Sulawesi (Sorowako)

Overview

The lateritic nickel mine is located in Sorowako on the Island of Sulawesi, Indonesia.  It is owned and operated by PT Vale Indonesia Tbk (PTVI) of which Vale S.A.  owns 59.2 %; Sumitomo holds 20.3% and 20.5% is publicly held.

PTVI is a public company whose shares are traded on the Indonesia Stock Exchange. It is the world’s second largest nickel company.

 PTVI mines nickel saprolitic laterite ore and produces nickel matte, which is shipped primarily to Vale’s nickel refinery in Japan. Pursuant to life-of-mine off-take agreements, PTVI sells 80% of its production to Vale’s wholly owned subsidiary Vale Canada and 20% of its production to Sumitomo Metal Mining Co., Ltd.

Vale’s 87.2%-owned subsidiary Vale Japan Limited operates a refinery in Matsuzaka, Japan, which produces intermediate and finished nickel products, primarily using nickel matte sourced from PTVI. Vale Japan is a privately-owned company controlled by Vale, with the minority interest held by Sumitomo (12.8%).

The Original Contract of Work (CoW), which was entered into on July 27, 1968, expired on March 31, 2008. On January 15, 1996, PT Inco and the government of Indonesia signed the Extension Agreement, extending the Company’s CoW to 2025.

In 2011, Sorowako mining and processing operations produced 68,000 metric tonnes of matte at 1.95% nickel.

Vale is allocating US$2billion over a five year period to increase the mine production to 120,000 tons. 

Location

The open pit mine is located in Sorowako on the Island of Sulawesi, Indonesia.

Indonesia is a country located in South East Asia and Oceania. It is made of an archipelago comprising 17,508 islands that host over 238 million people – the world’s fourth largest country.  There are over 300 ethnic groups speaking more than 700 languages. The vast majority of the population is Muslim.

The island of Sulawesi had its name derived from the words sula ('island') and besi ('iron') and may refer to the historical export of iron from the rich Lake Matano iron deposits, which are associated with lateritic nickel as well.

Nickel ore within iron deposits, plentiful in the central part of Sulawesi, was an important resource used in making keris(traditional Indonesian swords) since the Majapahit dynasty.

In 1901, nickel is first discovered by a Dutchman named Kruyt during his study of the iron ores in the Verbeek Mountains of Sulawesi. In 1937, an Inco Ltd geologist named Flat Elves is invited by a Dutch Exploration company to further study the Sulawesi nickel laterite deposits; he visits Sorowako.

In 1937, first nickel shipments from Southeast Sulawesi were made to Japan and Germany.

Geology & Mineralization

The geology is a typical tropical lateritic nickel deposit containing both limonite and saprolite material types, developed over ultramafic rock units.

It was formed by coupling many geological and geographical factors, including the geochemical source from ultramafic rocks, the weathering force affected by rain forest climate, the filtering and precipitation channels provided by structural activities, the ore deposition space offered by good relief, and the time insurance from stable tectonic environment.

The area is part of a larger mineralized province containing other lateritic nickel resources such as Soroako (Vale) and Bahodopi (Vale).

Mining & Operation

Vale's subsidiary mines nickel laterite saprolite ore and produces an intermediate product (nickel matte), which is shipped primarily to Vale's nickel refinery in Japan.

Operations consist of a open cast mine, smelter and hydroelectric facilities producing nickel matte, an intermediate product.

The Three-line reduction and smelting plant is capable of producing 68,000,000 kg of nickel per year, in matte form for Japanese refineries.

Processing

PTVI’s nickel processing plant at Sorowako has an annual production capacity of 65,000 tonnes of nickel in matte (above 75 per cent nickel content).

Stages of production are specified as follows:

-          Drying at kiln dryers aimed at reducing water content of lateritic ore supplied by mining section and separating ores measuring +25 mm and – 25mm.

-          Calcining and reducing at reduction kilns to eliminate moisture content in the ores, to reduce some nickel oxide to be metal nickel and sulphidation.

-          Smelting at electric furnaces to smelt calcine as a result of calcinations/reduction to form phased melted matte and slag.

-          Nickel grade enrichment at converters to upgrade nickel content in matte from less than 27 per cent to above 75 per cent.

-          Granulating to convert liquid matte to become ready-to-export granules when properly dried and packed.

The nickel matte is sold to a Japanese refinery.  Vale’s 87.2%-owned subsidiary Vale Japan Limited operates a refinery in Matsuzaka, Japan, which produces intermediate and finished nickel products, primarily using nickel matte sourced from PTVI. 

The company has constructed several facilities including three hydroelectric power plants, PLTA Larona (165 MW), PLTA Balambano (93 MW) and the most recent addition (September 2011) the Karebbe (90 MW). The plants supply cheap power which reduces the production costs and enables the potential expansion of the nickel matte production. 

PTVI has thermal generating facilities in order to supplement its hydroelectric power supply with a source of energy that is not subject to hydrological factors. In 2011, the hydroelectric power plants provided 93% of the electric energy consumed at their Indonesian operations, with the thermal generators providing the remainder. 

In 2011, Sorowako mining and processing operations produced 68,000 metric tonnes of matte at 1.95% nickel.

The company is working toward increasing the mining operation’s capacity to 120,000 t per year over a 5 years period. 

Environment & Community

Reclamation includes the follow-up steps: landscaping, the placement of layers of planting soil, terracing, and the development of drainage systems before the revegetating or replanting begins.  Some 700 hectares were revegetated to date.

In 2002, the nickel mining and processing operation employed 3,000 people.

The local farming and forest reliant communities are mostly opposing the mining project.

The company has made a significant contribution to the Indonesian economy through the payment of royalties, water levy, land rent and taxes and by the purchasing of supplies, services and equipment from other Indonesian companies.

It has also built a 42 bed hospital and medical clinics in Sorowako and a number of surrounding villages. The company has also built and operated two kindergartens, two elementary schools, a junior high school and a senior high school in Sorowako. It has sponsored agricultural counseling designed to improve crop production for local farmers. The company has also funded additional infrastructure development including five megawatts of power to the local community through PLN, a state-owned power company. They also provide roads, an airport and seaport, places of worship, sports facilities, water and sewage treatment facilities, TV relay stations and community centres.