April 19, 2012 / 7:54 PM / 8 years ago

BHP Colombia nickel mine output up 72 pct

* Cerro Matoso Q1 production up on new furnace
    * BHP seeking extension of Cerro Matoso concession
    * Colombia wants BHP to pay royalties on iron ore

    By Diana Delgado	
    BOGOTA, April 19 (Reuters) - Nickel production in BHP
Billiton  Cerro Matoso mine in Colombia rose 72
percent in the first quarter from the year earlier thanks to the
replacement of a furnace, the company said.	
     Colombia's only nickel mine - with 21 million metric tons
of proven reserves - produces about 4 percent of the world's
nickel, and 10 percent of global ferro nickel. Ferro nickel is
an iron ore-nickel combination mostly used in steel making.  	
     About 65 percent of nickel is used to manufacture stainless
steels, and 20 percent in other steel and non-ferrous alloys,
often for highly specialized industrial, aerospace and military
applications, according to the International Nickel study group.	
     "Nickel production was higher than all comparable periods,
reflecting improved smelter and refinery performance at Nickel
West Australia and strong operating performance at Cerro Matoso
(Colombia) following the successful replacement of the Line 1
furnace in September 2011," BHP said on Wednesday.	
    Cerro Matoso -- which bills itself as the world's second
largest producer of ferro nickel -- produced 13,400 tons of
nickel between January and March, up from 7,800 tons in the same
period last year, the company said.	
    In the 12-month period through March, nickel production
totaled 36,100 tons, higher than the 32,600 tones in the same
period last year. 	
    BHP, the world fourth-largest nickel producer, has
concession rights on Cerro Matoso until 2012. Three years ago,
the company asked the government to extend the contract, an
official at the government's mining and planning unit UPME told
    The government has not yet extended the concession because
it is holding separate negotiations with BHP to pay royalties on
iron ore associated with nickel in addition to the 12 percent it
already pays, government officials confirmed.	
    BHP did not return email seeking comment on the issue.	
    Colombia's UPME says that it expects Cerro Matoso output at
51,100 tons in 2012. The mine produced 37,810 tons of nickel
last year, 23.5 percent lower than the 49,443 tons produced in
2010 as one of the furnaces was off, the government said.	
    Cerro Matoso has an estimated reserve life of 40 years.
Located near the town of Montelibano in northern Colombia, the
mine has a lateritic nickel ore deposit and a low-cost ferro
nickel smelter. The smelter and refinery are integrated with an
open-cut mine. 	
    Colombia has six nickel deposits with proven reserves
totaling 37.8 million tons and 46.48 million tons in indicated
reserves, the government said.
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