THE US$650 million (K2 billion) Ramu nickel-cobalt project is expected to move into the construction phase later this year following the signing this week of a joint venture agreement with China's Metallurgical Construction Company (MCC). The giant Chinese-government owned company has completed a year-long due diligence studies on the Ramu project with agreement reached with joint venture partners, Highlands Pacific and Minerals Resources Development Company, in Beijing last January. Previous meetings had failed to reach agreement on key finance issues, but it is understood that intervention of Prime Minister Sir Michael Somare had paved the way for the final agreement. A key point of contention had been the Chinese decision that the PNG partners should be responsible for their share of financing for the project, but this has been replaced by a requirement that they provide reasonable assistance, without charge, during the construction period. It is not clear exactly when construction would commence but sources suggest that this should take place by June. Ramu nickel is one of the world's largest undeveloped nickel-cobalt deposits, is expected to produce 32,800 tonnes of nickel and 3,200 tonnes of cobalt annually. It had originally been the intention of Highlands Pacific to produce high-purity metal for export, but most sources believe MCC will opt for a high grade intermediate product that can be smelted in nickel refineries in China. This route is likely to avoid the technical problems that have been faced by laterite nickel producers in Australia and elsewhere, but it will reduce the level of value adding that will take place in PNG. The chairman of MCC, Yang Changheng, will host a banquet in Port Moresby on Thursday to celebrate the signing of the Ramu Nickel Commercial Agreement.
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