Horizonte seeks financing as Brazil nickel project capex rises

Horizonte Minerals is seeking financing solutions after it increased the capex projection for its Araguaia nickel project in Brazil’s Pará state by at least 35% from the initially planned US$537mn.

The company also delayed the first production estimates to 3Q24 from the first quarter of next year, while bottlenecks related to energy transition minerals are growing tighter.

"With the estimated increase in overall project capital, the company is working closely with its senior lenders and its cornerstone shareholders on a financing solution to solve the funding gap. The company’s objective is to put in place a financing solution which will satisfy the cost to complete requirements and thereby allow the company to continue to access its senior debt facility," according to a press release.

The top shareholders are La Mancha Investments, Glencore and Orion Resource Partners.

Capex had to be reviewed due to underestimating costs for civil works, electromechanical assembly and delays in deliveries of materials, among others.

Reta Engenharia is expected to complete the capital cost and schedule analysis this quarter, after which an exact capex figure will be known.

Other firms are facing similar problems. 

"In recent quarters, we have seen an increase in investments in different phases, exploration, pre-operational phase in mining to meet the demand for renewable energy, including in nickel, copper and lithium. The rush of different companies toward these projects causes damage at different stages of the supply chain," Valdir Farias, CEO at mining consultancy Fioito, told BNamericas. 

"If we do not get a quick response from the supply chain to solve these problems and avoid the spread to other companies, this will be very negative for the mining sector because it will end up driving away investors," said Farias.

Araguaia is among the largest nickel projects under development in Brazil. Construction began early last year. According to Horizonte, US$429mn has been spent on construction through September.

Meanwhile, Horizonte said the results from the feasibility study on Araguaia line 2 remain on track to be published this quarter. Line 1 and 2 production is expected to reach  29,000t/y of nickel.

The company's other project in Brazil, Vermelho, is in the feasibility study stage.