Nickel Mining Set to Increase

Activity in the nickel industry, New Caledonia's main economic sector, is set to increase with three major nickel processing projects in the pipeline. Progress on a planned project to build a nickel processing plant in the north, currently at the financial feasibility study stage, has been slow. However, the project received a boost from French president, Jacques Chirac on his recent visit.

Chirac spoke publicly about his personal interest in the success of the project because of its role in the economic rebalancing of the territory. He promised the French government's full support to see the project carried through. France's main form of assistance is through the granting of tax exemptions. However, the president said it would help in other capacities as well such as providing technical advice.

The project is a joint venture between local mining company SMSP, which holds 51 percent of the shares, and Canadian company, Falconbridge. Its estimated cost is US$1.5 billion.

As with the country's two other major mining projects, the French government is to grant significant tax exemptions.

The project's advocates say it will open up massive employment opportunities in the north which will stem the exodus of people south to Noumea. The plant is expected to create close to 900 direct jobs and over 1500 indirect and induced jobs. Other sectors of the economy in the north will also benefit through new and improved infrastructure in areas such as tourism, education and health.

Construction is expected to begin early 2005 with production to begin in 2008. The plant's projected output is 60,000 tonnes of nickel a year. Construction to resume

In the south, construction of a billion dollar nickel processing project is to resume after work was suspended last year. Canadian mining giant, Inco, in conjunction with its local subsidiary, Goro Nickel, suspended work on the project last December when it became clear the project would exceed its projected capital cost. The project's estimated capital cost had increased by 30 to 45 percent above the initial estimate of US$1.45 billion.

After reviewing the situation, the company took steps to reduce the cost which had risen to over US$2 billion to around US$108 billion. It is also waiting on a US$350 million tax exemption from the French government.

Inco has indicated that preparatory work for construction on the site will recommence in October. More significant construction work is to begin around March next year. Before the suspension of work, production was meant to start late next year. However, the company now estimates the plant will begin operating towards the end of 2006.

The plant is to use a new hydrometallurgic process which extracts nickel through pressure acid leaching as opposed to the traditional pyrometallurgic process which uses smelting. The hydrometallurgic process makes it feasible to extract nickel from ores with low nickel contents as well as cobalt. Once in action, the plant is expected to produce 55,000 tonnes of nickel and 4,500 tonnes of cobalt annually. The project will create 800 direct jobs and generate around 1500 indirect and induced jobs.

Increasing production New Caledonia's only existing nickel processing plant owned by the Société le Nickel (SLN) is currently undergoing renovations to increase production. The expansion project at the SLN's smelting plant in Noumea, will increase the company's annual nickel production from 60,000 tonnes to 75,000 tonnes. The 24 billion CFP (US$230 million) project, which includes the modification of one of the plant's three furnaces, also includes the introduction of new processing techniques to reduce the plant's atmospheric pollution. As part of the project, SLN is also increasing activity at one of its mines to supply enough ore for the plant's increased capacity. The mine's ore production will be increased from 250,000 tonnes to 1 million tonnes a year creating around 200 new jobs. The project is expected to be completed in 2006.