Most mined nickel is derived from one of two types of ore deposits—magmatic sulphide or laterite. Sulphide deposits are formed by magma from the Earth’s mantle ascending into the crust and crystallising iron-magnesium-nickel rich mafic and ultramafic rocks containing nickel-rich sulphide minerals. Lateritic deposits are formed from the weathering of ultramafic rocks, are typically near-surface and are typically found in tropical climates.
Amongst the largest producers, Russia and Canada mainly mine
sulphide-type deposits, while Indonesia and the Philippines predominately mine
laterites. Australia’s production comes from both deposit types. With the rise
of southeast Asian supply, the depths of existing sulphide operations becoming
cost-prohibitive, and a lack of significant new sulphide deposits being found,
mining and processing of laterite-type deposits is expected to continue increasing
as a proportion of global nickel production.
The two ore types require different processing treatments to
arrive at a finished nickel product. Sulphide ores can be relatively simply
processed, as with most other base metals—ore beneficiation, including grinding
and flotation to form a concentrate, is followed by a smelting and refining
process to obtain nickel products.
Despite the near-surface availability of laterite ore allowing
for significant mining cost savings, nickel laterite is generally more complex
to process than its sulphide counterparts, which offsets these savings. Basic
extraction methods such as heap-leaching have proven ineffective, and low
grades and high iron content make grinding and flotation to form a concentrate
difficult.
The proportion of laterite to sulphide processing has been given
a boost in recent years by the boom of Nickel Pig Iron (NPI) production in
China and the development of Rotary Kiln Electric Furnace (RKEF) technology—currently
being rolled out in Indonesia—which has allowed for relatively cost-effective
processing of the ores to a standard just suitable—along with its iron content—for
use in stainless-steel production. Laterite processing currently accounts for
~75% of finished nickel production, and its share is expected to grow.

The Demand for Better
Nickel
Demand from the stainless-steel sector
currently accounts for ~70% of global nickel demand, and when alloying
applications are included, the combined demand accounts for ~90%. Off its low
base of ~7% of demand in 2020, contained nickel for the battery materials
market is projected to reach only 10% of demand by 2024.
The emergence of an increasingly significant electric vehicle
(EV) industry is generating demand for higher-quality nickel products, suitable
for conversion to nickel sulphate (NiSO4), for use in battery production. This
has drawn increased attention to the hydrometallurgical process route for
laterite ores—the high-pressure acid leach (HPAL) process.
While Tsingshan has started producing nickel matte—suitable as
feedstock for converter facilities producing NiSO4—from its FeNi/NPI capacity,
this was put forward as a stop-gap measure following delays to its HPAL
projects in Indonesia. The high energy intensity and consequent carbon
emissions associated with this style of processing could make it undesirable in
the Green Economy. For processing laterite ores to products suitable for the
battery sector, HPAL is expected to be the preferred route.
The High Pressure
Acid Leach Process
HPAL involves leaching laterite ore in sulphuric acid within
titanium-lined autoclaves at up to 270°C and at pressures of up to 50
atmospheres. Solvent extraction is used to separate nickel (and cobalt) from the
solution as metal, or the nickel can be precipitated as an intermediate product
(oxide, hydroxide or sulphide concentrate).
These intermediate products are suitable for a range of high-end
applications, including conversion to NiSO4. They command a significantly
higher price than ferronickel products, which dominate the nickel market, and
this helps offset the comparatively high capital and operating costs of
producing them.
HPAL projects have some distinct advantages, predominately their
ability to process low-grade nickel laterites, which make up most of the
world’s resources, to produce battery sector-suitable intermediates.
Additionally, power for the process can be drawn as a by-product of the
required sulphuric acid generation. The process also has the potential to
derive additional revenue from the production of cobalt and, in some cases,
ammonium sulphate by-products. However, HPAL projects also face significant
challenges.
The Problem with
HPALs
Overall, HPAL plants have a pretty bad rap, with a reputation
for going significantly over budget and for operational struggles. Even when
they go to plan, within the sector, they have moderate to high operating costs
and high capital intensity. High capex is a major barrier to entry and makes
only very large projects economic.
The extreme operating conditions—high pressures and temperatures,
and the highly acidic nature of the process—has seen many HPAL operations, such
as Murrin Murrin and VNC, take years longer than planned to approach nameplate
capacity. Ore grade variation has also been the undoing of a number of projects
trying to reach nameplate capacity.
On a more technical level, HPAL is largely limited to processing
low-magnesium limonite ore. The higher magnesium levels found in saprolite ores
increase acid consumption to uneconomic levels.
A case study of the cumulative problems with HPALs can be seen in
the Ambatovy project. It is the largest investment in Madagascar’s history but,
to cut a long story short, was designed to never be able to reach planned
capacity with available ore grades.
Where are they?
Global HPAL capacity is currently limited to 11 operations, two
of which started operating in the past year. The majority are in the Pacific
region and were developed near a significant resource base.

The
majority of existing HPALs were developed around the Pacific and Australia.
Looking forward, there is the potential for HPAL projects to be developed in
Brazil with Horizonte’s Vermelho projects. A couple of (unlikely) HPALs have
also been proposed in Australia, namely Sunrise Energy Metals’ Sunrise and Australian
Mines’ Sconi projects. All these projects are looking to secure project
financing, but they have struggled to date.
Besides
Ramu’s current owners, most HPALs globally are owned and operated by ex-China
proponents. Looking to sustain, and increase, their domination of the battery
sector, Chinese producers have been the first movers in developing HPAL
capacity in Indonesia. As such, all eyes are on developments in Indonesia.
Indonesia, the New
Frontier
Home to the world’s largest nickel
reserves, Indonesia has been a hive of development activity in recent years,
leading up to and following the country’s ban on raw ore exports. While the initial
focus was on developing capacity to supply nickel products for the
stainless-steel sector, and while this development continues, attention has
been shifting towards HPALs and capacity to produce material for the emerging
battery sector.
With significant growth potential from the battery sector, and
with Indonesia being the location of the majority of forecast nickel production
capacity, further HPAL developments in the country are expected. Impetus could
be provided for new projects should the current batch prove more successful on
a capital intensity basis than previous projects.
Several HPAL projects are at varying
stages of implementation in Indonesia. The country’s first HPAL came into
production in 2020. The 37ktpa PT HPAL project was undertaken by China’s Ningbo
Lygend, in partnership with Indonesia’s Harita Group, on Obi Island, part of
North Maluku province. A second HPAL soon followed.
Commissioned in 2021, the
PT Huayue project being undertaken by China’s Zheijiang Huayou, China
Molybdenum and Tsingshan is a 60ktpa operation located in the Morowali
Industrial Park on Central Sulawesi. Indonesia’s third HPAL—PT QMB New Material
Energy— is also under development at Morowali and is being undertaken by
Chinese JV proponents GEM, Brunp/CATL and Tsingshan. It will have capacity of
50ktpa and is expected to start production this year.
Beyond the three commissioned and
imminent projects, a number of other potential HPAL projects have been flagged
in Indonesia, some even from companies without direct links to Chinese
producers:
- BASF and Eramet are assessing the development of a HPAL and base metal refinery at Weda Bay, Indonesia, with a targeted mid-2020s start-up (possibly ambitious).
- PT Vale Indonesia is planning to undertake its long-delayed Pomalaa HPAL project in Southeast Sulawesi province, with construction completion slated for 2026.