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Gas crisis hits output

THE pipeline fire at Varanus Island in June, which cut one-third of the state’s gas supply, is expected to have an impact on nickel, gold, alumina and mineral sands exports in 2008-09. Nickel production was severely hit, with the gas shortage estimated to have reduced refined nickel production by 33 per cent in the September quarter, according to the Australian Bureau of Agricultural and Resource Economics. Nickel production was also reduced by BHP Billiton’s shutdown of its Kalgoorlie nickel smelter for rebuilding. This is expected to substantially decrease volumes of refined production at Kwinana, which uses the intermediate nickel produced at Kalgoorlie as an input. Minara Resources’ Murrin Murrin project operated at two-thirds capacity for most of June before it secured gas from alternative supplies. Newcrest Mining, whose Telfer gold operation was affected by the shortage, said the crisis cost the company $9.3 million in the 2008 financial year, with indicators for FY2009 showing a cost of $26 million. It was estimated the overall impact of the gas supply interruption would reduce Telfer’s production by up to 25,000 ounces of gold, plus associated copper. Iluka’s mineral sands operations was one of the state’s hardest hit facilities, with the gas supply disruption costing the company $10.8 million while production was halted. Iluka halted mining operations at its South West and Mid West operations for most of June. Production at Alcoa’s WA alumina refineries is estimated to have been below full capacity in the September quarter because of disruptions to gas supplies. BHP Billiton doesn’t expect production at its Worsley refinery to have been affected by the disruption, as gas was diverted from the Kalgoorlie nickel smelter

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