Xstrata approves New Caledonia nickel project

Xstrata, the Swiss-based diversified mining group, has approved the development of the greenfield Koniambo nickel project, which is located in the North Province of New Caledonia, the South Pacific island.

The Koniambo prospect is believed to be one of the world’s largest and highest-grade undeveloped nickel laterite deposits, containing 62.5 million tonnes of saprolite reserves grading 2.40% nickel at a 2% cut-off grade.

The project, which is a joint venture with Societe Miniere du Sud Pacifique, will require an investment of around $3.8 billion.

The majority of the capital will be provided by Xstrata in return for a share of project cash flows during the first 25 years of production.

According to Mick David, Xstrata’s chief executive, “Koniambo represents the opportunity to develop an outstanding nickel operation with cash costs in the lowest quartile and exciting, low-cost growth potential from its vast resource base.”

The project has support from local communities, and production is expected to begin in the first-half of 2011, reaching full capacity by 2013.

Initial annual production is estimated at 60,000 tonnes of nickel with first ore and Xsanrata believes that Koniambo has “substantial further high-return, brownfield expansion potential”.

The nickel will be processed using Xstrata Nickel’s latest technology, which utilizes higher metallurgical recoveries and lower operating costs than conventional smelting operations.