here you go stix what do you think of this ?IF JULIAN Malnic's latest venture lives up to his expectations he will have made an indelible impression on the mining industry not just once, but twice. His first breakthrough was with Nautilus Minerals Inc, which he set up in 1997 and is now well on the way to the commercial mining of high-grade ore from the sea bed.
Nautilus shows so much promise that Anglo American plc, Barrick Gold Corp, Teck Cominco Ltd and Russian steel billionaire Alisher Usmanov, have paid millions of dollars for ringside seats at the undersea action. Mr Malnic has stepped away from Nautilus to focus on another innovative company, Direct Nickel Pty Ltd. He set this up with Russell Debney, a long time associate and a lawyer who has also been involved with Nautilus since the early days – and is still a director. Direct Nickel has a metallurgical process that Mr Malnic says will produce nickel from laterite ore at a cost lower than nickel produced from many sulphide deposits. He says both capital and operating costs will be lower. The socalled Direct Nickel (DNi) process could solve the global nickel shortage he insists, and “will challenge all other nickel processes”.
Mr Malnic’s claim is being met with some scepticism because it’s not so long ago that similar suggestions were being made about the High Pressure Acid Leach process (HPAL) to treat Australia’s nickel laterite ores. HPAL proved extremely difficult and expensive to bring into commercial production. He says: “Sceptics are my friends. That’s why we get independent studies to verify and cut risk. You can’t just walk in and say ‘I have something new and believe me it works.’ You have to persuade and offer quality science to the people you are trying to influence.”
And Aker Kvaerner of Toronto has already completed a pre-feasibility study for the DNi process. Mr Malnic says his association with Nautilus, another highly innovative venture, helps open doors and dampen scepticism about DNi. Mr Malnic can thank one of those inevitable troughs in the industry’s economic cycle for his crack at the Nautilus opportunity.
A geologist by training, he had turned to resource journalism to earn a living. In March 1993, while editor of The Miner, an Australian monthly, he interviewed Ray Binns, a geologist who had been trying, unsuccessfully, to persuade the Australian government to let him expand his work exploring the sea bed. Dr Binns was employed by the Commonwealth Scientific and Industrial Research Organisation (CSIRO), searching for Black Smokers. These are chimney-like structures formed when mineral-rich, magma-heated fluid shoots up through the earth’s crust and is then quickly cooled by sea water. The first rocks Dr Binns recovered from an extinct smoker 1,600 m deep off the southern tip of Papua New Guinea, contained 20% copper, several percent zinc and 10 parts per million of gold.
Dr Binns thought a way could surely be found to mine such high-grade material. But Australian officials were interested in his work only as a way of providing a guide for finding landbased mineral deposits. Mr Malnic listened to Dr Binns’ story and made a note of the location of the smoker. After lengthy research into law and technology – which convinced him that mineral rich deposits formed mainly in deep water – in 1995 he posted exploration licence claims to the Papua New Guinea government – which in Decenber 1997 awarded him its first-ever underwater exploration claims. These very areas contain the Solwara projects in PNG’s Bismarck Sea which Nautilus hopes to start mining in 2010. But Mr Malnic met as much resistance to the idea of undersea mining as Dr Binns before him. It was pointed out that in the 1970s about US$700 million had been spent in an attempt to mine manganese from deep below the sea’s surface – but these ultra-deep deposits didn’t offer high enough metal grades to be commercial.
In response, Mr Malnic argued that technology had raced ahead since the 1970s – the oil industry, for example, now had remotely-operated vehicles able to view, dig and drill material at depths down to 3,000 m below surface.
New Partners
Mr Malnic owned 100% of Nautilus until 1997 when he was able to convince two seasoned industry people to join the board – Mr Debney and Geoff Loudon, who, among other things, was founder and chairman of Niugini Mining, discoverer of the Lihir gold deposit in PNG. Mr Loudon is still Nautilus’ chairman.
Mr Malnic recalls that, because there was limited money available: “I did research, I worked with other researchers, sailed on the ships with the researchers and staked new areas in PNG, Fiji and Tonga.” In 2002, Mr Malnic brought in David Heydon, another geologist-turnedentrepreneur, to be Nautilus’ chief executive. Mr Malnic says of Mr Heydon: “He has achieved what I hoped he would achieve [with Nautilus].” Having brought together the key people to take Nautilus forward, Mr Malnic left the company in April last year when it listed in Toronto. He has sold some of his original stake – partly to help set up Direct Nickel, but also because his family home in Sydney was burnt to the ground in January this year, “a harrowing experience,” he says. But he still owns about 3% of Nautilus, shares currently worth about C$14.5 million. Mr Malnic, now aged 51, was born in Sydney. After graduating, he deliberately steered clear of starting a long-term career with one of the major mining groups – “I have always been unimpressed by the attitude of big companies.” He preferred “to survive drilling escapades in wild country,” drilling mainly for gold in Fiji as well as the Torres Straits and the Great Dividing Range in Australia. For a time, he ran his own consultancy and in the mid-1980s staked a big magnetite deposit near Munduberra which he sold “not for a fortune but enough to buy me a house”. The deal also “established in my mind that enterprise was the place for me”.
Reform in the spotlight
In 1996, he gained attention in his home town by drafting a paper suggesting how the Australian Institute of Mining and Metallurgy should be reformed. “So many people had been complaining about the Institute that I decided to do something about it.” He first showed his work to The Australian newspaper instead of the Institute. The headline said ‘Institute Gets Dinosaur Warning’ and consequently “that made me the most unpopular man on Earth”. He says that at that time there was a demand among Australia’s mining professionals for more debate about cultural and current affairs but the archaic AusIMM outlook and constitution could not cope with this. So Mr Malnic set up the Sydney Mining Club where industry people could meet every month to hear speakers on a wide range of issues.
He says: “We have a unique ‘come once and be a member for life’ philosophy, recognising that mining industry people belong together no matter what.” Following the success in Sydney, where Mr Malnic is chairman, he assisted in the creation of the present Melbourne and Brisbane Mining Clubs. And two years after he wrote his ‘Blueprint for Reform of the AusIMM’, the Institute made the first changes to its constitution in 102 years. Mr Malnic’s involvement with Direct Nickel started when a metallurgist contact put him in touch with an industrial chemist in the US who had been working on the technology for some time – the DNi Process has been 15 years in development to the present pilot plant stage. It is claimed that DNi is an environmentally friendly, hydrometallurgical process for treating nickel bearing laterite ores at a moderate temperature and atmospheric pressure.
Mr Malnic claims the economics are “far superior” to those of HPAL, the Caron Process and ferro-nickel smelting. A 5,000 t/y DNi plant, using readily available equipment, would cost US$150-170 million, and US$350-400 million for a 20,000 t/y lant. Mr Malnic says: “I can hardly believe I have an opportunity of this magnitude following an opportunity as big as Nautilus.”
Julian Malnic / Direct Nickel - original Mining Journal article (pdf)