Xstrata Nickel is preparing to restart its Falcondo ferronickel mining and processing operations in the Dominican Republic at 50% of installed capacity by March 2011. The operations were placed on care and maintenance in August 2008 due to a combination of extremely high oil prices, which represented the majority of the site’s costs, and low nickel prices. Production after startup is targeted at 14,000 mt/y of nickel in ferronickel.

Falcondo’s restart takes advantage of improved nickel market conditions, optimization of mining and production plant processes, and the signing of a commercial agreement with local power company, AES Dominicana, for the supply of electricity, which will enable Falcondo to operate at reduced costs. Prior to being placed on care and maintenance, Falcondo’s primary energy source was an on-site crude oil refinery and 200-MW power plant. Crude oil was piped 80 km from Santo Domingo and converted to naphtha for use in the plant’s reduction furnaces, to diesel fuel, and to fuel oil for the power plant.

Falcondo is being converted to use procured electricity, while continuing to use naphtha for metallurgical reduction. An ongoing project to convert the long-term energy source for Falcondo’s process plant from oil to natural gas and enable the operation to reach 100% production capacity will continue in conjunction with the resumption of operations.