Surge in demand fuels growth in nickel and cobalt production

A rapid growth in production and sales of electric vehicles and increased development of large-scale battery storage facilities is driving growth in demand for nickel and cobalt, according the Highlands Pacific.
The company has an 8.56 per cent share in the Ramu nickel and cobalt mine in Madang.
Speaking at the company’s annual meeting in Port Moresby yesterday, managing director Craig Lennon said Highlands Pacific had a strong start to 2018 and was well placed to benefit from rapidly-rising metal prices as the battery technology revolution unfolded.
The Ramu NiCo project achieved an output of almost 35,000 tonnes of nickel and 3300 tonnes of cobalt last year. The mine is one of the largest producers of cobalt outside of the Democratic Republic of Congo, which dominates global production.
The nickel price has increased by 35 per cent since the start of 2017 and reached more than US$15,000 (K49,000) per tonne last month, while cobalt is now trading at more than US$90,000 (K293,000) per tonnes, up more than 170 per cent since the start of 2017.
“Highlands is perfectly placed to benefit from the continued surge in demand for these metals and also copper, which we have significant exposure through our 20 per cent interest in the Frieda River project,” Lennon said.
“Ramu is performing very well and generating significant positive cash flows, and is on track to record another excellent result in the current year.
“Importantly, the project has started delivering cash distributions to Highlands, providing us with an important source of funding to develop our suite of projects in PNG.”
Highlands Pacific chairman Ron Douglas said he was optimistic about the outlook for the company.
He said the highlight of 2017 was the strong performance of Ramu, which provided Highlands with a maiden distribution of US$14.2 million (K46.3 million).
Of this, US$12.7 million (K41.4 million) was applied to reducing Highlands’ share of project debt, leaving US$1.5 million (K4.9 million) in net cash distributions.
“Based on Ramu’s results for the March quarter of 2018, and assuming steady rates of production and stable commodity prices for the remainder of the year, the 2018 distribution would be approximately US$31 million (K101 million), of which US$25 million (K81.5 million) would be applied to reducing debt, leaving Highlands with a cash distribution of approximately US$5 million (K16.3 million),” Douglas said.
Lennon said Highlands other projects were progressing steadily.
At the Star Mountains copper and gold exploration project near
Ok Tedi, Western, a major drilling campaign was completed in 2017, with encouraging results and Highlands was currently considering opportunities to introduce a new joint venture partner in the project to continue exploration efforts.
“We recently declared a major resource of 840,000 tonnes of copper and 2.9 million ounces of gold at Star Mountains and the project clearly has enormous prospectivity,” Douglas said.