BHP Billiton Ltd will lose around 28,000 tonnes in nickel sales after deciding to bring forward major maintenance plans at its Kalgoorlie nickel smelter, resulting in a four-month shutdown of two nickel plants.
BHP Billiton Ltd will lose around 28,000 tonnes in nickel sales after deciding to bring forward major maintenance plans at its Kalgoorlie nickel smelter, resulting in a four-month shutdown of two nickel plants.
The mining major said a major rebuild of the furnace at the smelter had been on the cards over the past two years, with plans to for the rebuild to take place later in fiscal 2009.
A BHP spokesperson said no major incident at the smelter had forced the mining major to bring forward its rebuild plans, however an assessment of the furnace had determined the rebuild was needed immediately.
She added that the furnace rebuild was brought forward as a result of the deterioration, rather than the state's gas crisis. However given the current gas crisis engulfing the state, gas from the smelter will be reallocated to BHP's Worsley alumina refinery.
BHP has so far not quantified how much the gas crisis is impacting Worsley, only saying that gas allocation to the operation had been reduced as a result of the pipeline rupture at Apache Energy's Varanus Island gas facility last week.
The rebuild is expected to last around four months and will also affect the Kwinana nickel refinery which will also be shut down over the duration of the rebuild.
The Kalgoorlie nickel smelter produces around 100,000 tonnes of nickel-in-matte per annum that is both the feedstock for the Kwinana refinery and exported to international customers.
The spokesperson said no jobs will be lost as a result of the shut-down and around 200 to 500 additional contractors will be needed to work on the rebuild.
BHP estimates the impact on nickel sales over the current financial year will be 3000t, plus an additional 25,000t over fiscal 2009.
The company said its other Nickel West operations will continue concentrate production.
"Subject to Nickel West obtaining the necessary permissions to store and export concentrate, concentrate production will continue unabated," the spokesperson said in an email.
Nickel produced at the Kwinana refinery originates from nickel sulphide ores mined at other Nickel West operations at Mt Keith, Leinster and Kambalda. Ore from these operations are first processed at the Kalgoorlie nickel smelter before being transported to Kwinana.
Meanwhile, London Metal Exchange nickel prices surged 6 percent after BHP Billiton's announcement. The nickel price hit $24,585 a tonne in electronic trading, its highest since May 22. By 0554 GMT, nickel for delivery in three months was quoted at $24,325, up from $23,200 on Wednesday.
A copy of BHP's statement is pasted below:
BHP BILLITON TO IMMEDIATELY COMMENCE A FURNACE REBUILD AT KALGOORLIE NICKEL SMELTER
BHP Billiton today announced that, as a result of a deterioration of the Kalgoorlie Nickel Smelter furnace in Western Australia, it would bring forward the furnace rebuild.
Planning and preparation for a major rebuild of the furnace has been in progress for the past two years. The rebuild was planned to occur later in the next financial year, however an assessment of the furnace condition has determined the rebuild must take place now to ensure the ongoing safety of the workplace.
The duration of the rebuild is estimated to be around four months.
The Kalgoorlie Nickel Smelter normally produces around 100,000 tonnes of nickel-in-matte per annum that is both the feedstock for the Kwinana Nickel Refinery and exported to international customers. The estimated impact on sales in the 2009 financial year is expected to be around 25,000 tonnes of contained nickel units, plus 3,000 tonnes of contained nickel units in the 2008 financial year.
As a result of the furnace rebuild the Kwinana Nickel Refinery will be forced to shutdown for the duration of the rebuild. The shutdown will commence immediately. BHP Billiton's Nickel West operations are endeavouring to continue concentrate production.
As a consequence of the furnace rebuild, BHP Billiton is reallocating gas to the Worsley Alumina Refinery.
