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Sumitomo may build $1.7-B nickel plant

NICKEL ASIA Corp. and Japanese partner Sumitomo Metal Mining Co. Ltd. may build a $1.7-billion nickel ore processing facility in Northeastern Mindanao next year, a move that could boost mining investments in the country.

Gerard H. Brimo, Nickel Asia president and chief executive officer, told reporters on the sidelines of a mining conference in Manila he expects Sumitomo to give its go-signal to the Surigao del Norte project by the end of the month, despite the global economic slowdown.

"We are looking at participating in [the construction of] a second acid leaching plant in partnership with Sumitomo," Mr. Brimo said, adding that the ore would come from their Taganito mine in Surigao del Norte. The feasibility study is almost completed, Mr. Brimo said.

The plant will process 30,000 metric tons of nickel ore per year, triple the initial capacity of the Rio Tuba plant in Palawan.

The Taganito mine will provide 100 million metric tons of nickel laterite ore, enough for the processing plant to operate for 30 years, Mr. Brimo said.

"The plant is going to be right beside the Taganito deposit so it is going to be a short distance [for us] to bring the laterite ore to the [processing] plant," he said, adding that ores from other nickel projects would add unnecessary transport costs.

Nickel Asia will shoulder 30% of the $1.7-billion project cost, while the Japan Bank for International Cooperation will finance the remaining 70%, Takanori Fujimura, president of Nickel Asia subsidiary Coral Bay Nickel Corp., told reporters.

The company also expects to finish expanding by March its first high-pressure acid leach facility near the Rio Tuba mine, which processes low-grade nickel laterite ores.

In 2005, Nickel Asia and Sumitomo started operating the country’s only nickel ore processing plant worth $180 million following an upgrade two years ago. Processed nickel ores are supplied by the Rio Tuba mine, Mr. Brimo said.

Once upgraded, nickel ore processing capacity will be doubled to 20,000 metric tons per year.

The Rio Tuba acid leach facility expansion cost the company $308 million, almost double the $180 million cost of the first plant.

"On a combined basis, those two plants will supply 7% of the world’s nickel output," Mr. Brimo said.

Mr. Fujimura said the company expects nickel prices to rise to $7-$8 per pound from $5-$5.50 now.

Precious metal retailer Kitco Base Metals has priced nickel at $5.56 per pound, down from $8.20 last month and $14 last year.

Mr. Fujimura said the company might also look at copper and gold projects in the country after building the second processing plant.

They will engage in a 60-40 joint venture deal in medium-scale mines or fully finance a large-scale mine, he added.

Nickel Asia operates nickel mines Rio Tuba, Taganito in Surigao del Norte, Taganaan in Surigao City and South Dinagat and Cagdianao in northern Mindanao.

Also yesterday, Canadian miner Philippine Metals Corp. said it was still waiting for the Environment department’s approval of its permits to explore copper mines Taurus in Tacloban, Leyte, Malitao in Kalinga Apayao and Dilong in Abra.

"Hopefully, we can see [the exploration permits] in a couple of months, maybe in the new year," Philippine Metals Vice-President Tom Vaillancourt told reporters.

"The market would be improving by that time... [and it] would be an excellent time to start the initial public offering," he added.

Philippine Metals will list its shares simultaneously list on the Canadian and local stock exchanges by 2009.

The company will invest $150,000 to $300,000 for the airborne geological survey of the Taurus mine, Mr. Vaillancourt said. (NEIL JEROME C. MORALES, BusinessWorld)

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