02/10/2007 - 22:00

Nickel production drops, prices soar

02/10/2007 - 22:00

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Western Australia’s nickel exporters, led by BHP Billiton and Minara Resources, had a bumper year in 2006-07 despite lower production, with record nickel prices achieved.

Western Australia’s nickel exporters, led by BHP Billiton and Minara Resources, had a bumper year in 2006-07 despite lower production, with record nickel prices achieved.

The nickel price averaged more than $US46, 600 per tonne in the first six months of 2007, up 90 per cent on the average price in 2006, reflecting global supply constraints and increased demand, particularly from China, according to the Australian Bureau of Agricultural and Resource Economics.

Prices have eased since then, with the commodity trading between $US26,000 and $US30,000/t nickel availability increases.

According to the Department of Industry and Resources, WA nickel production fell 5 per cent in 2006-07, while national production rose 3 per cent to 191,000t. The value of WA nickel exports more than doubled to $1.3 billion.

The state’s biggest nickel producer, BHP Billiton Nickel West, earned a record $A4.3 billion in revenue after achieving record annual nickel production of 103,000t of contained nickel in matte. In addition to exporting its own production, Nickel West also processes supply from third party mines at its Kambalda concentrator facility.

The company has off-take agreements with fellow WA nickel miners Mincor Resources NL, Independence Group NL, and Jubilee Mines NL, as well as Sally Malay, which exports 60 per cent of product and sells the remaining 40 per cent to Nickel West. Sally Malay lifted its export revenue in 2006-07 by 125 per cent to $181.3 million, lifting production to 11,920t.

Minara Resources Ltd more than doubled its export revenue to $751.9 million.

Western Areas NL commenced production at its 13,000t/year Forrestania Nickel project this year, and is currently toll treating its ore at Norilsk’s Lake Johnston concentrate plant.

Late last month, Western Areas announced its decision to proceed with the construction of its own nickel concentrate plant.

Abare forecasts mine production to increase in 2007-08 as operations commence at BHP Billiton’s 50,000t/year Ravensthorpe mine and production at Western Areas’ Forrestania project increases toward capacity. But this will be offset by decreased production at Minara’s Murrin Murrin operations as it undergoes a scheduled shutdown in late 2007.

Major exporter Norilsk Nickel could not provide any data for our report.

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