Guolian Hu - Sunbright Consulting Group Inc - Innovative technology - A Solution for Maximizing the Value of Laterite Resource and Sustain the Nickel Industry

General Manager Hu Guolian

Innovative technology-

Solution for maximizing nickel laterite resources and sustaining NPI industry

My presentation today is intended to discuss the impactsof ore supply and NPI production cost on thesustainability of nickel industry. Secondly, I would like tointroduce an innovative technology which has a strategicimportance in the sustainability of the Ni industry. Assuch, my presentation will be focused on the following:

1. Stainless steel-NPI-nickel laterite in China2. Nickel laterite resources and its supply3. Sustainability of NPI industry in volatile nickel market 4. Strategic significance of innovative technology5. Encouraging results of Catalytic Reduction Sintering-

Magnetic separation (CRSM)6. Win-win cooperation is very crucial to the success

Before the presentation let us look at the current situation

What is the current situation?• Under the volatile Ni market price especially when

the Ni price declines to lower than$9,000/t, manyNPI producers cut down their production or evenclose down their operations.

• When the demand of nickel laterite went down, thelaterite ore producers suffered.

• The NPI production is affected by its high productioncost resulted from high cost of high grade ore andsmelting.

• The supply of high grade ore is limited.

• Under this situation, how can we sustain the entirenickel industry?

1. Stainless steel –NPI industries in China● Since 2005 stainless steel production of China has been

steadily increasing and has now become the major producer andconsumer of stainless steel in the world.

2005-2014 China stainless steel production

('00,000 tons)

Year Total 200series 300series 400series

2005 316.00 116.92 129.56 75.84

2006 530.00 153.70 259.70 111.30

2007 720.00 187.20 316.80 216.00

2008 695.00 187.65 354.45 145.95

2009 1,140.00 330.90 535.80 250.80

2010 1,404.00 421.20 631.80 322.92

2011 1,575.00 466.00 769.00 340.00

2012 1,759.00 537.00 867.00 355.00

2013 1,898.20 526.20 997.10 395.10

2014 2,169.20 637.00 1,086.50 445.70

200 series: Mn,Cr,Ni base; 300 series: Ni ; 400 series: Cr

● Nickel Pig Iron (NPI) production in China has also been rapidly developed since 2005 and is now become the major source of nickel in the stainless production.

2013 % 2014 %

Stainless steel

200series 5,262 27 6,370 29

300series 9,971 52 10,865 50

400series 3,951 21 4,457 21

Total 19,184 100 21,692 100

NPI (Ni%)

1.6-2.0 1,921 28.9 5,281 47.4

4-8 457 6.9 803 7.2

10-15 4,030 60.5 5,068 45.4

Others 248 3.7

Total 6,656 100.0 11,152 100.0

NPI/SS % 35 51

ProductsProduction（'000tons）

●However, due to the shortage of Ni resources, NPIproduction in China is relying on the importation of nickellaterite especially from Indonesia and Philippines.

Since 2014, due to the export ban of Indonesia, Philippinesbecame the major exporter of laterite to China in 2014.

2. Nickel laterite resources and supplyNickel laterite deposit is a kind of supergeneenrichment deposit derived from the weathering andsoil forming processes of ultramafic rock.

The Ni content in the ultramafic rock was enriched from 0.2-0.3% to 0.6-2.5% in the different zones of the laterite. Resources computation of different cut-off grades shows:

Exploration results confirmed that the high grade nickel oreand high iron laterite ore account for only a small fractionof the total resource of any deposit. We have to keep inmind that the DOS we are trading before and in the futurewill only be a small part of the 1 billion laterite resourcesPhilippines has. Let us ask ourselves “What shall we do withthose unsaleble material”?

As the current NPI production technology in China prefers touse high grade Ni ore and low Ni high Fe laterite, hugevolume of low grade laterite can only be stockpiled at themine site as waste materials. More and more mines arehaving difficulties in : (1) the supply of the high grade ore,and (2) the space to keep the huge amount low grade wastematerials in the limited area of their property.

3. Volatile nickel price and its impact to nickel industry

From 2005-2015 we have experienced several Ups and Downsof LME nickel price. It changed by almost 30-58%, resulted inthe fluctuation of NPI, stainless steel price and production.

In general, the prices of laterite ore, NPI and stainless steel aremoving along with the trend of LME Ni price. When the price sliddown near or below the production cost, many NPI plant in Chinawere forced to reduce their production or even closed down.

What are the biggest components that affect the production costof NPI?Cost of ore: use of high grade ore that follows closely the

LME nickel price. It accounts of almost 40-50% ofthe total NPI production cost.

Processing cost: high energy consumption in smelting. It almostaccount for about 50% of the NPI production cost.

If the NPI production cost could be brought down to a levelbelow LME price, then we still can survive even at low nickelmarket price.

4. How can we reduce those costs?---find the solution from Innovative Technology

Cost of ore: make use of the huge quantity of low gradeore by upgrading the Ni content to high grade productthrough applying innovative technology

Cost of processing: apply new technology with lowenergy consumption to upgrade the Ni content withoutsmelting.

● Can conventional sintering or even RKEF achieve theabove requirements?

Conventional Sintering : conventional sintering can removeabout 30% of moisture and about 12%crystal water in thelaterite and can reduce Ni and Fe to a certain extend byusing coal or coke. But conventional sintering can onlyupgrade the grade of Ni and Fe to a limited extend.

NPI 1 NPI2

Ni % Fe% Ni % Fe% Ni% Fe% Yield % UG ratio Ni% Ni%

Philippines laterite 1 1.46 13.18 1.84 16.97 2.42 21.67 29.75 1.66 9.79 10.06





Laterite ore (Shanxi) 1.65 14.87 1.66 19.67 2.52 24.97 51.72 1.53 7.8 9.17

Sinter (Xuzhou)1/ 1.66 13.00 1.87 21.21 2.76 22.98 48.83 1.66 11.32 11.28

Sinter (Zhaozhuang)2/ 1.15 23.73 1.21 25.96 77.52 1.05 4.64 4.47

Sinter (Hunan)3/ 1.54 16.62 2.20 16.95 42.28 1.43 8.48 11.47

Sinter (Neimeng)4/ 1.70 18.72 1.80 18.26 91.06 1.06 8.31 8.97

Sinter (Henan)5/ 1.55 19.94 1.85 20.83 2.19 25.03 32.42 1.41 8.03

Ore Sinter Mag. Sep ConcentrateSample

5.Catalytic Reduction Sintering with Magnetic separation (CRSM)

CRSM is designed to upgrade the nickel and iron contentwithout smelting. CRSM is also a kind of reduction sinteringprocess. But it is different with conventional sintering and directreduction process. It uses a certain catalyst to extract differentmodes of Ni in the laterite and reduce Ni and Fe to form a kind ofmagnetic product that can be separated by magneticseparation. So as to upgrade the Ni and Fe content in the smallquantity of concentrate. The key is the CATALYST.More than 100 samples collected from different deposits inPhilippines, Indonesia and Yunnan (China) and also the waste ofAcid leaching process have been tested. More than 35 kinds ofcatalyst and different intensities of magnetic strength have beenstudied at various sintering temperatures and times to obtain thesuitable results.

Ore Sun dry Screening Over size grinding

Under size -2mmmeshCoal Grind to120mesh

Catalyst Blending

Sintering

Pelletizing

quenching

Ball mill-160mesh

Mag.sep 2500gs

Tailings Concentrate

Smelting

Stainless steel

Hi grade NPI

Briquetting

If necessary

CRSM basic flow sheet

1300 degree

Grind to -160mesh

Over size

We can see in the above flow sheet that no energy consuming smelting process is being applied.

Next question will be: 1.can CRSM upgrade the Ni and Fecontent to a better level than conventional sintering withoutsmelting to NPI? and 2. will the CRSM operation profiting ?

Please see the following data gathered from my 500 testresults.

Encouraging results of CRSM

Ni% Fe% Fe/Ni Ni% TFe% Yield % Ni TFe

Hydro waste H23 0.21 14.78 69.07 2.21 89.73 9.34 96.58 56.70

Sulawesi 1 L20 0.29 14.91 50.60 4.03 73.20 5.21 68.65 24.64

Sulawesi 2 L20 0.28 14.32 50.86 4.10 70.32 4.97 68.14 22.98

Sulawesi 3 L20 0.26 15.40 59.60 5.24 80.91 3.95 71.18 18.44

Z10 Phil H8 0.38 8.83 23.24 3.34 58.59 5.99 48.08 36.27

Z10 H3 4.10 59.81 1.18 12.22 5.42

Sulawesi 8 L20 0.80 35.51 44.36 4.17 64.17 51.49 82.49 63.20

YN2 Yunnan H18 0.84 15.83 18.84 2.65 68.01 17.62 47.56 64.87

YN2 H24 4.53 63.46 13.35 59.15 44.01

YN2 H23 4.69 60.61 13.77 67.23 46.10

Z13 H22 0.92 17.37 18.94 5.65 64.78 15.59 79.87 48.34

Z13 H17 5.82 71.46 6.55 31.29 20.27

Z13 H16 5.92 66.74 12.39 69.04 41.07

Z13 H13 6.21 68.36 17.08 48.33 67.17

Z13 H18a 8.06 70.88 7.07 53.00 24.60

BC1 H23 0.98 13.70 14.02 5.12 40.22 8.72 45.70 25.61

BC1 H23Z 8.27 72.43 7.30 61.79 38.61

BC1 H24 12.48 69.68 6.78 86.67 34.49

Laterite 2(菲) H3 1.06 20.81 19.63 9.58 71.71 6.68 60.41 23.03

CatalystConcentrate

SampleOre Recovery %

Ni% Fe% Fe/Ni Ni% TFe% Yield % Ni TFe

CD6 L20 1.08 14.70 13.58 7.43 62.78 10.09 64.66 40.23

CD6 H23 1.08 14.70 13.58 10.03 61.20 6.45 47.44 21.31

CD6 H24 1.08 14.70 13.58 12.34 52.00 4.84 52.67 16.34

CD6 L20Ｂ 1.08 14.70 13.58 16.63 68.52 3.32 51.00 15.47

CD6 H23Ｂ 1.08 14.70 13.58 16.88 66.46 3.86 60.19 17.45

CD6 H24Ｂ 1.08 14.70 13.58 17.29 70.20 4.44 70.92 21.20

Laterite 2(Phil) H3 1.06 20.81 19.63 9.58 71.71 6.68 60.41 23.03

LYG H20 1.12 10.69 9.54 7.91 80.64 11.43 58.66 62.69

LYG H23 11.14 60.74 6.11 58.66 33.52

LYG H24 11.16 69.25 6.95 62.76 40.82

Z-4 Zambales H8 1.23 14.49 11.78 4.96 37.21 10.37 50.10 31.90

Z15 H17 1.23 31.11 25.29 2.25 52.05 67.58 93.42 85.29

Z15 H16 3.51 70.73 42.82 89.32 71.14

Z15 H19 3.98 68.24 35.85 91.03 61.66

Z15 H20 4.74 65.65 27.04 57.00 98.00

Z15 H18 4.85 70.34 28.58 91.64 52.55

Sulawesi 13 L20B 1.32 39.98 30.35 4.24 87.26 31.54 101.43 68.83

Sulawesi 13 H23B 4.26 88.92 35.94 116.07 79.93

Sulawesi 13 H24B 3.64 89.26 33.14 91.63 73.98

SampleOre Concentrate Recovery %

Catalyst

Ni% Fe% Fe/Ni Ni% TFe%Yield % Ni TFe

BC-2 Phil L20 1.32 17.07 12.96 7.10 63.16 9.50 51.20 35.15

BC-2 H23 9.48 74.09 7.94 57.16 34.47

BC-2 H23Z 10.24 78.80 5.46 42.46 25.21

BC-2 H24 10.37 74.50 6.98 54.98 30.47

AG6 Phil L20B 1.32 11.22 8.50 7.34 49.08 8.20 45.64 35.87

AG6 H23B 7.56 44.66 11.62 66.55 46.25

AG6 H24B 9.22 61.17 40.84 106.61 66.63

AG7 Phil L20B 1.33 26.47 19.86 6.35 61.85 15.32 73.01 35.80

AG7 H23B 8.01 65.27 11.82 71.02 29.15

AG7 H24B 7.06 64.02 10.38 55.00 25.11

ZH3 H22 1.38 15.13 10.96 8.04 46.63 17.02 74.22 39.26

Sul 14 Indo L20B 1.41 34.60 10.96 4.59 85.21 22.58 73.38 55.60

Sul 14 H23B 1.41 34.60 10.96 4.26 88.92 35.94 74.36 63.81

Sul 14 H24B 1.41 34.60 10.96 5.24 86.83 25.86 96.10 64.89

NA3 Phi L20B 1.42 23.18 16.29 5.90 56.77 16.64 68.96 40.75

NA3 H23B 4.82 44.49 23.14 78.33 44.41

NA3 H24B 6.83 48.67 14.12 67.76 29.65

ZH1 H20 1.45 15.3 10.57 8.48 56.3 14.80 69.59 43.76

ZH1 H20-2 9.98 58.7 10.16 62.77 34.96

ZH1 H20 16% H20 11.7 57.7 8.30 56.69 26.45

ZH1 H21 H21 10.5 45.6 13.76 74.58 30.57

CatalystOre Concentrate Recovery %

Sample

Ni% Fe% Fe/Ni Ni% TFe%Yield % Ni TFe

BC-3 Phil L20 1.55 16.91 10.90 9.32 55.70 10.14 60.94 33.40

BC-3 H23 13.56 69.62 5.78 50.53 23.80

BC-3 H23Z 14.20 72.87 7.02 64.26 30.25

BC-3 H24 7.42 56.46 6.28 30.04 20.97

Laterite 3 H3 1.60 15.16 9.48 13.98 61.11 2.81 24.57 11.34

Laterite 4 H3 1.60 17.93 11.21 20.67 58.56 4.16 53.78 13.59

Z5 H13 1.68 18.02 10.73 4.79 53.04 17.76 46.72 48.24

Z5 H3 6.77 49.71 6.40 19.99 13.68

Z5 H18 12.90 69.24 9.94 60.05 30.05

AG5 Phil L20B 1.68 31.03 18.44 8.32 68.53 17.90 88.56 39.54

AG5 H23B 6.89 65.27 17.58 71.96 36.98

AG5 H24B 6.48 71.05 20.48 78.88 46.90

ZH2B H24 1.85 20.83 11.25 16.48 54.14 6.08 60.66 17.71

Laterite 5 H3 1.88 16.60 8.85 12.69 65.76 10.50 58.83 34.46

CD7 L20Ａ 1.91 34.64 18.10 5.90 68.98 24.92 76.84 49.63

CD7 H23Ａ 1.91 34.64 18.10 6.12 79.41 23.38 74.78 53.60

CD7 L20Ｂ 1.91 34.64 18.10 8.13 82.21 22.84 97.02 54.22

NA1 Phil H23B 1.93 21.85 11.32 7.72 49.90 16.32 65.34 37.28

NA1 H24B 7.54 49.01 18.96 74.06 42.54

Sulawesi 7 L20 2.11 10.89 5.17 9.40 37.11 14.87 55.75 42.57

IN-1 Indo H21 2.38 8.86 3.73 10.95 30.40 34.39 66.70 49.68

IN-1 Indo H22 13.01 35.97 29.03 67.65 50.18

Ore Concentrate Recovery %CatalystSample

CRSM technology has the followingCharacteristics:

1. Upgrades both the Ni and Fe content by 4-20 foldswithout smelting. The Ni content in the concentrate canreach a level close or similar to that of the NPI

2. Removes 70-80% gangue minerals. So that, it willreduce substantially the transportation cost. Thetailings can be used for back-filling material of mine outarea. At the same time if the concentrate will be furtherfed to a smelter, the slag produced in the NPI plant willalso be reduced significantly. It is environmentallyfriendly

3. The concentrate can be used directly for the stainlesssteel production which has been proven in one plantin China

5. Versatility. One technology can handle the processing of widerange of laterite material even high Fe/Ni ore by just adjustingthe kind of catalyst.

6. Low energy consumption, low production cost, low capitalcost, produce high grade products and environmentallyfriendly. So it can still be profitable even when the nickel priceis low.

7. Not necessary to construct big power plant. So it is suitable tobe used in Philippines and Indonesia where are short of powerand the cost of power is high.

8. It doesn’t need coke but just coal.9. More importantly, CRSM can utilize the huge quantity of low

grade laterite, which nowadays are practically waste, for thesupply of high grade material. It maximize the utilization ofresources.

● Financial analysis of four kinds of laterite with low Ni - lowFe ore, low Ni - high Fe ore, medium grade Ni - low Fe oreand high Ni - low Fe ore have been carried out based on the

actual test data.

The selling price is assumed at low LME Ni price of 9,000$/twith a further discount of 10-20%. It is shown that theproduction cost, which includes the cost of ore, is lower thenthe LME price.

Even at such lower selling price, the profits after tax of allgrades ore are still encouraging.

Is CRSM financially viable?

Sample YN2 Z13 BC1 ZJ-1 Sulawesi 5 Z15

Catalyst H22 H3 H24 H23 L20 H16

Exchange rate 6.1 6.1 6.1 6.1 6.1 6.1

Mine production t/a 600,000 600,000 600,000 600,000 600,000 600,000

Grade of ore Ni% 0.87 0.92 0.98 1.00 1.09 1.23

Fe% 47.95 17.37 13.70 45.94 31.05 31.11

Fe/Ni 55.36 18.94 13.98 46.01 28.41 25.29

Concentrate Ni% 2.26 6.21 12.48 2.39 3.72 3.51

Fe% 77.66 68.36 69.68 84.42 72.65 70.73

Fe/Ni 34.4 11.0 5.6 35.3 19.5 20.1

Up grading ratio 2.61 6.77 12.73 2.39 3.40 2.85

Yield % 43.57 17.08 6.78 43.33 32.20 42.82

Ore consuption 86.86 5.85 14.75 2.31 3.11 2.34

Recovery Ni % 95.23 48.33 86.67 103.73 94.55 89.32

Fe % 59.12 67.17 57.32 79.63 65.00 71.14

Conc. Prod. (t/a) 261,399 102,509 40,680 259,987 193,185 256,897

Contaned Ni (t/a) 5,907.62 6,363.44 5,076.86 6,213.69 7,186.48 9,019.64

Sales price $/T

ref. to LME $/t Ni 9,000 9,000 9,000 9,000 9,000 9,000

discount factor 1.00 1.00 1.00 1.00 1.00 1.00

Contained Ni $/T 9,000 9,000 9,000 9,000 9,000 9,000

Revenue $/a (Ni) 53,168,537 57,270,992 45,691,776 55,923,201 64,678,331 81,176,741

Production cost

Sintering Y/t ore 200 200 200 200 200 200

catalyst Y/t ore 100 100 100 100 100 100

mag. sep Y/t ore 10 10 10 10 10 10

Brequetng Y/t ore 10 10 10 10 10 10

Ore Y/t 61 61 61 73.2 73.2 82.5

All unit cost Y/t (ore) 381 381 381 393.2 393.2 402.472

Cost of conc, $/t 143 366 921 149 200 154

Cost of contain. Ni $/t 6,344 5,889 7,382 6,224 5,382 4,389

Total cost of Ni $/a 37,475,410 37,475,410 37,475,410 38,675,410 38,675,410 39,587,410

Tax 17% 2,667,832 3,365,249 1,396,782 2,932,125 4,420,497 7,070,186

Expected profit $/a 13,025,295 16,430,333 6,819,584 14,315,667 21,582,425 34,519,145

Sample NA3 ZH1 H20 16% ZH1 BC-3 Tangshan Laterite 5

Catalyst H23B H20 H21 L20B H22 H3

Exchange rate 6.1 6.1 6.1 6.1 6.1 6.1


Grade of ore Ni% 1.42 1.45 1.45 1.55 1.65 1.88

Fe% 23.18 15.32 15.32 16.91 17.68 16.60

Fe/Ni 16.29 10.57 10.57 10.90 10.74 8.85

Concentrate Ni% 4.82 11.71 10.52 9.32 7.86 12.69

Fe% 44.49 57.73 45.56 55.70 62.58 65.76

Fe/Ni 9.2 4.9 4.3 6.0 8.0 5.2

Up grading ratio 3.39 8.08 7.26 6.01 4.78 6.76

Yield % 23.14 8.30 13.76 10.14 22.31 10.50

Ore consuption 4.32 12.05 7.27 9.86 4.48 9.52

Recovery Ni % 78.33 56.69 74.58 60.94 88.82 58.83

Fe % 44.41 26.45 30.57 33.40 65.84 34.46

Conc. Prod. (t/a) 138,840 49,799 82,548 60,840 133,877 63,028

Contaned Ni (t/a) 6,687.92 5,831.46 8,684.07 5,673.22 10,522.74 7,998.29

Sales price $/T

ref. to LME $/t Ni 9,000 9,000 9,000 9,000 9,000 9,000

discount factor 0.90 0.90 0.90 0.90 0.90 0.90

Contained Ni $/T 8,100 8,100 8,100 8,100 8,100 8,100

Revenue $/a (Ni) 54,172,175 47,234,856 70,340,955 45,953,072 85,234,232 64,786,112

Production cost

Sintering Y/t ore 200 200 200 200 200 200

catalyst Y/t ore 100 100 100 100 100 100

mag. sep Y/t ore 10 10 10 10 10 10


Ore Y/t 88.5 88.5 88.5 88.5 91.5 122.0

All unit cost Y/t (ore) 408.45 408.45 408.45 408.45 411.5 442

Cost of conc, $/t 289 807 487 660 302 690


Total cost of Ni $/a 40,175,410 40,175,410 40,175,410 40,175,410 40,475,410 43,475,410

Tax 17% 2,379,450 1,200,106 5,128,143 982,203 7,609,000 3,622,819


Sample NA3 ZH1 H20 16% ZH1 BC-3 Tangshan Laterite 5

Catalyst H23B H20 H21 L20B H22 H3

Exchange rate 6.1 6.1 6.1 6.1 6.1 6.1


Grade of ore Ni% 1.42 1.45 1.45 1.55 1.65 1.88

Fe% 23.18 15.32 15.32 16.91 17.68 16.60

Fe/Ni 16.29 10.57 10.57 10.90 10.74 8.85

Concentrate Ni% 4.82 11.71 10.52 9.32 7.86 12.69

Fe% 44.49 57.73 45.56 55.70 62.58 65.76

Fe/Ni 9.2 4.9 4.3 6.0 8.0 5.2

Up grading ratio 3.39 8.08 7.26 6.01 4.78 6.76

Yield % 23.14 8.30 13.76 10.14 22.31 10.50

Ore consuption 4.32 12.05 7.27 9.86 4.48 9.52

Recovery Ni % 78.33 56.69 74.58 60.94 88.82 58.83

Fe % 44.41 26.45 30.57 33.40 65.84 34.46

Conc. Prod. (t/a) 138,840 49,799 82,548 60,840 133,877 63,028

Contaned Ni (t/a) 6,687.92 5,831.46 8,684.07 5,673.22 10,522.74 7,998.29

Sales price $/T

ref. to LME $/t Ni 9,000 9,000 9,000 9,000 9,000 9,000

discount factor 0.90 0.90 0.90 0.90 0.90 0.90

Contained Ni $/T 8,100 8,100 8,100 8,100 8,100 8,100

Revenue $/a (Ni) 54,172,175 47,234,856 70,340,955 45,953,072 85,234,232 64,786,112

Production cost

Sintering Y/t ore 200 200 200 200 200 200

catalyst Y/t ore 100 100 100 100 100 100

mag. sep Y/t ore 10 10 10 10 10 10


Ore Y/t 88.5 88.5 88.5 88.5 91.5 122.0

All unit cost Y/t (ore) 408.45 408.45 408.45 408.45 411.5 442

Cost of conc, $/t 289 807 487 660 302 690


Total cost of Ni $/a 40,175,410 40,175,410 40,175,410 40,175,410 40,475,410 43,475,410

Tax 17% 2,379,450 1,200,106 5,128,143 982,203 7,609,000 3,622,819


Sample CD7 CD7 NA1 Sulawesi 6 IN-1 Indonesia

Catalyst L20Ｂ H23Ｂ H24B L20 H22

Exchange rate 6.1 6.1 6.1 6.1 6.1

Mine production t/a 600,000 600,000 600,000 600,000 600,000

Grade of ore Ni% 1.91 1.91 1.93 2.11 2.38

Fe% 34.64 34.64 21.85 14.22 8.86

Fe/Ni 18.10 18.10 11.32 6.73 3.73

Concentrate Ni% 8.13 6.47 7.54 9.88 13.01

Fe% 82.21 87.26 49.01 44.99 35.97

Fe/Ni 10.1 13.5 6.5 4.6 2.8

Up grading ratio 4.25 3.38 3.91 4.67 5.47

Yield % 22.84 23.14 18.96 14.13 29.03

Ore consuption 4.38 4.32 5.27 7.08 3.44

Recovery Ni % 97.02 78.28 74.06 51.60 67.65

Fe % 54.22 58.30 42.54 34.92 50.18

Conc. Prod. (t/a) 137,040 138,840 113,760 84,760 174,166

Contaned Ni (t/a) 11,138.61 8,987.11 8,571.82 8,374.30 22,659.03

Sales price $/T

ref. to LME $/t Ni 9,000 9,000 9,000 9,000 9,000

discount factor 0.80 0.80 0.80 0.80 0.80

Contained Ni $/T 7,200 7,200 7,200 7,200 7,200

Revenue $/a (Ni) 80,198,001 64,707,215 61,717,075 60,294,928 163,145,033

Production cost

Sintering Y/t ore 200 200 200 200 200

catalyst Y/t ore 100 100 100 100 100

mag. sep Y/t ore 10 10 10 10 10

Brequetng Y/t ore 10 10 10 10 10

Ore Y/t 122.0 122.0 122.0 122.0 152.5

All unit cost Y/t (ore) 442 442 442 442 472.5

Cost of conc, $/t 317 313 382 513 267

Cost of contain. Ni $/t 3,903 4,838 5,072 5,192 2,051

Total cost of Ni $/a 43,475,410 43,475,410 43,475,410 43,475,410 46,475,410

Tax 17% 6,242,840 3,609,407 3,101,083 2,859,318 19,833,836

Expected profit $/a 30,479,750 17,622,398 15,140,582 13,960,200 96,835,788

It is shown that even if we use very low LME nickel pricewith additional discount of 10-20% ,the profitability ofCRSM is still encouraging. The unit cost per ton of nickelis lower than the recent very low LME Ni price of 9,000$/T. Therefore, the operation will survive even at verylow LME price.

However, it is also found that the higher the nickel contentupgraded, the lower the yield will be.

To obtain the optimum benefit, we have to balance theupgrading of nickel content and the yield.

How can we get the optimum balance?1. Adjust the use of the catalyst, and2. Adjust the temperature and time of sintering

Balancing the upgrading ratio and yield to get the best financial benefit

●Different catalysts provides different upgradingresults and the yields.

● The higher the grade upgraded the lower the yieldwill be.

● To obtain the best benefit we need to balance thegrade and the yield

● How to get the best balance between the gradeand the yield?

1. adjust the type of catalyst2. adjust the sintering temperature and time

Case 1 and Case 2 illustrate the different results ofupgrading using different catalysts.

In Case 1 the grade in the concentrate is lower thanthat of Case 2 but it has a better yield. As a result,Case 1 is profitable but in Case 2 we lost.

By adjusting the catalyst we can get an optimumbalance of yield and grade in order to achieve a goodfinancial benefit

Cost & benefit comparison of 3 technologies

Comparison of Capex and Opex of different processes

Particular Unit Conventional RK Direct RK

RK+EF Reduction CRSM

Capacity wt/a 2,000,000 2,000,000 2,000,000

Investment $mil 393.44 132.79 132.79

Ore Ni% % 1.8 1.8 1.45

Product Ni% % 10 9.5 11

Production cost $mil/a 439.34 221.31 217.49

$/tNPI 1,903 1,033 1,036

$/tNi 19,031 10,876 9,415

LME equivalent $/tNi 1,626,561 929,555 804,720

Revenue $mil/a 454.15 400.31 454.43

Net prof. after tax $mil/a 11.07 134.02 177.70

RK Direct Reduction (modified RKEF)

RK CRSM=Rotary kiln Catalytic Reduction Sintering Magnetic separation

1. RKEF method has advantage over conventionalsmelting process. It directly feed the hot sinter to the arcfurnace, so it can save some energy and reduce theproduction cost. But RKEF still requires expensive highgrade ore and smelting of the sinter．2. Direct reduction doesn’t need smelting, so it has lowerproduction cost. But it still requires high grade ore toproduce high grade NPI3. CRSM:● It can use the cheap low grade ore and produce highgrade concentrate which is close or similar to that of NPI●It doesn’t need smelting therefore it can save moreenergy and cost●It can tolerate low Ni price. Its ability to withstand thesharp decline of nickel price is the strongest among thethree.

The above comparison shows that CRSM has moreadvantages over conventional RKEF and RK directreduction process on the following:

● Using lower grade of ore but produces higher grade of

product

● Low energy consumption, no high cost of smelting so as

the production cost per ton of Nickel is lower than LMEprice

● Higher profit after tax.

However, the above comparison has to be confirmedthrough semi-industrial test of CRSM.

Conclusions

1. Excellent upgrading performance of CRSM allows theutilization of huge quantity and cheap low grade ores so asto enhance the resources utilization, prolong the life ofmine and the value of the property so as to sustain thesupply of good material to NPI industry.

2. Removal of substantial gangue minerals shall reduce the costof shipping and land transportation.

3. The low operating cost strengthens the company’saffordability in facing the volatile Ni market price fluctuation.The result of financial run show that even when the Ni pricefalls at 80-90% of 9,000 $/t LME price, we still in an goodfinancial condition.

4. Its versatility. One process can handle wide variety of lateriteeven those with high Fe/Ni >10 by just changing the catalysit.

5. It is absolutely possible that the future ofPhilippine nickel laterite industry will not only beusing smelting process to produce low grade NPIbut by applying low capex, low opex low energyconsumption innovative technology to process itslow grade laterite and to produce high grade Ni-Feproduct , so as to get value added to its property.

● Mine owner and Plant owner should work together as

partner instead of taking position as seller and buyer ofore. Convert the conflicting interest into a harmonious co-sharing relationship.

● Two parties form a JV company. Inject capital separately

but swapping equity in both the mine and processingplant.

● Process the ore as internal cost transfer

● Manage the operation together

● Share the profits of product according to negotiated

basis

Suitable mode of Win-Win cooperation is crucial tothe success

Mine owner Processing plant owner

Option 1 JV cooperation

Profit sharring

Option 2 Compensation financing

Mine owner Foreign partner

Procesing Equipment

Concentrate product

& equity guarantee

The mine owner uses the product to repay the value of the equipment atagreed price. Along with the partial repayment ,the equity will be graduallyreduced till full payment is made all the equipment will be owned by themine owner. Before the full repayment the mine owner pays a small interestto the foreign Partner based on the unpaid balance.

Ore

Thank you for giving me a chance of sharingmy research works. Let us hand-in-handworking together for a sustainable lateriteindustry by win-win cooperation.

Hu [email protected]+86-13911157078

mailto:[email protected]

Business

Guolian Hu - Sunbright Consulting Group Inc - Innovative technology - A Solution for Maximizing the Value of Laterite Resource and Sustain the Nickel Industry