Global nickel boom gives second lease on life

Global nickel boom gives mothballed mine in WA's remote Kimberley a second lease on life
WA COUNTRY HOURBy Courtney Fowler
Posted about 6hrs ago

Peter Harold is the managing director of Panoramic Resources, which has restarted its Savannah Nickel mine near Halls Creek. (ABC Rural: Courtney Fowler)
The expected demand for electric vehicles is driving optimism in the global nickel industry and breathing new life into a mothballed mine in Western Australia's remote East Kimberley after a three-year hiatus.

After a tough few years, things are turning a corner for the nickel market, which is up by 20 per cent since the start of the year trading at $US5.61 ($7.85) per pound.

Rising commodity prices have given several projects a boost, including Panoramic Resources' Savannah mine, which recently reopened near Halls Creek, 2,800 kilometres north of Perth.

Commercial manager Tim Shervington said the mine exported an $8.6-million shipment of nickel concentrate from Wyndham Port this week, its first since reopening.


Almost 8,000 tonnes of nickel concentrate was loaded onto the MV Heemskerkgracht at Wyndham Port for export to China. (ABC Rural: Courtney Fowler)
"It's been a long time coming, we've been in care and maintenance for three years, and to get our first shipment away is very pleasing indeed," he said.

"I think there's probably some more confidence in the market with the advent of the lithium-ion battery.

"In the process of marketing our concentrate we got approached by many battery manufacturers seeking to buy our product.

"That has definitely helped things but also stainless-steel production in China has been lifted in the back end of last year."

After resuming mining operations in September, the recommissioned mine processed its first ore at the end of 2018 and secured a four-year concentrate sales agreement with China's Jinchuan and Sino Mining.

Mr Shervington said the company hoped to return to monthly nickel exports out of Wyndham Port and were on target to ship out 100,000 tonnes of concentrate this calendar year.


The recommissioned Savannah mine has had its first nickel shipment leave the remote port of Wyndham for China. (ABC Rural: Courtney Fowler)
A boost for struggling East Kimberley port

Wyndham Port manager Steve Forrest says the restart at the Savannah nickel mine will give a much-needed boost to the port. (ABC Rural: Courtney Fowler)
The operator of the remote port of Wyndham said the restart at the Savannah nickel mine would give a much-needed boost to the region.

Before its closure in 2016, Panoramic was the Port's biggest customer, shipping more than 1.2 million dry metric tonnes of nickel concentrate to China in a decade, worth around $1.4 billion.

In the same year, the Port also lost another key customer when Kimberley Metals Group put its Ridges iron ore mine into care and maintenance.

Live cattle exports have also dwindled.

Port manager Steve Forrest said almost 8,000 tonnes had been loaded on a bulk carrier for the company's first shipment of 2019.

He said it was a great relief for the struggling port and good news for the local economy.

"We've been through a pretty lean period and basically we had just enough work to keep the gang of blokes working here," he said.

"We've had our eye on the nickel prices and the Australian dollar and when they made the announcement they were going to reopen it was very good for us, and the community."

Boom to bust … to boom?
It's been a wild ride for the nickel market over the past few years.

At the time of Savannah's closure, the nickel price bombed out at $US3.93 per pound.

But now the nickel market appears to be back on the up, more than 50 years after the country's first great nickel boom.

The state's nickel miners, who traditionally targeted the stainless-steel market, are increasingly looking to the electric vehicle market to drive future demand for the commodity.


Panoramic Resources will start expanding its Savannah Nickel mine in 2019 to extend the mine's life for a further eight years. (ABC Rural: Courtney Fowler)
This has prompted new projects like the Nova nickel-copper mine, 360 kilometres south-east of Kalgoorlie-Boulder in WA's Goldfields, which officially opened in late 2017.

The same year, BHP announced a $55-million expansion of the company's Kwinana refinery at its Nickel West operations, which will see it ship 100,000 tonnes of nickel sulphates to Asia a year.

Mining analyst Tim Treadgold said the electric vehicle market could account for up to 40 per cent of total nickel consumption in the next two decades.

"The electric revolution is upon us and we're going to replace oil with metals," he said.

"It's a real boost to the industry to be able to look at its market and say, 'We've got the stainless-steel market under control, and there's an entirely new use of nickel coming down the track'.

"So that's going to really push the price along."


Panoramic Resources recommissioned Savannah's nickel plant by crushing its first ore in December last year. (ABC Rural: Courtney Fowler)
A 'fickle' commodity
However, Mr Treadgold warned there would still be a few challenges for nickel miners along the way.

"Nickel is a spectacular metal going up and coming down and it's always been that way, it's peculiarly erratic and volatile, more so than any other metal," he said.

"We could have a jolly good nickel boom over the next few years, but it's always followed by a jolly good nickel bust.

"The market to watch is not so much the ebb and flow of nickel and vanadium prices, it's how are electric vehicle sales are going because that's the end market.

"And if that really starts to take off, metal prices will follow."


The Savannah nickel mine near Halls Creek restarted off the back of high commodity prices in September. (ABC Rural: Courtney Fowler)
Savannah mine to expand
Despite the metal's volatility, Savannah's future is looking bright with the mine looking to expand later in the year.

Panoramic plans to ramp up production to three quarters of a million tonnes of ore this year, but the key to Savannah's ongoing success is an additional ore body to the north of the mine.

Savannah mine general manager Ben Robinson said the expansion into Savannah North in August would extend the mine's life for a further eight years.

Mr Robinson said the project's restart would create 300 new jobs for the WA economy, at a time when another major mine in the region, Argyle Diamonds, was facing closure.

"Our strategy has been to have a large proportion of experienced people at the start because it's been critical to get it up and running.

"But equally we've been able to hire quite a few locals and invest in training our local Indigenous employees, which is fantastic."


Robotics are used to operate some trucks remotely in the Savannah nickel underground mine. (ABC Rural: Courtney Fowler)
Growing WA's battery mineral exports
The nickel price recovery reflects a wider battery metal boom which is strengthening a number of commodities in the state.

WA is the world's largest producer of lithium and a leading producer of other battery metals including cobalt and rare earths.

Australia's first dysprosium mine outside China was officially launched by Northern Minerals at Browns Range in the Tanami Desert mid-last year.

Savannah's restart also comes at a time when the State Government has launched the WA Future Battery Industry Strategy, designed to aid the state's growth as a battery minerals exporter.

If successful in its bid, the Government has committed $6 million to host the Future Battery Industries Cooperative Research Centre in Perth.

Mines and Petroleum Minister Bill Johnston said the unprecedented growth of the future battery industry represented a once-in-a-lifetime opportunity for WA.


Regional Development Minister Alannah MacTiernan with Northern Minerals managing director George Bauk at the official opening of the Browns Range rare earths pilot project. (ABC News: Rebecca Nadge)