P3bn Tati project crashes

Staff Writer
FRANCISTOWN: In a shocking development, Norilsk Nickel International announced Wednesday that it was halting construction of the multi-billion Pula Tati Activox Refinery with immediate effect.

Peter Reese, Norilsk Nickel International's Chief Executive, informed employees at the Tati Activox project: This decision has been taken in agreement with our fellow shareholder at Tati, the Botswana government, and follows a series of extensive internal and independent third-party reviews on the project.

The company's decision has left the group's entire workforce at Phoenix, Selkirk, Dense Media Separation project and the Activox Demonstration plant in a state of anxiety about their future.

While they have been assured of continuity by management, some workers are adamant that their future is uncertain following the postponement of the construction of the Activox plant. The site of the halted plant construction is about 30 kilometres east of Francistown, near the Tati Nickel mining site.

Norilsk Nickel is the largest mining and metals company in Russia and the world's largest producer of nickel and palladium. It is also one of the world's largest producers of platinum and copper and produces a large number of by-products including cobalt, rhodium, silver, tellurium and selenium.

The Activox is a patented hydro-metallurgical process that recovers nickel and copper metal from sulphide concentrates.

Following the acquisition of LionOre Mining International by Norilsk Nickel International last year, Norilsk Nickel initiated an extensive review of the Activox Refinery project. This included internal and independent third party reviews which highlighted a substantial project cost escalation from the September 2006 Bankable Feasibility Study estimate of US $498 million.

Reese revealed that third party reviews concluded that the project's forecast had increased substantially, mainly due to spiralling costs in construction and equipment worldwide and the global shortage of skilled project management professionals, which has rendered the Activox project at Tati uneconomic.

The short-term energy constraints currently experienced in Southern Africa were assessed as a further risk that would have adversely affected the commissioning time to production and the overall economics of the Activox project as well.

Reese explains: The postponement of the Tati Activox project is solely due to the project's economics. The aim of the project at Tati Nickel was to improve recoveries of nickel from concentrates, which are currently being treated through the smelter at BCL Mine.

The incremental recovery gained in this application at a Brownfield site does not economically justify the capital expenditure increase, it is said.

Reese believes that the Activox technology is viable and remains confident of the benefits of the application of the technology to the nickel industry.

I would like to thank everyone involved in this project for their hard work, from its inception back in 2003, all the way through

to this current stage, he says. We are working closely with HATCH, the main contractor on site, on a detailed plan to ensure there is an orderly closure of all the contracts in the coming weeks.

Despite the postponement of this project, Norilsk Africa continues to have growing business with a number of growth projects being implemented and evaluated, which will result in total annual nickel in concentrate production of around 40, 500 tonnes from 2010 for at least nine years.

Reese adds that in view of the current planned end of life at BCL Mine in 2013, they are working proactively with the Botswana government to evaluate and assess opportunities for a long-term sustainable future of the Botswana nickel industry.

The Wednesday announcement has sent shock waves across the entire Tati Nickel mining group with workers fearing that they will lose their jobs. In particular, workers who left their previous jobs from other mines and government departments are worried that they made the wrong move.

I just can't believe that this is happening to me. Although we have been told not to worry, we need some serious assurances about our jobs, said an employee of Tati Nickel who preferred anonymity.

In recent times, a good number of people who previously worked for Debswana mines have been leaving as if they knew what was coming, the source said.

Some angry workers at the site told Mmegi yesterday that the closure of the Activox construction was another ploy by the Russian-based mining giant to transfer the technology to Russia after realising its beneficiation potential.

Divisional Organisation Capability manager of Tati Nickel, Peter Meswele, dismissed the view that the Russians were intent on relocating the Activox technology to Russia. That is not the reason. Postponement of the project does not suggest relocation of the technology. That is not on our agenda, he said.

He emphasised that the main reason for the postponement of the project was cost implications. As to when the construction project would resume, he said it would depend on the economic situation.

Contacted for comment yesterday, Minerals, Energy and Water Resources Minister Ponatshego Kedikilwe said he could not say exactly when the project would resume either.

It will all depend on how the economic situation evolves. If it improves, construction will definitely resume, given the importance of the technology, said Kedikilwe.

He blamed the escalation of petrol prices, the cost of energy, and the escalating costs of construction material for the postponement of the project, which was billed for completion in 2011.

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