Economic and Business in cuban Review 2006 - Cuba's Nickel and Cobalt windfall

FOREIGN partners have entered the industry providing financing, technology and markets. A deal made in 1994 with Sherritt International Corporation has been the biggest single factor in reactivating nickel and cobalt output so far.

High international prices (see below) have encouraged a greater level of investment and exploitation. Total production for nickel and cobalt in 2005 was reported as 77,000 tonnes, representing a 4% increase on 2004. Initial reports for 2006 suggest a potential fall to around 74-75,000 tonnes.

Total revenue for nickel mined in Cuba in 2005 was estimated at US$ 1.1 billion. This is consistent with 2004 (US$ 1,022 million) and significantly higher than 2003 (US$633 million) or 2002 (US$426 million).

Total revenue for nickel mined in Cuba in 2005 was estimated at US$ 1.1 billion. This is consistent with 2004 (US$ 1,022 million) and significantly higher than 2003 (US$633 million) or 2002 (US$426 million).

Nickel and cobalt reserves in the north-east of the island are among the world´s largest. Cuba has about one-third of the world´s nickel resources (proven reserves of 800 million tonnes and 2 bn of probable reserves), and is the fourth largest nickel producer. Cuba's cobalt production is about 10 percent of the world total and the nation has the world´s second largest reserves.

Expansion Plans
The high price of nickel has stimulated significant expansion plans in the nickel sector in Cuba. The stated Cuban investment plans envision raising total production to 120,000 tonnes within 5 years.

San Felipe
Plans for a Chinese entity to explore and develop an unexploited nickel reserve in Camagüey. Industry analysts suggest that the investment would cost around US$1.3 billion and output could reach 50,000 tonnes of nickel a year.

Pedro Soto Alba
Moa Nickel S.A. is a joint venture with Sherritt International Corp. It produced approx 34,000 tonnes of nickel plus cobalt in 2005. Brownfield expansion plans should lift production by nearly 50% to 49,000 tonnes. Commissioning
is planned for 2008. Total expansion costs are approx US$ 450m

Business issues in mining
There is a severe lack of infrastructure and support services which are able to support
a mining operation. In general, most machinery must be brought in from overseas and there is an almost complete lack of service companies which are able to handle even basic support functions.

Las Camariocas
Plans for a Chinese entity to form a JV with a Cuban company, in order to complete and modernize an unfinished Soviet-built ferronickel plant in the Moa field, Holguín province. This has a capacity estimated at 22,500 tonnes of nickel a year for 25 years. This project is understood to have stalled pending the outcome of an international arbitration between a Cuban state company and the foreign party which completed a feasibility study during 2004.-