior nickel exploration and producing companies in Canada. Junior nickel exploration companies increased their spending on grassroots projects, advancing projects across the country.
7. Cliffs Natural Resources gained control of the chromite production potential in Ontario's Ring of Fire, leaving Noront Resources holding the potential for nickel production in this greenfields project that is not without controversy. http://bit.ly/bKH1as
8. Glencore International Group continued to seek control of more nickel production capacity worldwide. http://bit.ly/9socXZ
9. Nickel health classifications in Europe continued to give nickel platers the chills over cancer risks. This chill had a cooling effect on other, more important markets as well. http://bit.ly/9vBZtu
10. Rio Tinto joined the long list of new nickel production capacity by announcing plans to develop the Eagle mine in Michigan State by 2013. http://www.eagle-project.com/
If you would like to comment on the above, or if you would like to add something to this list, please click on "Comments" below.
Three former executives of Inco Ltd., now on the board of Royal Nickel Corporation, have a duty to provide potential investors with a thorough analysis of the risks of investing in a high-cost nickel producer
By Patrick Whiteway
Royal Nickel Corp. is seeking $100 million in public financing at a time when clouds of uncertainty hover over the nickel market - clouds that will break only for the low-cost producers of the Devil's metal.
A preliminary analysis of the prospects for profitability at Royal Nickel's Dumont nickel property in northern Quebec, concludes that the proposed $1.2-billion project will work out only if the price of nickel stays at US$8.00 a pound or above for the foreseeable future (for a 21-year operating life).
Like all speculation in commodities, the future price of nickel is something that is impossible to foretell. But that doesn't stop so-called "experts" from making predictions.
A recent survey compiled by Reuters of 2010 nickel price predictions bodes well for the Dumont project. It reveals that 24 of 48 market analysts surveyed worldwide foresee the price of nickel averaging US$8.25 per pound or above this year.
Overall, their predictions range from a low of US$6.69 per pound to a high of US$9.98. All, no doubt, cite double digit economic growth rates in China as a driver. Not one of the analysts predicted that nickel will dip below the average 2009 price of US$6.67.
I wonder what the prediction record is for these forecasting "experts". How many of them predicted that the average price in 2009 would be $6.67 for example?
Survey results of 2010 and 2011 nickel price predictions as compiled by Reuters
I have not read any of those reports, but I doubt that they include an in-depth discussion of what could cause the price of nickel to fall.
A lower nickel price should not be an unexpected event. A lower price is within the tunnel of possibilities. The following chart shows historical LME nickel prices from 1982 to 2009. Rarely, has the price been above $6 a pound.
Historical nickel prices and mine production costs (1982-2009) as compiled by Brook Hunt
So, a nickel price lower than $8 is very possible, especially considering the recent reclassification of nickel and nickel compounds by the European Union (and globally via the United Nations' Globally Harmonized System of Classification and Labelling of Chemicals) which followed a 14-year risk assessment process in Europe.
This regulatory development ,which came to light in 2009, could have a significant impact on long-term nickel demand. Demand could fall, for example, if a stigma were to be attached to nickel as a result of the classifications and if three lawsuits currently before the Court of Justice of the European Union drag on (and if they fail to overturn the classifications).
That's a lot of ifs, but as much as two-thirds of nickel demand could be negatively affected. Therefore the profitability of new, high-cost mines such as the Dumont project (not to mention the much larger and costly nickel laterite mines that are coming into production in the next few years) could be impacted.
As former executives of Inco Ltd. during a time when the European nickel risk assessment was being conducted by the Danish Environmental Protection Agency, Scott Hand, Peter Jones and Peter Goudie, are (or should be) well aware of the EU reclassification issue. As such, they have a special duty to fully brief investors on three costly lawsuits presently winding their way through the Court of Justice of the European Union and to explain how the outcome of these lawsuits could affect the health classifications of nickel.
The outcomes of these lawsuits are not expected until 2011 or 2012, which gives architects and the designers of white goods and other consumer products plenty of time to reconsider the use of nickel-containing materials in the consumer products and buildings they design. They may very well decide NOT to use materials that contain compounds that are considered by the EU to be carcinogens, mutagens and reproductive toxicants (CMRs). They may decide to substitute nickel-containing austenitic stainless steel with nickel-free ferritic stainless steel.
If the analysis of the 48 agust investment firms quoted in the Reuter survey mentioned above had factored in the reclassification of nickel, then their forecasts for nickel prices might have been significantly lower. That's because supply will significantly outstrip demand should demand decline due to a perception on the part of consumers that nickel-containing materials are to be avoided.
On the supply side of the nickel market, the Metals Economics Group of Halifax, N.S. recently published the following chart:
Potential nickel production from discoveries relative to global nickel production 1998-2009
It shows the relative positions of low-cost sulphide producers and generally higher-cost laterite producers.
In light of the above, here are some questions investors should ask Royal Nickel as it seeks $100 million to develop the Dumont nickel property:
Why hasn't the Dumont deposit been developed in the past? It's not a new discovery.
Should you succeed in bringing Dumont into production, what are your plans for the operation should nickel prices dip below US$8.00?
What possible future developments do you anticipate could impact costs at Dumont in the near future? Hydro power costs in Quebec; potential future carbon emissions taxes; or transportation costs relative to the price of oil; for example?
The world doesn't need more, low-grade, high-cost nickel producers. What is needed are more large tonnage, high-grade, low-cost nickel mines of the kind found at Voisey's Bay, Thompson and Sudbury. There are companies looking for these types of deposits in Canada and I hope to make them the subject of a future post on this website.
Canada's National Newspaper, The Globe and Mail, today published a feature story in its Report on Business section about nickel pig iron production in China.
Written by Andy Hoffman, it carries the provocative headline "A breakthrough in China, another blow for Sudbury." Like many newspaper headlines, this headline is designed to attract attention but is patently untrue.
I also believe that the premise of the story: that nickel pig iron (NPI) production in China is a threat to nickel sulphide production in Canada, is untrue for at least two reasons:
1. NPI production in China is the highest cost nickel in the world; and
2. NPI production in China is among the "dirtiest" nickel in terms of emissions profile (for more detail, see www.carbonemitters.org ).
Such production can thrive in the short term, but is unsustainable in the long run.
When striking nickel workers in Sudbury, Ontario settle their 11-month strike against Vale S.A. and get back to work, the world will be awash in low-cost, low-carbon-emitting nickel. Prices should drop as a result. In fact, they could fall so far that NPI production in China would become uneconomic.
In a nutshell, NPI producers in China are opportunists.
Global nickel demand is presently at record highs and due to the strike in Subbury and at Voisey's Bay in Labrador, nickel supply cannot keep pace with this pent up demand. This dynamic supports today's price of US $8.84 per pound, a price that gives producers, such as the one profiled by Andy Hoffman in the Globe and Mail article, an opportunity to produce nickel pig iron at a profit.
China imported about 3 million tonnes of nickel laterite concentrates in the first quarter of 2010, mainly from the Philippines and Indonesia (but some from New Caledonia).
But it cannot last for long.
In the long term, only low-cost, low-carbon-emitting nickel producers, such as those in Sudbury, will survive.
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In the past year, China has invested hundreds of millions of dollars in Canadian nickel properties both producing and exploratory. Will these investments benefit Canadians?
In September,
2009, Ningbo Sunhu Chemical Products Co., China's largest nickel
trading company paid $21.8 million for a 15.6% interest in Royal Nickel Corp.
Royal is a privately-held junior Canadian company that holds a 100% interest in the undeveloped Dumont nickel property located near the town of Amos in the prolific Val d'Or mining area of northwestern Quebec.
Three former Inco Ltd. executives
(Scott Hand, Peter Goudie and Peter Jones) are the principal players
in Royal Nickel, which intends to make an initial public offering of shares sometime this year.
The Dumont property hosts an indicated resource of 365
million tonnes, grading 0.32% nickel (or 1.2
million tonnes of nickel).
Plan view of Dumont Property showing proposed open pit outline (Royal Nickel Corp.)
That's a lot of nickel; enough to satisfy global demand for an entire year. But of course it will take a huge investment (about $1.2 billion) to build a producing mine and about 20 years to methodically mine the ore, concentrate it, smelt it and refine it into a pure, saleable product.
Two months later, in November, 2009, a controlling (77%) interest in Canadian Royalties, owner of the Nunavik nickel property was purchased by Jilin Jien Nickel, a Chinese
company for $148.5 million. The
Globe and Mail reported on this hostile takeover in August 2009 when the story first broke. Located not far
south of the producing Reglan nickel mine in Ungava in Quebec's far north, Nunavik is another undeveloped nickel property with a measured and indicated resource of 5.2 million tonnes grading 0.93% nickel (or about 0.05 million tonnes of nickel).
One happy Canadian: Crowflight Minerals VP Exploration Greg Collins (foreground) with Chief Geologist Rick Sproule (background) (Photo by Patrick Whiteway)
More recently, Jinchaun Group, a major Chinese nickel company offered to buy, for $150 million, a significant interest in Crowflight Minerals Inc., the company that operates the Bucko nickel sulphide minein the Thompson Nickel Belt of northern Manitoba.
Proven and probable reserves at Bucko are 3.7 million tonnes grading 1.45% nickel and indicated resources add another 2.8 million tonnes grading 1.53% nickel.
At a milling rate of 600 tonnes per day, this underground operation is producing nickel concentrates at a rate of about 127 tonnes of contained nickel per quarter.
Surprisingly, even though the Bucko mine is just 115 km south of the Thompson nickel smelter and refinery, concentrates from the Bucko mill are shipped 2,200 km eastward by rail to Sudbury for processing. Not the most efficient way to process nonrenewable resources.
So, why is China suddenly investing heavily in nickel properties in Canada? In the early stages of the global financial crisis, because stock prices had plumeted, these investments appeared to be purely opportunistic. But today with nickel trading at double the year-ago price, stocks have rebounded and Chinese companies continue to invest.
Is China interested purely in making a decent return on an investment or, is their interest really to export nickel concentrates to feed hungry smelters in China?
Of the 38 operating nickel mines in China, the Jinchuan mine in Gansu Province is by far the largest, accounting for about half of that country's total nickel reserves and resources. But reserves are not being replentished at a sustainable rate.
In 2005, China had proven reserves and resources of 7.9 million tonnes
of contained nickel, down from the 8.3 millon tonnes reported in 2001.
Back in Canada, recent Chinese investments in Syncrude, one of Alberta's oil sands producers, created and uproar over concerns that raw bitumen could be exported to China as a result. Ottawa responded quickly with reasurances that unprocessed bitumen would not be exported on the Conservative government's watch. There is no indication that the same policy would apply to nickel concentrates.
Will his stainless steel plant import Canadian nickel?
Do Chinese investors, then, want to export refined nickel to China to feed hungry stainless steel plants?
At 8.8 millon tonnes, China is a leader in stainless steel production, according to the International Stainless Steel Forum, accounting for 36% of total global output in 2009 of 24.6 million tonnes.
With demand for stainless steel growing in China, the country continues to add new capacity, investing millions in new production facilities, so the need for nickel continues to grow.
For China's investments in Canada's nickel to be truely benefitial to Canadians, China would have to invest also in the downstream processing of nickel to make stainless steel and nickel alloys here in Canada. This would add significantly to the efficiency and productivity of Canada's nonrewable resources, a much discussed issue at the federal level.
Importantly, from a climate change perspective, China would be wise to invest in downstream processing here because Canada has a wealth of low-carbon emitting sources of energy (hydro, nuclear and natural gas). Therefore stainless steel produced here would have a much smaller carbon footprint than any that can be produced in China where energy is generated largely by coal.
So. When will Canada's nickel producing provinces (Newfoundland and Labrador, Quebec, Ontario, Manitoba and Alberta) realize that they have a clearer competitive advantage and roll out the red carpet to actively welcome and encourage Chinese investment in stainless steel production capacity in Canada?
When that happens, Canadians will benefit more fully from the recent and future Chinese investments in Canadian nickel resources.
To comment on the above posting, click on "Comments" below.
When it comes to the efficiency and productivity of Canada's nonrewable mineral resources, only one thing matters: are Canadians getting as much benefit as they can from their mineral resources when the companies that extract those resources are foreign owned?
Public discourse on the efficacy of foreign ownership in the Canadian mining industry is running rampant these days.
One popular mining blog recently talked about the issue of Canadian nickel miners in Sudbury striking against their off-shore employer Vale S.A. of Brazil.
The blog quoting an unnamed geologist as saying "the strikers are holding out, not for money, but in an attempt to
preserve the Canadian way of mining to retain the benefits of a long and
hard process leading to decent treatment as miners, and as Canadians."
The geologist was also quoted as saying that "the foreigners who came and bought up the
Sudbury mines are seeking to impose Latin ways of treating miners on
Canadian miners, and that it is just not decent to treat people as they
do in Brazil."
Vale's Copper Cliff South mine and sulphide nickel smelter in Sudbury (Patrick Whiteway)
The blog goes on to speculate that to reduce costs, foreign-owned mining companies with mining operations in Canada will, in future, simply bring workers into Canada from their home countries. The implication here is that those workers would have much lower expectations in terms of wages and benefits than Canadians and therefore would be more likely to work for less. This might be true, but for how long?
On March 9th, the Globe and Mail newspaper published an opinion
piece by columnist Jeffrey Simpson. In it, Mr. Simpson bemoans the fact that
Canada's federal government allowed the takeover in 2005-06 of the
country's two premier nickel mining companies (Inco and Falconbridge).
He rightly points out that domestic ownership results in head office
decisions being made in Canada and research and development dollars
being spent here. In the case of Inco and Falconbridge, those benefits have been lost.
In response to that piece, another popular blog that
specializes in income trusts suggested one financial reason why Vale
appears to show little interest in settling the record-long strike in
Sudbury. That blog suggests that Vale structured its takeover of Inco as
a private income trust and has already recouped the initial investment
it made in the Inco takeover. A public income trust (as opposed to a private
one), which was contemplated by Inco prior to the takeover, according to
this blogger, would have resulted in actions that would have been in
the interest of Canadians and not just a Brazilian company as is now
the case.
Personally, I don't think Vale is seriously interested in settling the Sudbury and Voisey's Bay strikes for another reason. Intentionally restricting nickel supply while demand recovers in China following the global financial crisis has had the effect of putting upward pressure on nickel prices. This is important to Vale because it makes the future profitability of the company's new US$3.2 billion Goro nickel latreite mine in New Caledonia and its Onca Puma mine (US$2.3 billion) in Brazil much more certain.
Also, I don't for a minute think that Vale could possibly get away with
offering the same employment pay levels and benefits to Sudbury nickel
miners as they do to their iron ore miners in Brazil. What they have
done is ask for concessions; asking the union to give up benefits
they've fought long and hard to achieve over the years. The union membership
decided to strike in order to keep these benefits. That decision has put
them out of work for almost a year because Vale is holding tough even
though the price of nickel has doubled in the past 12 months (from US$6
to US$12 a pound). Truth is, nickel is a minor part (about 15% of 2008 revenues) of this huge
US$38-billion-a-year mining company.
A feature story in the April 2010 issue of Report on Business magazine covered much the same ground as the blog mentioned above. This article was a major disappointment to me because after advertising it for a week, The Globe and Mail let their readers down by publishing a poorly researched, second-rate piece. Only the outstanding photos by Louis Palu saved it.
Readers of the mainstream media have much higher expectations for thoroughness and accuracy than the readers of blogs. Interviews with a few of the
former Inco Ltd. executives (who worked with then Inco CEO Scott Hand prior to the
takeover by Vale), for example, would have uncovered a far more interesting story. And interviews with people in the Ontario government , which is loosing a significant amount of revenue as a result of the strike, would have given the story much more depth.
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Observations from the PDAC 2010 conference: Still not taking the long-term view
By Patrick Whiteway
Prospectors from across Canada and around the world have gathered in Toronto every spring since 1932. This year was no exception. Encouraged by higher metals prices, a record number of people (the majority of whom were investors) attended four days of festivities at the Toronto Convention Centre. And there can be no doubt that this was a hugely different convention from the one in 2009 when the mood was at an all time low.
Twelve months ago, all metals companies had been cut off at the knees by the global financial crisis. In fact, some junior exploration companies fell into their graves (or into the arms of bigger companies with more cash). Walking the isles of the Investor’s Exchange in 2009 was like strolling past rows of tombstones in a cemetery. No, the 2010 edition of the PDAC convention demonstrated that the people who explore the world for valuable minerals can bounce back from even the darkest hour.
In 2009, investor interest was extremely low
In 2010, every metals analyst was optimistic about the future direction of prices.
Every company presentation extolled the positive aspects of their properties. Everyone could make money for investors it seemed; liquidity has returned to the market; but for how long?
The doubling of prices for many metals in the past year has been tied, not surprisingly, to China, according to Andrew Keen of HSBC Securities Inc. China’s US$586 billion stimulus package, allocated over the past year and a half, was focused mainly on building public infrastructure, a lot of which had been planned years ago. Therefore contracts could be awarded immediately.
“We’re about halfway through the downturn,” Keen said at the commodities and market outlook session. “Things should return to ‘normal’ [with supply and demand in balance] in 2011. China’s economic growth needs to stay at 8% per year for metals demand to return to a ‘balance,’ ” he said.
Just below this promotional surface, however, lurk some inconvenient facts which could cloud this sunny outlook. Take the nickel market for example.
FACT: On the supply side, Vale S.A. and Sherritt International have invested billions in two high pressure acid leach nickel projects (Goro in New Caledonia and Ambatovy in Madagascar respectively). To make the projected profits their investors have been promised (10% ROR), nickel prices have to be above US$8.50 a pound for a sustained period of time. This does not sit well with the fact that on the demand side regulations could create a stigma for nickel compounds, seriously affecting demand in more than one important end-use sector. This is true even in China and the countries to which it exports stainless steel products.
FACT: The European Union in 2009 reclassified over a hundred nickel compounds as carcinogens, mutagens and reproductive toxicants (or CMRs) and, via the United Nations’ Globally Harmonized System, these classifications have spread around the globe. The use of nickel in almost two-thirds of its applications could be negatively impacted. Yet not a single metals analyst even mentions it. Could it be that demand for nickel will fall by 67% over the next couple of years taking prices with it? In that case, only the lowest-cost producers (largely the sulphide nickel producers) would survive and laterite operations would become uneconomic very quickly.
Some things at the PDAC change very slowly
Climate change is another game-changing issue that did not get the public air time it deserves at this PDAC. This is particularly important because investors are listening intensely, trying to decide where to put their savings. Yes, the United Nations’ Climate Change Conference in Copenhagen was a dismal failure and the so-called ‘climategate’ revelations have turned the tide of public opinion, but professional opinion remains firmly planted on the side of “take action now or pay more dearly later.” So, it’s fair to say that some form of carbon emissions tax or cap-and-trade system is likely to emerge within the next 12 to 18 months. Was this issue openly discussed at PDAC 2010? I don’t think so.
FACT: Environmental and corporate social responsibility issues were discussed behind closed doors in a very clubby ICMM-sponsored seminar on the Saturday before the convention even got underway.
Yes, the PDAC is all about providing a venue for companies to sit down with investors and to promote their efforts to find the metals that society will need in the years ahead. The lithium (rechargeable batteries for cars) and rare earth guys did a spectacular job of promoting their companies and properties at this convention. But where were the companies who are competing for investor interest based on low carbon emissions relative to their competitors? Nowhere, that I could see.
Asked how a carbon tax might affect their nickel operations in Western Australia, Robin Dunbar, director of Western Areas (the second largest nickel producer in Australia) said “Frankly, I don’t know. But royalties to the state is an important issue related to carbon taxes.”
That about sums it up. No one at this convention was looking beyond the short term gains that can be made. No one can see the long-term risks of investing in some of these companies. Isn’t that the lesson that the financial crisis taught us: that an inability to adequately evaluate the long-term risks of an investment can lead to disaster?
I think mineral explorers should be convincing investors to put their money into mining ventures that will satisfy a real need of society and they should be explaining to them the long-term, sustainable plan that they have to meet that need. Nickel companies today are not doing that at their peril.
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On Friday (March 5), nickel prices hit US$10 a pound, up 25% from just two weeks ago, even though the amount of nickel in LME warehouses is at a record high (over 160,000 tonnes). Prices jumped in the face of record high inventories because, according to Greg Barnes, a metals analyst with TD Newcrest in Toronto, a slight decrease in these inventories has investors anticipating that strong demand will continue in China and therefore inventories will be systematically drawn down over the next 12 months.
Speaking at the commodities and market outlook session of the Prospectors & Developers Association of Canada (PDAC) annual meeting in Toronto today, Mr. Barnes said "What we've begun to see in all of the commodity markets (copper, zinc and now nickel) over the last couple of years is that investors, hedge funds, speculators and the market in general are beginning to react very, very quickly to the second derivative change (or the rate at which inventories are being drawn down)."
TD Newcrest is calling for a 19,000 tonne surplus of nickel supply over demand in 2010 and a further 46,000 tonne surplus in 2011 as new nickel operations come into production.
Nickel producers need to have high nickel prices in the US$8 to US$10 range, Mr. Barnes said, in order to realize a reasonable rate of return (10 to 15%) on the billions of dollars that are being invested worldwide on high pressure acid leach (HPAL) nickel projects such as Vale S.A.'s Goro project in New Caledonia.
Mr. Barnes said that nickel producers shot themselves in the foot a few years ago by not supplying enough nickel to satisfy rising demand. This created an opportunity for nickel pig iron producers in China to import low grade nickel from laterite mines in the Philippines and Indonesia to produce low quality ferro nickel. In 2009, those nickel pig iron operations produced over 100,000 tonnes of nickel, Mr. Barnes said, something no one thought could be done at the low price levels seen in 2009.
Nickel prices will experience some weakness this year, Barnes said, should Vale Inco settle a bitter strike in Sudbury and at Voisey's Bay in Labrador, bringing those operations back into full production. That process could take up to six months after an agreement is reached with the unions involved.
Mr. Barnes made no mention of the fact that in 2009 the European Union (and by extension, the rest of the world, via the Globally Harmonized System) reclassified over a hundred nickel compounds as carcinogens, mutagens and reproductive toxicants. This extraordinary regulatory move could significantly impact the demand for nickel in up to two thirds of its applications. In turn, this would result in a much higher than anticipated surplus, putting downward pressure on the price of nickel.
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Today, producing nickel is a big, global industry dominated by three companies: Norilsk Nickel of Russia, Vale S.A. of Brazil and BHP Billiton of the U.K. and Australia. In 2009, an estimated 1,300 kilotonnes of the devil’s metal were produced by a handful of companies with mines in many different countries. Norilsk accounted for 282.9 kilotonnes, or about 22% of total global production.
No other company comes close. Brazil’s Vale S.A., which now owns most of Canada’s nickel production, was second at 187 kilotonnes in 2009, or about 14% of total world output. Another company with operations in Canada is Xstrata Nickel. It produced 88.6 kilotonnes in 2009 (about 7% of the total) and Canada’s Sherritt International, which produces nickel from mines in Cuba, reported 2009 production of 16.8 kilotonnes.
The Anglo-Australian mining company BHP Billiton, produced 180.5 kilotonnes in 2009 (about 14%).
Much, or about 425 kilotonnes (33%) of nickel produced in the world today, goes to meet growing demand in the booming economy of China. Much of that demand is for stainless steel which is used in a multitude of manufacturing industries.
One hundred years ago, the nickel industry was vastly smaller with total production of just 10 kilotonnes. Most of that metal was used to make tough nickel steel for making battleships. In 1910, the nickel industry was dominated by producers in Sudbury, Ontario, Canada. Since nickel production began in Canada (in 1886) to the present day, about 13,000 kilotonnes of nickel have been extracted from the Precambrian Shield. That’s about 35% of the estimated 35,000 kilotonnes of nickel that have ever been mined. Most of Canada's output has been exported to stainless steel and nickel alloy producers in the U.S. and U.K.
The following article was published in the October 1, 1910 edition of The Canadian Mining Journal (on pages 589 and 590). The article was originally published anonymously in the Engineering Supplement of the London Times. All of photos used here to illustrate the article are from "Royal Ontario Nickel Commission Report and Appendix, 1917." To give a true feeling of the year 1910, I have not corrected the English grammar in the article. Also, comments, which appear in square brackets throughout the piece are mine - Patrick Whiteway.
The world’s production of nickel, which showed a marked increase during the years subsequent to 1900, has for the last few years remained fairly constant. The demand has been steady, but there seems very little doubt that it would have been much greater had the metal been obtainable at a slightly lower price. The price has been high chiefly through the instrumentality of the International Nickel Company, which has controlled prices in America and has succeeded in influencing outside markets as well.
[It’s interesting to note how freely the author addresses the price of nickel; how it affects demand and how one producer controls the price of nickel. The author seems to be suggesting that nickel producers should lower their prices in order to increase demand for their product. Such a suggestion would not be made today. If it were, it would be considered highly inappropriate and would likely lead to an antitrust investigation and hefty fines. Today, the nickel industry goes to great lengths to be seen NOT to be colluding and fixing the price of nickel. Prices are, after all, determined by the market forces of supply and demand.]
The properties of nickel in itself are such that it will always command a wide sphere of utility. Its resistance to the attack of alkalis, the difficulty with which it is corroded by most acids, its durability, and the high polish it is capable of taking place it high amongst the commoner metals. It is these properties which have led to the adoption for such purposes as field and ship cooking utensils and for replacing copper as coinage, while it has long been used for electro-plating, and in this respect is little inferior to silver, while obtainable at a much smaller cost.
[Here, the author identifies the key properties that make nickel useful and speculates on future applications. The properties of nickel mentioned are still exploited to this day, however, there are additional properties of nickel and nickel-containing materials, such as magnetism and a low coefficient of thermal expansion of certain alloys, which have since come to light and have been used in many new applications since 1909.]
Nickel will alloy with most of the useful metals. Among such alloys the so-called German silver, which consists essentially of nickel, copper and zinc, is most widely known. The most valuable properties of German silver are its white colour, its brilliant luster, hardness, tenacity, toughness, malleability, ductility, and power of resistance to many chemical influences. The presence of cobalt does not seem to interfere with these properties. A new alloy known as monel metal, which consists of one part copper and three parts nickel, with a small amount of incidental impurities, has many excellent properties, chief of which is its great resistance to the attack of acids.
[This was written a decade before the discovery of iron-chromium-nickel stainless steels – the largest single use of nickel today. In addition, there are hundreds of nickel alloys and nickel stainless steels and more being formulated every year to meet exacting operating conditions. What the property 'tenacity' is, in an engineering sense, I don’t know.]
It is the combination known as nickel steel, however, which utilizes most of the nickel mined at the present day. Nickel steel is principally used for armour plates, but the toughness of this alloy or mixture renders it also applicable for other purposes. Recent tests have shown its utility for rails and for rivets and it has been adopted for the barrels of small arms. The presence of nickel, up to 20 per cent, in steel increases the elastic limit and breaking stress, and steels rich in nickel are practically non-corrodible. Alloys have been made containing a high percentage of nickel, but it has been found that for general purposes, taking into account the relatively high price of the metal (at present about L160 a ton), the best result is obtained with the greatest economy when it is present to the extent of about 2 per cent.
[One interesting application of nickel steel employed at about this time was in the construction of a bridge over the St. Lawrence River at Quebec City. For details, see an article in Nickel Magazine at: www.nickelmagazine.org/index.cfm?ci_id=10135&la_id=1 ]
Until quite recently the entire nickel supply of the world was obtained either from the Sudbury district of Ontario, Canada, or from the ores of New Caledonia. The other sources are still insignificant compared to these, but there is a possibility of great developments in the near future.
[This is fascinating because the author could foresee significant growth in nickel supply and demand. Nickel today is mined in many parts of the world, including Russia, Cuba, Columbia, Finland, Australia and Indonesia; a diversity of supply which demonstrates the phenomenal growth in demand of the metal over the last 100 years.]
About 60 per cent of the world’s nickel supply is mined at the present time in the Sudbury district. As early as 1770 Canada’s deposits in Algoma, which borders on Sudbury, were worked as a source of copper, but the true nature of the deposits was not recognized till in recent times the officers of the Canadian Geological Survey pointed out that they would probably be workable. The Sudbury deposits first attracted notice in 1883, during the construction of the Canadian Pacific Railway, and in 1886 they were first exploited for nickel. The ore in this district is mined and treated by two companies – the Canadian Copper Company and the Mond Nickel Company. A new company, the Diamond Nickel Copper Company, has started operations in the Northern range. The ore of the Canadian Copper Company is chiefly raised from the Creighton mine, which is rich in nickel, while the Mond Nickel Company obtains its supply principally from the Victoria mines.
Victoria Mine, Sudbury, Ontario. (Royal Ontario Nickel Commission Report and Appendix, 1917)
The ore is smelted into a matte by the Bessemer process, and this matte which contains about 40 per cent of nickel and a bout the same amount of copper, is then shipped for the production of pure nickel, by the former to Constable Hook, Nova Scotia and other places, and by the latter to South Wales. The ores from the Cobalt district, worked for their high silver content, give the only other supply from Canada, but in this case the metal is only a by-product, and the nickel content is not reconed with in the sales. There are indications of workable deposits further north in Canada. Returns for the nickel industry of Ontario in 1908 give the following figures: Ore raised, 409,551 short tons; ore smelted, 360,180 tons; Bessemer matte produced, 21,197 tons; nickel contents, 9,572 tons; copper contents, 7,503 tons. The ore also contains considerable amounts of silver, palladium, platinum and gold.
[In 2009, nickel produced from mines in the Sudbury Basin, according to the production reports of Vale Inco and Xstrata Nickel, was about 55,000 tonnes. This figure, which is low compared with 2008 because of a strike at Vale Inco, represents about 5% of total global nickel production. ]
Garson mine, Sudbury area, Ontario, September 9, 1916 (Royal Ontario Nickel Commission Report and Appendix, 1917)
All the ore in New Caledonia is exported to France, Great Britain and Germany for smelting, although plans have often been discussed for treating the ore on the island. In Great Britain the ore is treated by the Glasgow Nickel Company at Kirkintilloch. The approximate output of nickel ores from New Caledonia during the year 1909 was 120,000 tons.
There are now two other countries which produce nickel. In Norway it is worked in the valley of Sotersdalen, not far from Christiansund. The output in 1908 was only 81 tons, but has now probably much increased. Nickel was produced in the United States for the first time from its own ores in 1908, by the North American Lead Company, but the production was small. The Oreford Copper Company and the Balbach Refining Company refine nickel, but obtain their supplies from the Bessemerized matte from Sudbury or from other sources. A deposit of ore somewhat resembling the Sudbury ore has been found in Nevada, but has not been worked. Particulars of a recent development at Webster, Jackson County, North Carolina, were given lately. Dr. Hennig hs worked out a process for direct reduction in the electric furnace of a nickel silicate ore found there. A product consisting of silicides of nickel and iron with some chromium, aluminium, magnesium and a little carbon is obtained, which can be applied directly to the manufacture of nickel steel. The production of ferro-nickel, nickel alloys, and metallic nickel is also contemplated.
[This is interesting because Norwegian nickel mines supplied the German war effort in both the first and second world wars. Also, today, the nickel refinery at Kristiansund, Norway, is still in operation. Its present owner is Xstrata Nickel.]
For refining nickel, or obtaining the metal from a nickel-copper matte, various processes have been adopted. The preparation of nickel oxide and direct chemical reduction gives an impure product as a rule. Formerly commercial nickel only contained about 94 per cent. of the metal, but in the last few years the commercial metal has greatly risen in purity. An analysis of one of the best makes of nickel would give figures of the following order: Nickel 99.1 per cent.; cobalt, 0.4 per cent.; iron, 0.3 per cent.; carbon, 0.05 per cent.; manganese, 0.05 per cent.; silicon, 0.10 per cent. These figures, and the nature of the elements present as impurities, of course vary according to the nature of the ore and the methods adopted in refining it. In the United States, since 1894, electrolytic methods have been largely employed. Copper is deposited apart from the nickel in the actual electrolysis. Nickel is almost invariably deposited from solutions which have been made alkaline by the addition of ammonia, copper having been eliminated in the previous operation. In Germany, at the Papenburg works of the Aligemeine Electro-Metallurgische Gesellschaft, an electrolytic process known as the Hoepfner process has been adopted. In America the chief processes which have been tried or adopted are the Thum process at the Balbach Company’s works, Newark, the process of the Orford Copper Company at Baylnne, New Jersey; the Brown process at Cleveland, Ohio, by the Canadian Copper Company, and the Hybinette process at Sault Ste. Marie.
[The plethora of metallurgical processes used to recover nickel is fascinating. Today, these methods can be classified as either pyrometallurgical or hydrometallurgical processes.]
The process adopted by the Mond Nickel Company at their Clydach works in South Wales is unique not only in the manufacture of nickel, but in the whole domain of metallurgy. The method adopted gives nickel of a very high degree of purity, seldom less than 99.9 per cent., the small trace of foreign elements left being carbon and iron. The Mond process depends on the formation of an easily volatile compound formed by the action of carbon monoxide gas on finely-divided nickel. This compound, known as nickel carbonyl, is easily decomposed by heat, leaving pure nickel, with the evolution of carbon monoxide, which is used again to act on further impure metal. The discovery of the formation of this compound, which was originally accidental, led to a patent being taken out in 1890 by the late Dr. Ludwig Mond for refining nickel, but it was not until 10 years later that it was used on the commercial scale. Since no other element present under ordinary conditions, with the exception of iron to a very limited extent, forms a carbonyl, the nickel is free from other metals, and especially from cobalt, which is separated only with extreme difficulty in other methods of refining. The metal appears on the market in the form of pellets varying in size up to 5-16-inch in diameter. The works at present turn out about 1,800 tons of nickel a year, but are being much enlarged.
[Nickel carbonyl is known today to be highly toxic. If you breath it into your lungs it will kill you.]
The future production of nickel, at any rate in so far as it will be used for the manufacture of nickel steel, will, it seems, lie in the formation of ferro-nickel by direct reduction in the electric furnace, and with cheap electric power, and by working possibly some of the sources of nickel not yet tapped, it seems probable that the price may be considerably reduced.
[Again, the author does what legally cannot be done today – alluding to price-fixing or collusion among producers.]
But in such a complicated problem as in afforded by the addition of various alloys of steel, it is difficult to see what the future may have in store. There are indications that vanadium and chromium, if the former can be obtained sufficiently cheaply, may replace the use of nickel; but, whether or not it is superseded as a toughening addition to steel, the fact remains that pure nickel, by reason of its excellent properties as a metal, must always find its uses, and the extent to which it is employed will depend on its cost.
[Again, the author takes a parting shot at the producers of nickel , prodding them to reduce their prices. The speculative comment about the possibility of vanadium replacing nickel in steel making did not bear out over time, probably because vanadium is more rare than nickel and therefore commands a higher price than nickel. It is interesting to note that what is not even mentioned in this summary of the nickel industry one hundred years ago are the issues that so much impact the industry today: human health, the impact that the industry has on the natural environment and the social responsibilities of the corporations that carry out the mining of nickel. These issues are of paramount importance to the nickel industry today.]
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Hugh S.; Fraser: A Journey North: The Great Thompson Nickel Discovery We owe a debt of gratitude to senior Inco geologist Hugh Fraser for publishing this book in 1985. It describes in great detail an incredible exploration effort that culminated in the 1956 discovery of the Thompson nickel deposit that is still being mined today.
Edited by Thomas E. Graedel and Ester van der Voet: Linkages of Sustainability "To meet the challenge surrounding the sustainable use of resources, improvements are needed in many areas: technological innovation across the entire mineral life cycle (e.g. improvements in exploration, mining, and processing methods, product design and recycling system design), new policy instuments, more complete databases, more integrated models, better-informed stakeholders and citizen iniatives, and various types of entrepreneurship. Most importantly, the challenge of sustainability requires a generation of practitioners and analysts with a multidisciplinary understanding of a broad set of issues."
