Canadas Sherritt begins Cuba nickel expansion

Canada's Sherritt begins Cuba nickel expansion
Wed Apr 19, 2006 9:53 AM ET

HAVANA, April 19 (Reuters) - Canadian resource company Sherritt
International Corp. <S.TO> and Cuba have begun a 16,000 tonne expansion
of their joint nickel and cobalt production facility, official Cuban
media said on Wednesday.

The plant, in Moa, eastern Holguin province, is a joint venture with
state-owned Cubaniquel and currently produces 33,000 tonnes per year.

Plans call for increased output to come on line in 2008 without
affecting current production, Sherritt recently reported.

Sherritt President Ian Delany and Cuban Basic Industry Minister Yadira
Garcia were among company executives and Cuban officials in Holguin on
Tuesday to inaugurate the project after a year of planning.

Delany and Garcia both emphasized the challenge posed by the 2008
termination date, but expressed confidence it would be met, the Cuban
media said.

The $450 million expansion project includes retooling a joint venture
refinery in Canada to handle the increased output and mining rights that
would supply the Moa plant for 25 years.

Cubaniquel operates two of three processing facilities in Holguin
province, 500 miles (800 km) east of Havana, and is a 50 percent partner
in the third with Sherritt International.

The industry is operating at a current capacity of around 76,000 tonnes
of unrefined nickel plus cobalt.

Nickel is essential in the production of stainless steel and other
corrosion-resistant alloys. Cobalt is vital to produce super alloys used
in aircraft jet engines, wireless phones and high technology batteries.

Nickel emerged as Cuba's biggest export earner in 2000 with most of its
nickel plus cobalt sulfides and oxides going to Canada, Europe, and more
recently China.

The Communist-run Caribbean island is one of the world's largest nickel
producers and supplies 10 percent of the world's cobalt, according to
the Basic Industry Ministry.

China's state-owned Minmetals Corp. agreed in 2004 to form a joint
venture to produce ferro-nickel at a plant abandoned when the Soviet
Union collapsed. The $500 million project would produce 68,000 tonnes of
ferro-nickel annually (21,000 tonnes of nickel), but plans have
reportedly been delayed.

Cuba has invested more than $500 million over the last decade in the
industry.

Cuban nickel is considered to be Class II with an average 90 percent
nickel content.

Cuba's National Minerals Resource Center reported that eastern Holguin
province where the industry is based counted 34 percent of the world's
known reserves, or some 800 million tonnes of proven nickel plus cobalt
reserves, and another 2.2 billion tonnes of probable reserves, with
lesser reserves in other parts of the country.

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