Nickel firm to develop Turkish mine

European Nickel said it may get $350 million in loans from Industrial & Commercial Bank of China in the second quarter for development of a mine in Turkey.

The bank is waiting for a letter of intent from a Chinese guarantee agency before going forward, European Nickel Managing Director Simon Purkiss said on Thursday in an interview in London.

European Nickel last year agreed to sell 20 percent of the Çaldağ nickel mine in Manisa, western Turkey, which has a projected capacity of 20 million metric tons a year, for $20 million to China’s state-run Jiangxi Rare Earth & Rare Metals Tungsten Group. It also agreed to sell 2 percent of the project and pay a $5 million fee to China Tianchen Engineering Corp. to help build the mine, Purkiss said.

The investment in Çaldağ is known as the largest foreign direct investment in Turkey’s mining industry.

The deals with the Chinese companies are part of a package that includes securing the $350 million loan, he said.

London-based European Nickel has invested $78 million in the $420 million project and has been waiting for additional funding since February 2009 to begin developing the mine, Purkiss said. The company is also in talks with banks, including Turkish institutions, over the terms of possible funding as an alternative to Chinese financing, he said.

“With Western bank financing we know that process,” Purkiss said. “Now we have two sources of finance.”

Çaldağ will begin output a year after securing funds and reach full annual capacity of 20,400 tons after 28 months, he said. The company plans overall annual capacity of 50,000 tons of nickel within five years after developing the Acoje project in Philippines, Purkiss said.

European Nickel will gain about $50 million from Turkey’s tax incentives that reduce corporate tax to 4 percent from 20 percent and allow the deduction of 50 percent of fixed investment, he said. European Nickel plans to complete a merger agreed last month with Australia’s Rusina Mining in May and the combination will be listed in Australia and London, he said.