Capital expenditure at the Brazilian ferronickel project is reported to have jumped by at least 35%

Horizonte Minerals (Horizonte) has provided an update on the final detailed engineering and construction design for its 100% owned Araguaia nickel project in Pará state, Brazil. A revised cost review resulted in changes to the design and execution scope, which Horizonte expects will increase overall capital expenditure (CAPEX) by at least 35% (of current CAPEX budget) and delay first production to Q3 2024.

The Araguaia Nickel Project comprises a single line rotary kiln electric furnace (RKEF) to produce ferronickel from laterite ores. After an initial ramp up, the plant will reach full capacity of about 900ktpy dry ore feed to produce 52ktpy (14.5ktpy Ni-in-ferronickel) over a 28-year life of mine (LOM). Capital costs for the first phase had previously been estimated at US$443.1M. The project also has the option for the future construction of a second process line, which Horizonte plans to shortly deliver a feasibility study on, doubling capacity to 29ktpy Ni-in-ferronickel. Construction is ongoing for the single line RKEF and ore stockpiling activities commenced during Q3.

Horizonte’s share price dropped quickly in response to the development, falling from £1.25 (US$1.52) to as low as £0.14 (US$0.17) although it staged a minor recovery at the time of writing. However, this means that Horizonte’s market capitalisation plummeted from US$410.4M to US$45.9M over the space of a few days. It remains to be seen what the next steps Horizonte takes to secure the additional funding required to complete construction of Araguaia, although it states that it is “…working on a plan with its various financial institutions together with the cornerstone shareholders for a financing solution to complete construction.” Its major shareholders include La Mancha (23.1%), Glencore (17.7%) and Orion Resource Partners (10.5%).

A large proportion of nickel projects under development globally are targeting products to supply the EV battery sector, however, Araguaia will produce ferronickel as a traditional feedstock for the stainless steel industry. Despite the strong outlook for nickel demand in lithium-ion batteries, Project Blue expects stainless steel to continue to remain the main consuming sector of nickel units for the foreseeable future. Project Blue forecasts primary nickel demand from the stainless steel sector to increase by a modest 3.6%py over the remainder of the decade.