Bloomberg News

Burundi to Start Nickel Production 35 Years After Its Discovery

July 01, 2011

July 1 (Bloomberg) -- Burundi, one of the world’s poorest nations, plans to start nickel production next year, more than 35 years after first discovering the stainless steel-making ingredient, as the country addresses a lack of power and transport infrastructure.

Feasibility studies, carried out by the closely held South African company Burundi Mining Metallurgy International, are almost finished and mining work is expected to begin early next year, said Evelio Mushimantwari, director general of the department of geology and mines, in an interview yesterday in the capital, Bujumbura.

The Central African nation, about the same size as the U.S. state of Maryland, has about 285 million metric tons of nickel reserves, according to a report by the African Development Bank. Exploitation of the metal, discovered in 1974, has been hindered by a lack of infrastructure following civil war in the mid-1990s that halted development and limited economic growth.

Burundi’s nickel-ore reserves stretch from the south to the northeast of the country, according to Didace Birabasha, permanent secretary at the Ministry of Minerals and Energy. The landlocked nation plans to build a $3.5 billion railway with Tanzania and Rwanda to boost investment into the region, Tanzanian President Jakaya Kikwete said on March 18.

First nickel output will start at Musongati, in Burundi’s southeast province of Rutana, Mushimantwari said.

World’s Ten-Largest

The deposit is Burundi’s largest, with reserves of about 180 million tons, making it one of the world’s ten largest undeveloped resources, according to the African Development Bank’s report.

The country plans to eventually produce about 2 million tons of nickel ore a year, Mushimantwari said, without being more specific. The government has secured 50 megawatts of power to start production, and it plans to source as much as 100 megawatts more as metal output increases, he said.

Nickel, the worst-performer on the London Metal Exchange this year, may extend declines this year as China leads a switch among users to a low-cost substitute, hurting refined metal prices, according to Morgan Stanley.

Prices are at risk of reaching a “bear-case scenario” of $10.42 per pound ($22,976 a ton) this year on “greater than anticipated levels of substitution” from nickel pig-iron production in China, analysts Peter Richardson and Joel Crane wrote in a report on June 28.

Three-month delivery nickel fell 0.8 percent to $23,229 a ton as of 1:30 p.m. in London today, extending its decline so far this year to 6.2 percent.

The assassination of Burundi’s president in 1993 sparked a civil war that led to the deaths of more than 200,000 people over almost 12 years, according to the CIA World Factbook. The country has a population of about 8.7 million people.

--Editors: Alastair Reed, Paul Richardson, Dan Weeks.

To contact the reporter on this story: Desire Nimubona in Bujumbura via Nairobi at pmrichardson@bloomberg.net

To contact the editor responsible for this story: Paul Richardson at pmrichardson@bloomberg.net


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