Singapore 27/01/2016 - Mincor Resources and Panoramic Resources will close their flagship nickel mines due to falling nickel prices, the Australian nickel miners said separately on Wednesday.
Mincor said preparations are underway to suspend mining at its Miitel and Mariners operations in the Kambalda nickel district in Western Australia from the end of January, with operations to wind down completely during the January-March quarter.
The mines will be prepared for a period of suspension until nickel price recovers, the company said in its quarterly report.
The future of Mariners is uncertain at this point as by the end of January, accessible ore at Mariners will have been depleted, with only an undeveloped surface remaining. At Miitel, substantial developed ore remains easily accessible, but this material is best left in place until prices recover, as its early availability will assist the restart of full-scale mining in due course, said Mincor.
In the meantime, the company will continue with Definitive Feasibility Studies on its Durkin North and Burnett projects, with a view to having these ready for rapid development once conditions improve.
Over the past 12 months, Mincor has responded to sharply deteriorating nickel price by scaling down its operations, this including putting its unified Miitel/Mariners operation onto a single shift. The scale down had led to 40 redundancies at the company.
Mincor produced 27,588 tonnes at 2.68 percent nickel (739 tonnes contained nickel) during the December quarter, taking July-December output to 78,835 tonnes at 2.9 percent nickel (2,286 tonnes contained nickel).
All of Mincor’s ore is toll-treated at BHP Billiton’s Nickel West concentrator in Kambalda, and the resulting concentrate sold to BHP under a long-term offtake agreement.
Meanwhile, Panoramic said it will put its Savannah nickel sulphide mine in the East Kimberley regions of Western Australia onto care and maintenance over the coming months and only restarting operations when nickel price returns to a sustainable level.
Full care and maintenance will be achieved during April and the last shipment of concentrate occurring that month as well.
The company attributed the move to “the continuing decline in the US$ nickel price to levels not anticipated by the company or the market, and the uncertain outlook for the nickel price over the foreseeable future.”
The decision will result in a significant percentage of the workforce being made redundant over the course of the coming months with around 50 employees already made redundant on Wednesday, said Panoramic.
Panoramic has a concentrate sales agreement with China’s Jinchuan Group which terminates once the decision is made to suspend operations at Savannah indefinitely, the Australian miner said.
Panoramic said it will now focus on completing the feasibility study on its Savannah North project and if it decides to develop the project, it would most likely be in conjunction with the restart of mining and processing of the Savannah orebody when nickel prices are more favourable, it added.
Savannah had produced 2,600 tonnes of nickel contained in concentrate in October-December, up from 2,427 tonnes in July-September
The company had put its Lanfranchi nickel mine near Kambalda on care and maintenance in November last year.
Panoramic had produced 19,300 tonnes of contained nickel in its fiscal year ended June 2015.
Falling nickel prices is taking a toll on nickel producers. Earlier this month, Brazil’s Votorantim has announced plans to suspend operations at its Niquelandia and Sao Miguel Paulista operations from February 1.
Australia’s Queensland Nickel also entered voluntary administration and while production has not yet been affected, analysts said the possibility of a short-term closure exists.
The London Metal Exchange three-month nickel price has fallen by around 40 percent since May this year. It was last at $8,725 per tonne on Wednesday, up $55 from Tuesday’s close.