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"We're now looking at increasing laterite shipments to BHP to 1 million (metric) tons a year; that takes us away from relying on the Chinese market," said George Bujtor, BNC's chief executive officer.
The new agreement may be signed next month, Bujtor said, adding the ore, extracted from its Berong mine in central Philippines, has a grade of 1.50% nickel and 30% iron.
In September last year, Berong and BHP signed an agreement to supply 500,000 tons of laterite ore a year to BHP's Queensland Nickel Pty Ltd. operation in Australia - the world's largest consumer of laterite ore.
The agreement will last five years, and can be extended by another five years, Bujtor said.
This year, BNC is expected to export 600,000 tons of laterite ore, of which 285,000 tons have already been shipped. The bulk of shipments this year will go to BHP following slackening demand for nickel ore in China, he said.
Philippine shippers of laterite ore are losing their market share in China to Indonesian competitors who can offer higher-grade nickel ore, he added.
Last year, BNC shipped 530,000 tons of ore, mostly to China.
Bujtor added BNC is also seeking long-term supply agreements with Chinese end-user customers, but he didn't elaborate.
Meanwhile, metallurgical tests are being conducted to determine which of various value-added processing options is best-suited to Berong's ore as part of plans to establish a nickel processing plant.
The heap leaching process would require a capital investment of $500 million, atmospheric leaching would require $1 billion and high-pressure acid leaching, $1.5 billion. A decision on which will be used at Berong will be reached by year-end, Bujtor said.
Heap leaching, which major shareholder European Nickel PLC (ENK.LN) is using in Turkey, would allow Berong to produce 25,000 tons of nickel a year in about three years, he said. European Nickel bought 18.7% of BNC from Investika Ltd. last month.
Using either atmospheric leaching or high-pressure acid leaching, possibly with Jiangxi Tungsten, would raise extraction levels to as high as 40,000 tons of nickel a year, he said.
London-listed Toledo Mining Corp. (TMC.LN) owns 56.1% of BNC. The Berong mine is estimated to have 275 million tons of nickel ore containing an estimated 3.6 million tons of nickel.
-By Rhea Sandique-Carlos, Dow Jones Newswires, 63-918-9014158; rhea.sandique-carlos@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=auex%2Fz%2BID%2BGPtpqCBKoHCA%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
07-18-08 0327ET
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