Axiom Mining has been forced to reapply for prized nickel leases in the Solomon Islands after a lengthy legal dispute over the legitimacy of its original lease application which had been challenged by Japanese giant Sumitomo Metal Mining.
Axiom Mining was invited by the Solomon Island government to apply for a mining lease for the Isabel nickel project, but an objection by Sumitomo Metal Mining kicked off a multi-year legal row which has only just been settled, with all claims to the nickel reserves denied.
As a result, Axiom Mining is now to reapply for the contentious leases.
In a long-delayed decision by the appeal court, it was decided the original land registration by the government was carried out incorrectly, while at the same time, Sumitomo Metal should never have been allowed to bid for the tenements since it was already in breach of local land-banking rules.
Advertisement
"It is frustrating, but we respect the rules, so we will reapply," Axiom Mining's chief executive, Ryan Mount, said. His company had the support of the landowners and the government, which was expected to expedite its application, he said.
"We've been invited to reapply. We're going through the process now."
It is unclear how long it will take to finalise the latest applications but it is expected control of the mining leases will be sorted out by mid-year.
"We have ceased exploration and development activities," Mr Mount said. "They are on hold as we proceed with the reapplication."
Sumitomo Metal Mining said it intended to study the implications of the ruling.
Axiom's leases reserves in the Solomon Islands have achieved greater attention following Indonesia's decision earlier to ban exports of nickel ore, which removed as much as 30 per cent of global supplies, or about 50 million tonnes a year, and the Philippines can only supply about 10 million tonnes of that.
Axiom held 80 per cent of the reserves, with the remaining equity held by local traditional owners.
Sumitomo Metal Mining sought to assert that it has a prior established right to develop the resource at Isabel province after winning an international tender five years ago. However, the appeal court ruled that it had accumulated too many leases, making its bid illegal.
Axiom fought off the initial challenge in the Solomon Islands High Court but it then went to the Court of Appeal, which included retired Queensland judge Margaret Wilson.
Axiom won the first round and was awarded costs of $4.8 million, but this will only be received once judgment confirming Axiom's ownership is handed down. Because the appeal court said Axiom had reached agreement with the owners of the land title and not the customary owners, it too was in breach, so the earlier ruling on cost did not apply.
The deposit, on Isabel island at the centre of the archipelago, was first explored in the 1960s by Canadian miner Inco and then by California's Kaiser Engineering.
Axiom has been working to upgrade the resource while finalising sales agreements with the intention of achieving initial shipments by month-end. In late 2015, Axiom signed an agreement with Gunvor Singapore for a $5 million pre-payment for 500,000 tonnes of ore.
