Goro technical delays have set $4 billion nickel project back a year

Vale Inco's Goro nickel complex, one of the world's largest, and most expensive current mining projects, is now due to come on stream in January 2010, but will only produce at a third of its design production rate next year.

Author: Lawrence Williams
Posted: Thursday , 22 Oct 2009

LONDON -

Peter Poppinga, the newly appointed Director of Vale Inco's huge Goro nickel laterite project in New Caledonia blames some major technical problems for the latest delay in start-up of this, one of the world's largest nickel projects. The mine and acid leach processing facility, one of the world's largest current new mining projects of any kind, was initially due to come on stream late 2008/early 2009, but will only now start operations in January next year and, according to Poppinga, will only produce around one-third of its design production in its first full year of operation.

The Goro project will probably have cost close to US$4 billion (slightly below according to Poppinga), which has escalated dramatically from the original $1.9 billion construction cost estimate, by the time it starts up. The latest problems will perhaps have added another $40 million to the overall costs. The latest technical difficulties had stemmed from problems with the big high pressure autoclaves which followed on from an even-more serious sulphuric acid spillage last April resulting from a pipeline joint rupture in what is an extremely sensitive environmental area. This required a major acid plant safety redesign which will only be completed next month.

The French Territory of New Caledonia, an island around 1,500 km off the eastern coast of Australia, has one of the world's most attractive coastlines and what is said to be the second longest coral reef in the world after Australia's Great Barrier reef. There had been considerable local protest about the Goro construction, with the plant being situated on a beautiful bay in the south part of the island and the plant's liquid effluent to be pumped into a lagoon situated close to a Unesco World Heritage site. Solid tailings are planned to be used to reclaim mined out open pit areas. Two years ago there was considerable local protest by the community involving disruption to the construction programme and some sabotage, but the mining company, in conjunction with the New Caledonian government, eventually managed to cool the situation down and proceed with the production plans.

Vale Inco says that Goro is among the best undeveloped laterite orebodies in the world, with excellent average grades, 55 million tonnes of estimated measured and indicated mineral reserves, and a very large resource base estimated to contain at least as much as 120 million tonnes of mineable material or more. The planned annual capacity of the project is 60,000 tonnes of nickel and 4,300 to 5,000 tonnes of cobalt. The operation will employ around 800 people.

Vale Inco holds a 69 percent interest in Goro. The three provinces of New Caledonia hold a 10 percent equity interest in the project, through their holding company Société de Participation Miniere du Sud Calédonien (SPMSC) while Japan's Sumitomo Metal Mining Co. Ltd. and Mitsui Co. Ltd. own the remaining 21 per cent.

High pressure acid leach (HPAL) hydrometallurgical nickel plants have the reputation for being extremely expensive to build and few manage to come to production without some serious start-up problems. It looks as though Goro is no exception to this. Also new HPAL nickel projects have proved to find it difficult to produce at economic production costs given lower nickel prices, but Vale Inco reckons Goro will be among the most efficient of these and should be able to produce economically, although it will take some time to pay back the huge capital costs of the project.

Goro is coming on stream at what could be a difficult time for the nickel sector where a 110,000 tonne surplus of supply over consumption is anticipated for the current year. Similar surpluses are projected to continue into 2010 and beyond as new facilities, like Goro, come on line even should global demand pick up if the recession is truly drawing to a close.