Defence industry expected to spur demand for nickel as world invests in armaments

This audio is brought to you by Astec Industries, a Global Leader in manufacturing equipment for infrastructure, including asphalt production, construction, and material processing, driving innovation and sustainability. The global defence industry is expected to stimulate considerable demand for nickel as the world invests in more armaments that require nickel-containing steels. "I think there's going to be a big demand side inflection coming quite quickly from the global defence industry as the world invests - and I think, unfortunately, has to invest - in more armaments that all require stainless steel and specialised steels that contain nickel for gun barrels, for armour, for ships. "I'm not seeing, yet, that it's factored into the demand side analysis much at all, but I think it's going to be big. It's going to be bigger than anyone's thinking about at the moment," Lifezone Metals founder and chairperson Keith Liddell outlined to Mining Weekly in a Zoom interview. (Also watch attached Creamer Media video.) "We think that the nickel price will start to trend up over the next few years, and we want to be commissioning into a rising price, rather than where we are at the moment where the price is in a bit of a doldrum." New York-listed Lifezone recently took full control of Kabanga Nickel, which in turn holds an 84% interest in Tembo Nickel, the Tanzanian operating company behind the Kabanga project. The remaining 16% is held by the Tanzania government. Lifezone's comprehensive feasibility study for the Kabanga project outlines the initial development phase, including a 3.4-million-ton-a-year underground mine, processing infrastructure and tailings storage. The project will produce a high-grade nickel, copper and cobalt concentrate for downstream processing and has an expected 18-year mine life. "It's very big and it's a very high grade nickel resource - and those two things, large tonnage and high grade, don't often come together. "You either get one or the other, but not both, and this is what makes Kabanga so great," said Liddell, who is well known in South Africa for conceiving smelterless Kell Technology that enables the production at mine sites of refined platinum group metals (PGMs), substantially cutting capital expenditure and operating costs. Liddell was also instrumental in the development of South Africa's Kroondal PGMs project, which gave birth to a low cost and efficient PGM business. Now, Kabanga is on its way to bringing benefits to the people of Tanzania, and Liddell is going all out to make sure it does so. The feasibility study contains the reserve statement, which at the project level is 52-million tons of ore grading 2% nickel, and that contains 103-million tons of nickel in the reserve, 7.8-million tons of cobalt and 14-million tons of copper. "So you can see it's big, over 100-million tons of nickel in reserve. That's massive," Liddell pointed out. Steady-state output of 60 000 t/y of nickel in product would make it one of the larger nickel mines in the world, particularly underground nickel mines. Project-level financial metrics include a post-tax net present value (NPV) of $1.58-billion at an 8% discount rate at just over $8/lb nickel price, with an after-tax internal rate of return (IRR) of 23%. On a capital expenditure (capex) of just under a billion dollars to build a mine and a concentrator first, a $1.858-million NPV is described as being eminently fundable with both debt and equity. The feasibility study initially is based on the sale of concentrate and the Kabanga concentrate runs at 17.5% nickel with no penalty elements contained in it. The initial assessment includes a Lifezone-hydromet-technology-using refinery making an entry five years after the startup of the mining concentrator, so cash can be generated to pay for most of the refinery capex, but also derisk the project from a debt and equity perspective, to open the way for the mining concentrator to be built as fast as possible. In ...