Cuba Business

Sherritt eyes Cuba nickel expansion as price rises

Posted June 06, 2003 by publisher in Cuba Business.

TORONTO, June 4 (Reuters) - Sherritt International S.TO said on Wednesday it is looking at developing more near-surface nickel laterite deposits in Cuba, where it is already a large investor in oil and gas, agriculture and tourism.

Dennis Maschmeyer, Sherritt’s chief executive and president, told a conference in Toronto the company’s plans to expand its Moa laterite nickel and cobalt project in Cuba looked more attractive with the prospect for both metals “extremely positive”.

Maschmeyer said consumption for stainless steel production was rising, led by China, which has left nickel supplies tight and pushed prices higher.
About 75 percent of the world’s nickel is used in stainless steel production and the industrialization of China has led the growing demand. The tight supply is also due to failed promises of production increases.

Nickel prices have surged to near three-year highs over the past month as worries about supply shortages grew and a strike shut down Inco Ltd.‘s N.TO huge operation in Sudbury, Ontario, which produces 9 percent of world supply.

The metal closed at $9,260 a tonne ($4.20 a pound) in London on Wednesday.

Maschmeyer said 60 percent of the world’s undeveloped nickel deposits are laterites, which tend to be in places where large capital expenditures need to be made.

He said Cuba has about 27 percent of these laterite deposits and has an experienced workforce that is already producing over 70,000 tonnes of nickel and cobalt annually.

“We are well positioned to be a major player in the development of Cuba’s nickel resources. Studies have verified that we can incrementally expand existing operations by 50,000 tonnes of nickel and cobalt,” he said told the Scotia Capital materials conference.

“Such economies, in our view, are very compelling and will lead to increased capacity coming out of Cuba in the next five years,” he said.

The Moa project is used as an example of the successful development of laterite deposits—compared with deeper sulfide deposits.

Sherritt also has an 8 percent stake in Anaconda Nickel Ltd., the joint venture that owns the Murrin Murrin laterite nickel plant in Australia’s outback.

The project has failed to meet promised production runs as it struggled to install Sherritt’s complex heap-leaching technology, used in Cuba, which extracts nickel and cobalt from otherwise worthless clay-like lateritic ore.

At Moa, Sherritt’s mine processing facilities produce mixed sulfide containing nickel and cobalt. The sulfide is shipped to Canada where it is refined into nickel and cobalt in Fort Saskatchewan, Alberta.

The company was not available for comment, but analysts said that under an agreement with the Cuban government, the Moa operation will have access to laterite reserves if the plant and mine are expanded.

The Cuban government would also like to see a refinery built on the island for further processing of nickel and cobalt produced there.

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