Foreign mining companies fight over Solomon Island riches. But will any of this benefit local people? As usual they will be left to pay the heavy environmental and social price of large-scale mineral extraction that tramples all over our own Pacific Ways… Sarah-Jane Tasker | The Australian AUSTRALIAN-listed minnow Axiom Mining is confident of winning its “David versus Goliath” battle with Japanese giant Sumitomo Metal Mining to develop one of the world’s largest nickel laterite deposits.
Axiom chief Ryan Mount is undaunted by his battle opponent, a metals major and Japan’s No 2 copper producer, and is hopeful that when the judge delivers his decision this week on the project, in the Solomon Islands, Axiom will win.
In what has been the longest-running and most expensive case on the Solomon Islands, Sumitomo has fought to be recognised as the developer of the nickel asset, after it was taken off the Japanese giant and given to Axiom by the traditional owners of the land.
Analysts have estimated that Axiom has spent more than $10 million on its court action.
They have also outlined that Sumitomo spending millions to challenge Axiom’s ownership of the Isabel project was a clear indication that the asset was of great significance to a major company.
“It was worth pursuing. It will be of significant value to our shareholders. We feel confident as to our rights on this matter,” Mr Mount said. “We didn’t initially believe it would take this long.”
Sumitomo won an international tender for prospecting licences over the project in 2010. The licences were cancelled in 2011 and similar rights were later awarded to Axiom.
The junior explorer had strategically aligned itself with the local landowners, who have right of veto over who can develop an asset.
Mr Mount, who is based in the Solomon Islands and speaks the local dialect Pijin, said it was important for developments to have landowner consent.
“It is ingrained in the constitution and in the mines legislation, while you can get government approval, you must have the landowners’ consent also,” he said. Axiom’s agreement to develop the project included giving the indigenous landowners a 20 per cent interest in the mine.
The Isabel project is hyped as a “world class” nickel laterite deposit.
The majority of nickel is produced from sulfide deposits, as it is easier and cheaper to mine and process than lateritic ore.
But known sulfide deposits, which are large in scale and of high nickel grade, are depleting, meaning a higher proportion of future production is expected to come from laterite deposits.
“The Indonesian government has also banned the export of unprocessed laterite ore, which has made this asset more valuable in recent times,” Mr Mount said.
“The demand for nickel will increase over the next five to seven years and we particularly see an increasing dominance of meeting that demand with nickel laterites. We think this project is well suited to provide that supply.”
If Axiom wins the legal case this week it will implement a fast-track plan to develop the project and be in production in the next 12 to 18 months.
“There aren’t too many world-class deposits that can move into production that quickly,” Mr Mount said.
“We have had time to consider our funding options and we have several and we are comfortable about funding our mine development plans.”
Mr Mount says that the Solomon Islands, which has no operating mine, is geologically gifted and has an abundance of natural resources.
It lies on the Pacific Rim of fire and it is bordered by countries with mines.
“The Isabel nickel laterite project could be a significant boost to the community and to the national economy,” he said.
“It will generate a vast number of jobs and a significant amount of government revenues through taxes.”
The Axiom chief, whose company is also drilling a gold project in the Solomon Islands, encouraged others to look to the region to pursue mining interests.
He advised, though, that it required companies to take time to understand the legislation and the culture of that community.
“The Solomon Islands is made up of nine provinces and all of them have unique cultures and customs, as well as the Solomon Islands as a whole,” he said.
“With the landowners having a right of veto over most developments on their land, it is natural that companies wanting to commence commercial activities would take the time to understand and respect that culture.”
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