25/11/2008 - 10:58

Norilsk shuts down two WA mines

25/11/2008 - 10:58

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Falling commodity prices and higher operating costs have forced Russian miner Norilsk Nickel to halt production at two of its Western Australian mines.

Norilsk shuts down two WA mines

Falling commodity prices and higher operating costs have forced Russian miner Norilsk Nickel to halt production at two of its Western Australian mines.

In a statement, the miner said current market conditions had forced it to place its Waterloo and Silver Swan underground mines, which collectively produced about 10,000 tonnes of nickel over the past year, into care and maintenance.

"These mines have been operating under increasing cost pressures for some time and a significant increase in the cost of inputs coupled with a steep decline in nickel prices lead to the decision to curtail operations," Norilsk said.

The price of nickel has plummeted from its highs of around $US51,000 per tonne reached last year to its last trading price on the London Metal Exchange of $US10,555/t.

A company spokesperson told WA Business News about 150 Norilsk staff were employed at both mines, with the company currently considering a range of options for the employees.

He said it was possible the employees could be redeployed to the company's other nickel operations in WA, Black Swan and Lake Johnston.

Production at Waterloo and Silver Swan are expected to come to a halt by early January, with the spokesperson pointing out that both mines were close to the end of its mining lives.

The closure of the two mines follows the suspension of production at Norilsk's Cawse nickel mine thanks to the Varanus Island gas explosion in June this year.

It also follows comments made by the company last week that net profits could fall 75 per cent next year.

Norilsk's news comes as Consolidated Minerals said it planned to place its Kambalda nickel operations on care and maintenance from mid-December.

Around with 180 staff and contractors are expected to be affected.

 

Norilsk's announcement is pasted below:

 

Moscow, November 24, 2008 - As part of an overall reassessment of its international nickel operations and the current market dynamics, Norilsk Nickel Australia, a subsidiary of OJSC MMC Norilsk Nickel (MMC "Norilsk Nickel" or "the Company"), has decided to put its Waterloo and Silver Swan underground operations in Western Australia's eastern goldfields region into care and maintenance.

These mines have been operating under increasing cost pressures for some time and a significant increase in the cost of inputs coupled with a steep decline in nickel prices lead to the decision to curtail operations.

Waterloo, which is located 40 kilometres south of Leinster, has been underground mining since 2006 with ore being trucked and processed at BHP Billiton's Leinster Nickel Operation.

Silver Swan is the underground operation at Norilsk's Black Swan nickel project is located 53 kilometres north east of Kalgoorlie and has been underground mining since 1996.

Collectively, these two mines produced approximately 10,000 tons of nickel contained in product over the last 12 months. This decision will not affect the Company's open cut operations at Black Swan nor the Lake Johnston operation, which continue to perform in line with expectations.

The Company is considering a range of options for its employees at these operations.

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