UPDATE: Norilsk To Suspend Black Swan, Lake Johnston Mines
February 16 2009 - 2:49AM
Dow Jones News
Russia's Norilsk Nickel (GMKN.RS) said Monday it will suspend
the remaining two mines at its Australian nickel operations because
of low prices for the metal rendering the operations
unsustainable.
Norilsk will suspend the Black Swan and Lake Johnston mines
effective immediately, cutting staff by around 330 from March 1 to
leave only a small number of employees to manage the sites under
care and maintenance.
Last year, the two mines together produced around 25,000 metric
tons of nickel in concentrate.
Norilsk owns a number of mines in Western Australia with
production just under 30,000 tons annually. Norilsk bought
U.S.-based OM Group's nickel business for US$408 million in 2007 as
well as taking over Australia's third-largest nickel miner LionOre
Mining International Ltd. for US$6.36 billion, when nickel prices
were at record highs.
In November, the global number one nickel miner shut its Cawse
and Waterloo operations, also because of the ongoing slump in metal
prices.
Australian nickel miner Western Areas N.L. (WSA.AU) also Monday
said it had restructured its ore offtake deal with Norilsk, instead
relying on its own concentrator that is in the ramp-up phase.
Nickel is primarily used to make stainless steel, with global
steel prices falling by about 40% during the course of last
year.
After hitting record highs in excess of US$50,000/ton - prices
in mid-2007 - nickel plunged to a five-year low of US$8,850/ton in
October last year, forcing many operations to shut down.
Earlier this year, BHP Billiton Ltd. (BHP) announced it would
shut its 50,000-ton Ravensthorpe nickel laterite operation, taking
an impairment charge of US$3.36 billion from the project that it
only commissioned last year.
-By Elisabeth Behrmann, Dow Jones Newswires; 61-2-8272-4689
elisabeth.behrmann@dowjones.com
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