London-based Horizonte Minerals has begun construction on its Araguaia nickel project in Brazil.

Araguaia hosted a ground-breaking ceremony on May 18.

Horizonte estimates a 24-month construction period. Stage 1 production will produce an estimated 14,500 tonnes per annum.

At the end of April, Horizonte had awarded US$204 million in contracts, and will award an additional US$66 million. Together, this will amount to 50% of pre-contingency project direct capex, the company said.

Earlier this month, the company said it had signed an earthworks development with Brazilian company Copa.

The project continues to be on budget, Horizon said.

Inflationary costs continue to be an issue, and Horizon is taking steps to continually optimise its processes to offset inflation.

In December, Horizonte purchased new and unused ferronickel processing equipment from Compania Brasileira de Aluminio.

The acquisition of the equipment led to "significant savings on our planned development costs," Horizonte's chief executive Jeremy Martin said.

The equipment also included key components of a conventional rotary kiln electric furnace plant.

Horizonte projects an initial 28-year mine life, while stage 2 expansion will have a 26-year mine life.

The Araguaia project contains measured resources of 18.2 million tonnes at 1.44% nickel for 261,000 tonnes. Indicated resources are estimated to be 101.2 million tonnes at 1.25% nickel for 1.3 million tonnes.