MANILA, Philippines -- Output at the Berong nickel mine is expected to be flat to higher this year at between 530,000 and 600,000 tons of laterite nickel ore, from last year's 530,168 tons, a shareholder said Monday.
London-listed Toledo Mining said in a statement, the Berong mine, potentially the world's fourth-largest nickel laterite resource, produced 284,556 wet metric tons of laterite nickel ore in the first half, most of which was shipped to Australia and China.
The first half ore shipment from the mine in southwestern Palawan province had an average grade of about 1.52 percent nickel, or 2,326 tons on a dry basis, and 28.89 percent iron.
About 170,000 tons of ore is stockpiled waiting for shipping at the end of the second quarter.
"Considering the extreme wet weather conditions during the first half of 2008 and the state of the Chinese laterite market, operating performance has been good and continues to improve," said Toledo, which holds a majority stake in Berong.
Toledo said demand for Philippine laterite ore in China declined in the second quarter and is expected to remain depressed during the third quarter when industrial activities are halted due to the Beijing Olympics.
"Anecdotal evidence suggests more than eight million tons of laterite ore is currently stockpiled at Chinese ports, and many Philippine ore producers have stopped shipping laterite ore to China," Toledo said.
The company said it was insulated from the Chinese market by its ore supply contract with BHP Billiton, the world's biggest mining group.
Berong is in talks with BHP Billiton to double its existing supply contract of 500,000 tons of laterite nickel ore per year. The contract is good for five years, and can be extended by another five years.
The talks are expected to be concluded in the current quarter, Toledo said in the statement, adding it was seeking other long-term contracts with Chinese end-users.
Production capacity at the Berong mine is expected to be raised to 1.0 to 1.5 million tons of laterite ore per year with the current infrastructure in place, Toledo said.
It said it would start pre-feasibility studies on the most suitable leach processing option for the Berong ore types in the third quarter.
Berong's other shareholders are London-listed European Nickel and Philippine firm Atlas Consolidated Mining and Development Corp.
Toledo also said it had signed last month a deal with China's state-owned Jiangxi Rare Earth and Rare Metals Tungsten Group Co. Ltd. to develop a nickel-cobalt leaching plant at the Ipilan/Celestial nickel laterite deposit also in Palawan.
Under the deal, an atmospheric leach plant or high pressure acid leach plant with an annual capacity of 40,000 tons mixed nickel-cobalt hydroxide output will be built under the joint venture, with all the output to be sold to JXCT under a long-term supply arrangement.
Estimates based on test results in the Ipilan/Celestial area showed possible deposits of over 100 million wet tons of laterite ore with average nickel grade of 1.2 to 1.3 percent.
