16/02/2009 - 15:04

Norilsk to close all WA mines

16/02/2009 - 15:04

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Russian mining giant Norilsk Nickel is planning to close all of its mining and exploration operations in Western Australia, resulting in the loss of about 330 jobs.

Norilsk to close all WA mines

Russian mining giant Norilsk Nickel is planning to close all of its mining and exploration operations in Western Australia, resulting in the loss of about 330 jobs.

Norilsk announced today the closure of Black Swan and Lake Johnston operations, three months after the company closed its Waterloo and Silver Swan mines and eight months after its Bulong operation was suspended.

It adds to a long list of nickel and base metals miners that have scaled back their operations or put mines on care and maintenance.

BHP Billiton's Ravensthorpe nickel project and Consolidated Minerals' Kambalda nickel operations are other notable examples of mines being shut down.

The closures come four years after Norilsk bought into Australia through its acquisition of Canadian company LionOre Mining International.

The pressure on Norilsk was highlighted by ratings agency Standard & Poor's which announced this week that it has revised its outlook on OJSC MMC Norilsk Nickel (Norilsk) to negative from stable.

The 'BBB-' long-term corporate credit rating and 'ruAA+' Russia national scale rating were affirmed.

"The outlook revision reflects our view that the sharp downturn in the global metals and mining industry, notably very depressed nickel prices, will substantially affect Norilsk's profits, cash flows, and credit metrics," the ratings agency said.

"Although we have always factored cyclicality of the global mining industry into the rating on Norilsk, the current downturn exceeds historical precedents.

"Under our price assumptions, Norilsk's EBITDA could fall to $1.5 billion in 2009-2010, representing an approximate 70% drop from our estimate of 2008 EBITDA."

 

A Norilsk announcement is pasted below:

Moscow, February 16, 2009 - Norilsk Nickel International, a subsidiary of OJSC MMC Norilsk Nickel, announces that it will suspend its Black Swan and Lake Johnston nickel operations (Western Australia), placing them under care and maintenance effective immediately.

This decision was taken on the grounds of a structural review and the Company's resolution to place the Cawse and Waterloo projects under care and maintenance in November 2008.
Today's announcement is largely the result of the prevailing economic climate and its impact on the nickel price.

These Western Australian assets are located in prime nickel producing regions and have the potential for further exploration; however market and other conditions have left the Australian business unsustainable given current metal prices.

In 2008, Black Swan and Lake Johnston nickel operations produced ca. 25,000 tonnes of nickel in concentrate.

The total workforce at these operations will be reduced by approximately 330 employees by March 2009. A small number of staff will be retained to manage the sites under care and maintenance.

The company is committed to providing full entitlements to those employees whose roles are now redundant and where possible, will assist in identifying alternative employment opportunities.

ABOUT MMC NORILSK NICKEL:

MMC Norilsk Nickel, a company incorporated under the laws of the Russian Federation, is the largest diversified mining and metals company in Russia, the world's largest producer of nickel and palladium and one of the world's largest producers of platinum, rhodium, copper and cobalt. In addition to this, MMC Norilsk Nickel produces a large number of other by-products, including gold, silver, tellurium, selenium, iridium and ruthenium.

The key production units of the Company's group in Russia are the Polar Division and OJSC Kola Mining and Metallurgical Company. MMC Norilsk Nickel international assets include operations in Finland, Australia, Botswana and South Africa. MMC Norilsk Nickel is the majority shareholder in Stillwater Mining Company, the largest producer of platinum group metals in North America, whose shares are traded on the New York Stock Exchange.

 

 

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