Toledo Mining Ships Nickel Ore Directly To China
By Rob Davies
It is amazing how the market invents solutions to problems. The current shortage and high price of nickel has prompted Toledo Mining
to ship laterite ore directly from the Philippines to China for
smelting. It wasn’t so long ago that laterite ores were regarded as
high cost because of the high energy required to smelt them. Now it
seems to be economic to ship ore grading 1.5% nickel across the South
China Sea to without any beneficiation at all. Toledo has only been
doing this since February 2007 so no financial reports are available
yet. So far it has made four shipments totalling 170,000 tonnes from
its Berong and Ipilan projects on the island of Palawan in the
Philippines. Its initial agreement is to ship 900,000 tones of direct
shipping ore to China for metallurgical testing with prices for the dry
laterite ore directly linked to LME nickel quotes.
this early work is underway the company is preparing a feasibility
study on developing the Berong project in which it has a 56.1 per cent
stake. The resource at Berong is estimated on a non JORC basis at 275
million tonnes at a grade of 1.3% Ni. That might not sound very much
but at today’s prices that material is worth about US$500 a tonne.
Moreover, this laterite is low in phosphorus making it particularly
amenable to ferro-nickel smelting.
The facilities that are
taking the ore are nickel pig-iron, acid leaching and ferro-nickel
processing plants and it is the nickel pig-iron smelters that are
having a big impact on the supply side of the nickel business. These
plants are run by small operators and are essentially pig-iron furnaces
that are taking laterite ore into the charge to produce nickel enriched
pig iron. While it is not suitable for the higher grade 300 series
stainless steels it can be used for lower grade 200 series stainless
steels. According to Stephen Briggs of Société Générale this process
has come from nowhere to account for 30,000 tonnes of nickel production
in 2006 and it could be as much as 70-80,000 tonnes this year.
has commissioned Snowden of Australia to prepare a resource statement
on Berong to JORC standards and has asked SNC Lavalin of Canada to
research the options of processing the nickel on site. One method would
be a high pressure acid leach process. Mining operations at Berong are
being conducted under a one year, renewable mine permit allowing it to
mine one million tonnes a year. Completion of the feasibility study
will greatly assist the award of a full mining permit. In the meantime
Toledo is working to upgrade the facilities at Berong by seeking to
improve the haul road to the loading facility.
A major advance
would be to replace the current system of barging the ore out to
freighters and replacing it with a trestle conveyor that would allow
direct loading rather than double handling. However, permits for these
improvements are taking time to come through. Despite that the market
has taken to the story and pushed the shares up from 150p to 332p
taking its market capitalisation to £95million. In the background is
also the potential of the Celeste/Ipilan nickel project of 75 million
tonnes of non JORC resource in which it has a 52 per cent stake.
Adding that into the equation adds another dimension to the Toledo
story and the first set of results showing the revenue from the direct
shipping should be very interesting indeed.