News

May 08, 2008

Toledo Mining Starts To Get Serious About Downstream Nickel Production

By Alastair Ford

According to George Bujtor, chief executive of Toledo Mining, there’s six million tonnes of nickel laterite ore sitting in ports in China. That may be one reason why the nickel price has come off last year’s highs to the point where some companies that had planned direct shipping operations are thinking again. “Remember”, says Mr Bujtor, “there wasn’t a market for this ore two years ago”. The implication is - although unstated - that two years hence, there may once again be no market for shipping wet nickel laterite to China. But in the immediate term for Toledo it’s full steam ahead, as the company still makes money at the current LME US$28,000 per tonne spot price, and can clear a strong margin all the way out to the 27 month forward curve. US$17,000 nickel is Toledo’s current break-even from its Berong laterite nickel property on Parawan island in the Philippines, where the ball-park resource is estimated at between 350 million tonnes and 450 million tonnes.

The last 12 months have been a bit of a rollercoaster for Toledo. Not only has nickel come a long way back from last summer’s heady heights, but the company has faced difficulties on the ground at Berong from adverse weather, rough seas, and lower grades. The actual mining of the ore presents very few difficulties: the company digs it up and trucks it to the coast. But if the ships can’t stand close-in off-shore, none gets loaded, and more importantly none gets sold. The season of inclement...