Madagascar welcomed back

Materials World magazine
1 Jan 2015

Madagascar’s democratic election has led to a return to its position as a preferred trade partner with the USA and a priority market
with Canada. Michael Schwartz takes a look at two key mining projects in this recently reinvigorated country. 

In June 2014, President Obama reinstated Madagascar to the USA’s African Growth and Opportunity Act (AGOA). This encourages economic incentives between the two countries and had been regarded as successful before its suspension in 2009. On average, US$200m worth of goods had been exported to the USA – it is now predicted that US-bound exports could rise by 70%, crucially important to the African country’s economy.

At the same time, Canada responded to the democratic presidential election in January 2014 of Canadian-trained chartered accountant Hery Rajaonarimampianina. It also welcomed Madagascar’s commitment to work towards the signing and ratification of the Canada-Madagascar Foreign Investment Promotion and Protection Agreement. This framework is intended to prevent double taxation of corporations at a time when current two-way trade is described by Canada’s Department of Natural Resources as ‘merely moderate overall’. The same department identified Sheritt International’s US$8bln Ambatovy project and Energizer Resources’ Molo graphite project as Madagascar’s most notable mining operations.

Energizer Resources

Based in Toronto, Energizer Resources owns the Molo graphite deposit in Southern Madagascar. The project is at an advanced stage – the company completed a preliminary economic assessment (PEA) study on the project in 2013 and is expected to complete a full feasibility study in early 2015.
The Molo is currently ranked as one of the largest all-flake graphite resources in the world, containing a NI 43-101-compliant measured mineral resource of 23.62Mt grading 6.32% carbon, an indicated mineral resource of 76.75Mt grading 6.25% carbon and an inferred mineral resource of 40.91Mt at 5.78% carbon, all at a 2% cut-off. Results from the company’s full-scale pilot plant operation confirm an average purity level above 97% carbon through standard flotation alone. Production is targeted for Q3–Q4 2016.

Actual production at low cost is now Energizer’s target. Its PEA study reported an OPEX cost of US$418 per tonne, which is competitive with those of Chinese flake graphite mines. Pilot plant results show that premium-priced jumbo flake from Molo can be achieved by simple mechanical separation at more than 97.7% purity, ready for the demands of the key markets – namely electric vehicles, refractories and graphite foils for consumer electronics.
Then there are ongoing infrastructure enhancements proximal to the Molo project – the EU has confirmed it will fund and upgrade enhancements to the Route National 13 main highway, which links Madagascar’s capital, Antananarivo, with the deep-water state-of-the-art port of Ehoala, in Fort Dauphin. Upgrading will be done in three stages. The first portion is already underway and is the section closest to (30km from) Molo.

All in all, Energizer’s PEA study anticipates output of a maximum of 84,000t/y, consisting of two 42,000t/y modules. Expectations are that Molo will initially start with the first module and then ramp up accordingly, as extra graphite will be available via further expansion in accordance with any market demand.

As Materials World goes to press, Molo is at full feasibility stage, with Energizer’s related study imminent. The project is well-positioned to be first mover in the production of flake graphite on a global scale.

The Ambatovy JV

More complex in its ownership than Molo is the joint venture (JV) at Ambatovy, 80km east of Antananarivo. Comprising 40% ownership by Sherritt, 27.5% by both Sumitomo and Korea Resources (KORES), and 5% by SNC-Lavalin, the project involves the mining, processing, refining and marketing of nickel as well as cobalt. Proven and probable reserves total 190Mt, hosting 0.85% nickel and 0.07% cobalt.

Ambatovy is the world’s largest finished nickel/cobalt operation from lateritic ore, lying just a few kilometres from the rail and road systems that connect the capital with the east coast port of Toamasina. Slurried laterite ore is delivered via pipeline to a process plant and refinery located directly south of Toamasina.

Ambatovy’s design will allow for 60,000t/y of nickel and 5,600t/y of cobalt over an estimated 29-year mine life. Roughly 6.5Mt/y of ore is scheduled for the ore preparation plant, equivalent to 20,000t/d.

The JV comprises open-pit mining with hydraulic excavators, twenty-one 40t trucks and eight 100t trucks along with an ore preparation plant at the mine. The ore is mixed into a slurry with water then screened and settled in a thickener, before the slurry reacts with sulphuric acid to leach the nickel and cobalt into a solution.
Separation of the nickel and cobalt solution from the residue is then required via a countercurrent decantation wash circuit. The ore is moved through a series of steps called the hydrometallurgical process, which uses a series of chemical compounds (including sulphuric acid and lime) and water to produce finished nickel and cobalt.

In the final stages, precipitation recovers the nickel and cobalt, along with hydrogen sulphide gas, to generate concentrated mixed sulphides. Washing and drying can produce the mineral products as well as the mixed sulphides in powder or briquette form ready for delivery to key markets. By January 2014, commercial production had been achieved.

All Ambatovy’s nickel is sold to KORES, Sumitomo and Sherritt at market prices under nickel off-take agreements covering full nickel capacity for 15 years. These partners then sell directly to end-users.

The rest of the story

In addition to the energy that Energizer will draw from the Sakoa coalfield, other developments in the area are underway. ASX-listed Lemur Resources acquired Coal of Madagascar Ltd in 2011 and, therefore, the Imaloto coal project, which is the northernmost coal field in the greater Sakoa Basin and 30km from the main basin. Imaloto’s JORC-compliant resource measures 135.7Mt in situ (68% measured).

Lemur Resources continues to use scoping studies to assess the viability of small-scale production of up to 1Mt/y of saleable product. Longer term, it continues to target 1–3Mt/y, again subject to scoping and feasibility studies.

There are certainly challenges to Lemur Resources regarding transportation. The existing ports of Tulear and Antseraka would both need upgrading to deal with 1Mt/y and 1–3Mt/y respectively of saleable product. Even the initial transportation of relatively small amounts of coal from the site by road will demand the building of a 60km road to the national highway network.

Development of Antseraka will be managed by a consortium of Lemur, the Agetipa government agency, Madagascan Consolidated Mining and Sherritt International. Another transport option is rail, but the infrastructure in this case dates from the 1960s and new tracks would be needed.

Ryan Rockwood, a director at Lemur Resources, spoke on the changes in Madagascar. ‘Following the conclusion of the democratic elections and the establishment of a new government in 2014, political stability has returned to Madagascar after four years of uncertainty. Lemur looks forward to advancing its Imaloto coal mine and 3x15MW mine-mouth power-station [an MoU has been signed with state-owned power company Jirama], which will spur the development of mines and industry in the South West.’

Also Australian-listed is World Titanium Resources (WTR), which has several exploration targets, including the Toliara Sands project located 640km south west of Antananarivo. At Morombe, exploration to date indicates higher titanium dioxide ilmenite and higher zircon grades than normal for south west Madagascar. In addition, the project is a dry mining project, so a large-scale operation would not require a lot of water.

At nearby Ranobe, production is expected to achieve 407,000t/y of ilmenite and 44,000t/y of zircon-rich concentrate over 21 years life-of-mine. Simple dry mining is the intended method, which would benefit from no overburden and very low slimes (<5%).

The Definitive Engineering Study, completed in August 2012, confirmed low capital investment, low technical risk and simple mineral sands operations, based on mining and processing at 8Mt/y of ore from Q2 2014 – a robust project compared to similar scale mineral sands projects. It also estimates an average mine operating cash cost of US$116/t of product, combined with life-of-mine average revenues of US$271/t of product. WTR is predicted to deliver an internal rate of return of around 29% over 21 years.

It is clear that mining operations have increased and intensified since the election of a democratic president of Madagascar. The minerals being extracted are themselves greatly in demand.

Energizer names attributes that, in its opinion, set Molo apart:

Proximal to top graphite demand markets – the Molo is located within the hub of top purchasing and processing markets for flake graphite (China, Japan, South Korea, India)

The deposit is within a flat semi-arid environment with little flora or fauna and is immediately at surface, which should lend to low-cost open-pit mining

Easily expandable – Energizer has also confirmed more than 320km of continuous graphite mineralisation, at surface, on the total property

All-flake deposit – Molo can address all graphite markets with a variety of flake sizes, for example, jumbo (+50 mesh), large (+80 mesh), medium (-80 to +100 mesh) and small (-100 to -200 mesh) flake