Sumitomo, Nickel Asia invest $1.3 billion in RP plant

MANILA, Philippines - Sumitomo Metal Mining of Japan and Nickel Asia Corp., the country’s largest nickel mining group, have signed a memorandum of understanding (MOU) in Japan last Sept. 14, 2009, to proceed with a nickel processing plant in the municipality of Claver, Surigao del Norte.

Signing the MOU was Manuel B. Zamora Jr., chairman and founder of the Nickel Asia group, and Gerard H. Brimo, president and CEO. The $1.3-billion project will take three years to complete with construction expected to start early next year.

The project will reportedly represent the largest foreign investment in the Philippine minerals sector to date.

The plant will be constructed adjacent to Taganito Mining Corp.’s nickel mine. Taganito, a subsidiary of Nickel Asia, will supply all of the required nickel ore to the plant over an estimated 30-year project life, while Nickel Asia will take a 20 to 25 percent equity interest in the project under a joint venture company called TPHAL Corp. The output of the plant, a mixed nickel-cobalt sulfide, will be purchased by Sumitomo for final processing at its refinery in Japan.

This will be the country’s second downstream nickel processing plant by the Sumitomo-Nickel Asia tandem. The first plant is under Coral Bay Nickel Corp., a joint venture between a Japanese consortium led by Sumitomo and Rio Tuba Nickel Mining Corp., another Nickel Asia subsidiary. Constructed adjacent to the operations of Rio Tuba in southern Palawan, the plant became operational in 2005 and has been a technical and commercial success. Its initial capacity of 10,000 tons per year of nickel metal equivalent has since been doubled.

The new project, triple the size of the initial Coral Bay plant, is considered to be particularly beneficial to the country due to the value added created by the downstream mineral processing plant. The project is expected to employ about 4,000 personnel during the construction stage and 1,000 full time employees when operational. Substantial benefits will accrue to the adjoining communities from its social development management projects while yearly exports of its product will bolster the country’s foreign exchange reserves. Substantial taxes will also be paid from the plant operations and from the Taganito mine due to the increase in mined ore to feed the requirements of the plant.