Comparative costs of nickel sulphides and laterites

Abstract

Although relative production costs of nickel from laterite and sulphide deposits have changed during the period 1988 to 1994, cash break even costs of the average sulphide producer remain below those of the average laterite producer. Sulphide producers have higher direct production costs but lower net production costs because of significant byproduct credits. However, total costs, which include capital, are now equal for the average laterite and sulphide producers. Relative production costs have been influenced by simultaneous yearly changes in byproduct and nickel prices, oil prices and exchange rates as well as real changes in actual production, transport and capital investments. In the absence of major shifts in energy or byproduct prices, the average sulphide producer will continue to experience lower cash operating costs gained through capital investments than the average laterite producer. This suggests that the average nickel sulphide operation is more able to withstand cyclic nickel price downturns.