Mitsui & Co Ltd and Sumitomo Metal Mining Co Ltd said they have undertaken a review of the Taganito Nickel Project that is being implemented in the Philippines by Taganito HPAL Nickel Corporation, an affiliated company of SMM and Mitsui.
The result of the review is a forecast increase in construction costs from the initially planned $1.3 billion to approximately $1.59 billion.
This project suffered a setback in October 2011 when the plant construction site came under attack from an armed group, which resulted in the facilities under construction sustaining damage. As such, as well as repairing the damaged facilities, a number of measures have been taken to ensure the safety of employees, construction workers, and other involved persons.
In addition to the extra costs incurred by these measures, an increase in material prices and alterations to the construction specifications among other factors have led to a $150 million increase in construction costs. Furthermore, with the rapid devaluation of the U.S. dollar that occurred after the start of this project in September 2009, the difference in exchange rate for construction fee settlements not made in U.S. dollars has increased with an effect of approximately $140 million, leading to a forecast construction cost of $1.59 billion.