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By Patrick Antoine Decloitre

NOUMEA, New Caledonia (Oceania Flash, Jan. 12) – A joint venture between Canadian firm SNC-Lavalin and American company Foster Wheeler has won a US$150 million tender for engineering, supply and management services as part of the construction of giant Goro-Nickel project, in the South of New Caledonia’s main island.

Canadian media report SNC-Lavalin and Foster Wheeler had already been involved as consultants in a drastic review of the US$1.8 billion project, which was "paused" in late 2002 due to major cost overruns.

The major driver of Goro-Nickel, Canadian mining giant Inco, which currently holds 85 percent of Goro-Nickel’s capital, decided to resume its project in New Caledonia late last year, once investment costs had been downsized.

"We welcome this contract and the opportunity to help Goro Nickel achieve it," SNC-Lavalin Vice-President Pierre Duhaime said in a release.

Late November, Goro Nickel launched a call for tenders from interested companies, including local ones. A firm, Goro Construction Team (GCT), was set up last year in New Caledonia to implement the re-start.

GCT director Pierre Dubuc told local media that in selecting sub-contractors between December 2004 and June 2005, it would place a particular emphasis on ensuring as many New Caledonians as possible can take part in the construction of Goro Nickel.

To respond to the tender offer, local companies have been told they can either offer their services on their own, or in conjunction with international firms.

The total value for the local contracts is estimated to reach US$40 million.

About 300 local companies are believed to be interested, according to an earlier survey conducted by GCT.

Works involve quarry, a water processing facility, construction of the main mining site and nearby wharves.

The previous implementing company, BTH (a consortium between local and Brisbane-based engineering companies) has been sidelined when Inco decided to hold the Goro project two years ago, due to "unacceptable" overrun in capital costs on the order of 40 percent, compared to the initial budget.

In October 2004, Inco announced that Frenchman Pierre Alla, who held the position of Executive Chairman for Canadian Inco’s local Goro-Nickel company, under the old configuration, had been sidelined.

He was replaced by Peter Jones, who is Inco’s group President and Chief Operating Officer, and Australian executive Ron Renton, who recently worked on major mining projects in Africa.

Renton has already arrived in New Caledonia, where he is now based.

Alla’s position has now been split into two: Jones becomes Goro Nickel’s Chairman and Renton is the new Chief Operating Officer.

As part of the project review decided in Toronto, Alla will remain a "senior advisor" to Goro-Nickel and Inco.

The Goro project is currently the biggest of its kind in the world.

Actual construction on the Goro site is expected to resume in early 2005, Inco said, for an estimated duration of 35 months to become operational in September 2007.

The Goro project would reach about 75 per cent of its expected annual capacity of 60,000 metric tons of nickel within 12 months after initial production, and would be at approximately 90 percent of the expected nickel capacity within two years after initial production, the company anticipated.

As for cobalt, the capacity of the New Caledonia plant has been revised to a current range of 4,300 to 5,000 metric tons per year.

On January 5, Canadian mining giant Inco announced it had reached an agreement with the French government and obtained tax rebates for an initial US$500 million.

The tax holidays regarded financing of "the purchase of specified equipment and other assets for the Goro project’s planned process plant".

Combined with the upgrade of existing projects (one from Société Le Nickel, a subsidiary of French mining giant Eramet) and other planned projects (including one, In New Caledonia's North, so far driven by Inco's Canadian competitor Falconbridge), New Caledonia's nickel production capacity could reach some 200,000 tons per year within the next three to four years.

New Caledonia currently holds about a quarter of the world’s nickel reserves.

Its current nickel boom is mainly responding to increasing demand from emerging markets in China, India and Southeast Asia, where nickel is used to manufacture stainless steel, but also in power plants and transport and piping infrastructures.

January 13, 2005

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