First Quantum Minerals has reduced nickel guidance over the next few years.

First Quantum Minerals (FQM) has announced its Ravensthorpe nickel and cobalt mine in Australia will be suspended for a period of up to two years resulting in a loss of a third of its workforce. The company stated that mining at Showmaker-Levy will be halted and both high pressure acid leach (HPAL) circuits will be bypassed. Existing ore stockpiles will be processed through the atmospheric leach circuit, which it expects will reduce mining and processing costs, despite having lower recoveries in the process plant. Stockpiles are sufficient for 18 months of production, after which time Hale Bopp and Halley’s ore bodies will be mined. In line with the impact on grades and recoveries, FQM also slashed Ravensthorpe’s nickel guidance to 12-17kt Ni in 2024, 11-16kt Ni in 2025 and 2026.

FQM acquired the Ravensthorpe plant from BHP in 2010. The plant hydrometallurgically processes lateritic ore from several deposits to produce mixed hydroxide precipitate (MHP) – an intermediate commonly used to produce nickel sulphate. The plant was idled in August 2017 due to previously low nickel prices. However, following a price recovery in 2019, FQM announced its intention to recommence operations. This resulted in the restart of the acid plant and atmospheric leaching operations in March 2020. In 2021, FQM sold a 30% stake in the Ravensthorpe operation to South Korean steel giant, POSCO, for a cash consideration of US$240M.

The decision to halt mining is another blow to the Western Australian (WA) nickel sector and further unwelcome news to FQM, which was recently forced to close its copper mine in Panama. Panoramic Resources’ Savannah nickel mine operation in WA was halted early in January, having gone into voluntary administration, another casualty of low nickel prices. The LME nickel cash price has been hovering around the US$16-16,500/t mark since the beginning of the year, a far cry from prices north of US$25,000/t at the same time last year. Concerns are growing that Australian nickel production is becoming increasingly uncompetitive against a massive wave of low-cost Indonesian material entering the market. Australia’s Albanese government is reportedly supportive of the development of a pricing mechanism for nickel that distinguishes between material that is produced to high ESG standards, and that produced elsewhere. Project Blue analysis shows that Indonesia’s refined nickel production last year surged by 21% y-o-y and accounted for a little over 40% of global refined output.