Ferro-nickel proj on Semirara to continue - Rusina Mining

Robert Gregory, chief executive officer and managing director of Rusina Mining N.L, which operates the Acoje nickel project in the Philippines, said the company will pursue its ferro-nickel processing project on Semirara Island and is set on further expansion for the long term.

In an interview with The STAR, Gregory said Rusina Mining is now firming up plans for a high pressure acid leach processing (HPAL) plant possibly by next year when the nickel market has stabilized and the world financial market has calmed down.

He said an HPAL plant requires an investment of “more than $400 million.”

Australian principal Rusina Mining Ltd. is expected to take the lead in the nickel processing plant because, according to Gregory, the 60 to 40 Filipino majority ownership requirement for mining firms is not applicable to processing plants.

Last week, Isidro A. Consunji, president of DMCI Holdings, parent firm of DMCI Mining Corp., the local partner of Rusina revealed plans for the possible temporary suspension of nickel mining operations in its Acoje tenement in Zambales.

“Nobody is buying (nickel),” Consunji said.

As such, Conjunji said, “based on current market conditions, it is not cost effective to continue nickel mining operations.”

The last shipment made by Rusina, Consunji said, amounted to 350,000 metric tons worth $10 million.

Nickel prices are now down to about $11,000 per metric ton.

Nickel prices had previously reached $33,000 per metric ton.

A temporary suspension of nickel mining operations, Consunji said, would not result in any substantial loss as the mining equipment could easily be moved to other mining operations for other metals such as chromite and platinum.

DMCI Mining controls 60 percent of Rusina, while 40 percent is held by the Australian Rusina Mining Ltd. Rusina is listed on the Australian Stock Exchange and the London Stock Exchange.

Under a joint venture agreement, DMCI and Rusina will acquire, explore and develop mining properties in the Philippines.

The joint venture company has three subsidiaries which would house the separate mineral projects.

Under the agreement, Rusina would guarantee ore supply for five years. DMCI has also agreed to carry Rusina’s equity contribution for the project construction on their balance sheet.

All nickel properties with DMCI and Rusina jointly acquiring, exploring and developing all non-Luzon island nickel projects in the Philippines.

Early on, Rusina was already aware that the DSO market for low grade nickel limonite is erratic.

The low grade limonite is used for producing “pig-iron” and traders have stockpiled quite a lot of this material in China ports.

Apart from low nickel prices, stainless steel producers are starting to revert to pure nickel rather than purchase the “pig-iron”.

Most analysts, however, say there will remain a “pig-iron” market until supply side conventional nickel catches up to demand.

The Acoje lower grade limonite sits on top of the higher grade ores.

Acoje also has a good grade saprolite ore up to grades greater than two percent. The market for higher grade saprolite ore will continue for the foreseeable future as this ore is used in ferronickel smelters. 

DMCI is responsible for all funding, mining, grade control, rehabilitation, road and port development work as well as the sales and marketing obligations.

There is no requirement for any capital injection by Rusina nor is there any sale of project equity or shareholder dilution.

The mining of the Acoje nickel laterite deposit commenced in May 2007.

Rusina and DMCI’s ferronickel facility at DMCI’s Semirara Coal Mine located on Semirara Island below Occidental Mindoro initially involved a “pig-iron” blast furnace.

However, the focus has now shifted towards a small longer term Rotary Kiln and Arc Furnace to produce a higher grade (higher than 20-percent nickel) ferronickel suitable for sale anywhere.

DMCI agreed to carry Rusina’s equity contribution to the project, to speed up financing and reduce risk to Rusina shareholders. 

Rusina agreed to guarantee ore supply for five years. 

DMCI owns and operates the 3.5Mtpa Semirara coal operation and the mine is ideally located for a smelter with abundant limestone resources located on the island, including their own coal operated power station.