Australian miner IGO will put the Cosmos nickel project on ice from May this year, with recently appointed CEO Ivan Vella saying it was too risky to proceed with the A$1.1 billion redevelopment “in the current environment”.
Its decision to put the Odysseus underground mine and new 1.1 million tonners per annum nickel concentrator on care and maintenance follows a lengthy review of the asset, initiated in the middle of last year, which is said to have demonstrated a reduction in the expected 10-year life of the mine, delays in ramping up the mine to optimally feed the plant and further increases in operating and capital costs.
IGO says it will finish wet commissioning of the plant and process some run-of-mine ore from the mine before the May close. It expects to book a further A$150-175 million impairment charge on Cosmos in February, on top of the c-$1 billion writedown announced last year on the value of the Cosmos and Forrestania nickel assets it acquired in its $1.3 billion takeover of Western Areas in 2022.
IGO flagged impending redundancies and said it was weighing up further near-term investment in resource exploration and possible expansion programs, plus mine and materials handling optimisation work.
“We still believe there is value in Cosmos, however in this nickel environment we need to be disciplined with our allocation of capital, while retaining our optionality to restart if market conditions improve,” Vella said today.
ASX-listed GR Engineering Services has all-but completed delivery of the Cosmos plant under its $76 million engineering, procurement and construction (EPC) contract.
Barminco, part of Perenti, signed a five-year, $200 million mine development contract with Western Areas back in the second half of 2020. Last year IGO engaged Perenti and ABB to study options to electrify what was a standard diesel-powered underground mine operating plan for Cosmos.
While long-term in nature it is unclear whether that work will continue as part of IGO’s efforts to future-proof a new mine.
