Partner Sought for Madagascar Nickel Laterite Project – by Jane Werniuk

The Canadian Mining Journal is Canada’s first mining publication.

This article was originally published – April/2006

Another large Canadian nickel laterite project is Ambatovy in eastern Madagascar, off the east coast of southern Africa. The project is owned by Dynatec Corp. of Richmond Hill, Ont., and Sumitomo Corp. of Tokyo.

Ambatovy was studied extensively from 1989-95 by Phelps Dodge Corp., which sold 100% interest in the project to Dynatec between 2004 and January 2005. A bankable feasibility study, co-ordinated by SNC-Lavalin Engineers & Constructors, was released in February 2005. The results were positive, but the estimated capital expenditure was US$2.25 billion — too expensive for Dynatec to carry alone.

The company sought and found two partners. In May 2005 it signed an agreement with Impala Platinum Holdings of Johannesburg for 50% interest. Sumitomo purchased 25% interest in August 2005, reducing Implats’ and Dynatec’ holdings to 37.5% each. A shareholders agreement was signed between the three parties in mid-October, but six weeks later came news that must have been bitter. A Nov. 28 news release said, “Implats has advised that it has determined that the benefits to Implats which it had initially anticipated from the project do not now appear to be achievable.”

Dynatec’s interest climbed to 75%, and Sumitomo stayed at 25%.

In a March 2006 interview with CMJ, Dynatec president and CEO Bruce Walter said that the partners are talking with interested parties, and expect to add a third partner within the next few months. Dynatec intends to maintain a substantial interest, in the 30-40% range.

Current activity includes SNC-Lavalin assisting Dynatec with the engineering work, mostly in the Toronto area and Fort Saskatchewan. An important aspect includes updating the capital and operating costs from June 2004 to 2006 pricing, expected to be complete by April 2006. “We’re quite comfortable with where the numbers are coming out, and don’t see them impeding the progress of the project,” said Walter. He added: “The environmental study will be submitted to the government very shortly, and that’s the critical piece in completing the permitting process.”

The Japan Bank for International Cooperation has expressed a strong interest in participating in the project debt financing for Ambatovy.

Unique advantages

In some ways, Ambatovy is very similar to the Goro and Koniambo projects in New Caledonia (p.11-15, this issue). All three truck-and-shovel open pit projects will become long-life nickel laterite mines producing a similar amount of nickel, with a similar capital cost.

But there are several aspects that set Ambatovy apart from any other nickel laterites in the world, according to Gerry Bolton, Dynatec’s vice-president metallurgical technologies based in the company’s division in Fort Saskatchewan.

In a March interview Bolton said, “The best feature is the thickness and extent of the laterite at the Ambatovy and Analamay deposits [the two pits that will be developed 3 km apart]. An average deposit is several metres to 10 m thick, but our deposits average 40 m thick and are up to 100 m. Therefore the footprint for the pit will be much smaller, so the amount of disturbed area and the haul distance are much less.”

The other advantages are metallurgical. “The ore and the leached residues both thicken well,” says Bolton. “The ore is quite low in magnesium so the sulphuric acid consumption is low and the leaching time fairly fast.” Test results confirm that more than 95% of the nickel and cobalt go into solution within 75 minutes.

The Ambatovy ore will be screened and slurried in a nearby preparation plant, and sent 195 km via pipeline to a pressure acid leach process plant near the port of Toamasina. The mixed sulphide product containing about 55.2% Ni and 4.2% Co will feed a conventional refinery that will extract nickel and cobalt. The annual production will be 60,000 tonnes of nickel and 5,600 tonnes of cobalt. The operating cost is estimated at US$1.67/lb of nickel, or a net cost of US$0.67/lb nickel after cobalt credits.

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