Nickel prices will need to double before Metallica Minerals resumes work on a mine in Australia suspended because of a bleak outlook for the metal, the companys managing director said on Thursday. "Well wait for firmer and lasting prices above eight dollars a pound, rather than below five dollars a pound," Andrew Gillies said in a telephone interview from Brisbane.
Gillies blamed the sharp drop in nickel prices - currently around $9,575 a tonne ($4.34 a pound) versus a May 2007 peak of $51,650 ($23.42 a pound) - for a board decision to defer feasibility work indefinitely on its 8,000 tonnes-per-year Nornico mine project in Queensland state. A ballooning nickel surplus - more than 100,000 tonnes or one-tenth of annual global consumption sits in London Metal Exchange warehouses - was undermining attempts by suppliers to bring the market into balance, Gillies said.
Metallicas study covers two promising nickel finds called Bell Creek and Minnamoolka, he said. The project hinges on an energy-intensive heap leaching-type technology employed by the now-defunct Ravensthorpe nickel mine, also in Australia. BHP Billiton Ltd/Plc, the worlds biggest mining house, closed Ravensthorpe after spending more than $2 billion on construction and only six months in operation once costs of production exceeded selling prices.
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