TORONTO, Feb. 11 -- The processing plant at Brazilian miner Vale's (VALE5.SA: Quote) Goro nickel operation in New Caledonia, which had been expected to start operating in January, is undergoing tests but is not yet in production, a company official said on Wednesday.
The launch of Goro has been delayed several times over the past year as the operation has faced skyrocketing costs, environmental opposition, and a sharp drop in nickel demand since 2008.
Mining began last year, and Vale said in October it expected the processing plant to begin production in January. It also said at the time that the cost of building the entire Goro operation in New Caledonia, an island territory of France in the South Pacific, had ballooned to $4.3 billion from $3.2 billion.
Erin Satterthwaite, director of internal communications at Vale's Toronto office, said in an email on Wednesday that Vale had successfully tested the process through which metal is leached from the ore, and will test the refining process at a later date.
She did not say whether Vale's expectations of 20,000 tonnes of nickel production in 2010 would stand.
"The ramp-up plan will be decided after the details of the technical inspection of the leaching process are available," she said.
When at full production, Goro is expected to produce 60,000 tonnes of nickel annually, or about 5 percent of global production. It will also produce some cobalt.
Nickel prices hit a record high of nearly $25 a pound in May 2007, but then started a steep slide that took them to around $4 a pound in late 2008. The metal MNI0 has since rebounded on the back of a recovery global economy and tighter production, and was around $8.10 a pound on Wednesday.
Vale acquired the Goro project when it bought Canadian nickel miner Inco in 2006.