The CSIRO and Direct Nickel (DNi) have announced the  successful development of an environmentally friendly processing method that uses and recycles nitric acid and could unlock 70 per cent of the world’s nickel supply.

Full scale testing of the method has commenced at CSIRO’s pilot plant in Perth.

Russell Debney, Managing Director and CEO of Direct Nickel, says with the increasing demand for nickel, which is a key component of stainless steel, the future of the world's supply lies in laterites.

"Many of these reserves remain untapped due to the difficulty and expense of extracting the nickel. Technical difficulties and the high costs of existing processing methods are massive and continuing roadblocks," Mr Debney said.

"There is a desperate need for a solution to the laterite processing problem that is threatening world supply. Other forms of nickel reserves, such as sulphides, are running out and there are few new discoveries."

Traditional processing techniques use large quantities of sulphuric acid at high temperatures and pressures, resulting in expensive treatment and disposal of chemical waste.

Dr Dave Robinson, leader of mineral processing research at CSIRO, says the new process uses nitric acid, over 95 per cent of which can be recycled and reused making it more environmentally friendly and lower in cost.

"This process has the potential to revolutionise the global industry. Australia has an abundance of nickel laterites, so it would provide a significant boost to our economy," Dr Robinson said.

"We have been working in partnership with Direct Nickel for over three years and the pilot plant is an important step in understanding the process. It will provide the engineering data to validate our technical and economic predictions."