In 2006 mineral research organization Intierra listed Australia...

In 2006 mineral research organization Intierra listed Australia as the world’s second largest nickel producer behind Russia.

Australian nickel generated more that $8.46 billion of export earnings in that financial year. Historically the majority of the country’s nickel mines have been confined to the state of Western Australia. However in January of 2008, Sydney based Allegiance Mining is set to begin production from its first nickel project, Avebury Mine in Tasmania.

Avebury will be the island state’s first new base metal mine in 20 years. It will start producing at a very volatile stage of the nickel market.

Tony Howland Rose the Executive Chairman of Allegiance Mining says:
“The first drill holes were drilled about nine and a half years ago now, and we’ve been working, beavering away all that time, expanding that resource. And it has … it’s one of those nickel projects which was found in the wrong place – theoretically it shouldn’t have been there!

“But what gave us a lot of faith that it was something quite significant, was that our first drill hole intersected 10.7m of 1.7 per cent nickel. I mean you can’t deny that that is a very, very significant intersection. You really have to take a cold shower after seeing an intersection like that.

“It turns out that it’s really a new deposit type – really simple, very coarse grained pentlandite only, and will produce one of the world’s best concentrates, if not the world’s best concentrate; we reckon about 22%.

The nickel deposits found at Avebury are distinct for another reason too. Unlike the deposits found in Western Australia which are about 2.7 billion years old, Tasmania’s nickel is very much younger - only 300 million years old - and it is the first deposit of its type to have been discovered in the world.

“In terms of the output, 8000 to 9000 tonnes of nickel in steady stages as soon as we commission, and we anticipate the plant being ready in January this year,” Mr Howland Rose says.

“It is significant in the important respect, not just in Australia, but worldwide, in that there are other nickel deposit types than the conventional ones where you would normally go and look. That’s the beauty of this find; it tells you to think big, to think differently to think fundamentally.”

The importance of the project has been recognized within the mining community; earning the 2004 London Mining Journal Bonanza Award for the most significant discovery of the year. Howland Rose and team have since continued to add to their trophy cabinet.

“This year myself and two colleagues were jointly awarded Prospector of the Year by a West Australian based group AMEC, which was terribly well received because the West Australian’s think all the nickel’s in their back yard, and now we demonstrate that that’s not necessarily the case!” Mr Howland Rose says.

Nickel prices peaked at over $54,000 a tonne in May of this year but they have since plummeted to almost half that value. Nevertheless Howland Rose and associates at Allegiance Mining have not been deterred by the volatile market.

“I am very, very bullish about nickel in the long term for the simple reason that, together with zinc, it’s the metal that is disproportionately used during a nation’s ramp up from a lesser developed status to developed status,” Mr Howland Rose says.

“And you have at the moment three billion people in the world, India, China, Brazil etc who for the first time in human history, have political and economic systems in place that permit them to start climbing that ladder.

“Now we have a bit of disruption to the markets at the moment. But the long term is clear; those people, the three billion market will eventually use just as much nickel per annum as the people in the one billion dollar market, the haves in other, words do now.

“You have to remember that for 20 years there was no material exploration for nickel. Generally it takes 15 to 20 years from discovery to production. We’re 10 years but that’s because we are fairly simple, the metallurgy is simple we’re in an area with very good communications – workforce just 8km away from where we are. Very favorable circumstances unlike most – mineral deposits generally seem to be found in awful places,” he says.

“People think that the present nickel price at $25,000 dollars, that’s terrible it’s low, it’s halved. But in fact it’s five times the price it was when we struck nickel nearly ten years ago, so I think the price is still quite good.”