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.