Nickel maestro worth his weight in gold

ON an icy day in July 1999, Andrew Forrest opened the Anaconda Nickel's Murrin Murrin laterite nickel project, his $1bn desert dream.

Nickel maestro worth his weight in gold

ON an icy day in July 1999, Andrew Forrest stood next to then prime minister John Howard and West Australian premier Richard Court at the opening of his $1 billion dream in the desert: Anaconda Nickel's Murrin Murrin laterite nickel project.

Forrest, the youthful and big-talking Anaconda chief executive, led the invited guests in a solemn prayer session before declaring the massive plant would reach full production within 18 months and revolutionise the global nickel industry.

Unfortunately for Forrest and his backers, a series of technical disasters quashed that dream and the highly complex project limped on for years while the company almost went bust.

But the man who replaced Forrest at the helm of Murrin Murrin, Peter Johnston, can now report to his boss, Glencore International chief Ivan Glasenberg, that he and his team at Minara Resources have finally cleaned up the mess.

The project, Johnston says, is now consistently hitting nameplate capacity and is producing at an annualised rate of 40,000 tonnes of nickel.

In fact, the plant in Western Australia's Goldfields has been producing at that level for the past 11 months, prompting Johnston to go public with his assertion that the tortuous task of making the giant chemicals factory work has been achieved.

Despite its chequered history, Murrin Murrin -- which has been wholly owned by Glencore, the Swiss commodities trading giant, since 2011 -- now ranks as Australia's most successful laterite nickel plant.

BHP Billiton was forced to abandon its Ravensthorpe laterite nickel project in WA in 2009 just a few months after it opened and later sold the project, which has since been restarted but on a smaller scale.

Two other WA projects, Cawse and Bulong, have also shut down.

Johnston says the 14 years of negative publicity Murrin Murrin has endured belies the many technical successes - most of which he describes as "one percenters" - that have been achieved on site.

And he is especially keen that credit should be bestowed on his team of technical experts and the thousands of workers who have slogged away at Murrin Murrin - in summer heat that is regularly above 45C - over the years.

"Some people genuinely believe it was always fatally flawed or it could never work, but we've done it, it's there, and we're only going to get better at it," he told The Weekend Australian in a lengthy interview at his Perth office.

"We have cracked the formula through management depth and talent and persistence."

Not all is completely rosy, of course.

The weak nickel price and high Australian dollar have combined to dent profits at Minara, which has reported its results through Glencore since it disappeared from the Australian boards in late 2011.

The company managed to break even last year, although it did post healthy profits when nickel prices were stronger.

Johnston says much of the credit for Murrin Murrin's survival must also go to Ivan Glasenberg, the billionaire boss of Glencore who has retained faith in the project since the Swiss company emerged as a key shareholder in the early days of Anaconda Nickel.

Glencore underwote a $210 million capital raising in 2008 and has tipped more than $100m into fixing the technical flaws at Murrin Murrin over the past few years.

"Ivan always took a long-term view, and he said: 'Eventually nickel will turn,' and he showed great persistence," Johnston says.

"People think these commodities traders don't hang in there. Well, he's hung in there for 10 years, and all he wants now is a decent return on his capital."

Reflecting on his 11 years in charge, Johnston says some of the toughest times were the early years when his focus was on keeping the company afloat by convincing US bondholders to accept a deal on their debt.

Once that was sorted out, Johnston needed to make the plant work.

The flaws in the plant, which uses a complex technology known as high-pressure acid leaching to extract the ore, were vast and Johnston recites a long list of design elements that took years of trial and error to fix.

Most problems stemmed from the plant's original design and, many believe, Forrest's push during construction to cut costs in order to keep the budget to $1 billion.

"As the plant was being built, they got capital-constrained and they took things out, so is it a design flaw or is it a capital constraint flaw?" Johnston says.

"These are not plants you can build, in my view, on the cheap."

Johnston says many key elements of the original design had to be fixed and, in come cases, materials were completely retrofitted. "Some of the materials at the start wouldn't last 24 hours," he says. "Unbelievable as it sounds, we were changing valves that would last 24 hours. Now these are big valves - they were $300,000 or $400,000 each.

"Some of the people just didn't understand how aggressive this environment was and how maintenance-intensive it was."

Johnston, 61, graduated from the University of WA in 1977 with a bachelor of arts majoring in psychology and industrial relations before scoring a job as a management trainee with CRA, which became Rio Tinto.

He later made an unorthodox career move into the beer industry, joining high-flying Perth entrepreneur Alan Bond's brewing business in the late 1980s.

When Bond's empire collapsed, Johnston went to work for rival brewer Tooheys before being lured back into the mining game by then WMC chief executive Hugh Morgan.

Johnston reveals that he was preparing to leave Minara last year after Murrin Murrin reached full production, but Glasenberg managed to persuade him to stay at the helm until Glencore's $US32bn ($31bn) merger with Xstrata has been completed, which is expected in coming months.

After that, he expects to have a new, unspecified role with Glencore. "I'll be honest, I did say to Ivan that it was time for me to move on," he says.

"But that was before the merger, and he said, 'hang on, there might be opportunities for you'."

Johnston's life will become a bit quieter when he stands down as chairman of the Minerals Council of Australia later this year. For now, though, he is hanging tight and revelling in an achievement that took more than a decade of toil.