SYDNEY: China Minmetals Corp said it is conducting a review that could lead to a restart of its Avebury nickel mine in Australia, becoming the second miner in the country to consider reactivating production shut due the global financial crisis.
"While this review is not an indication that operations at Avebury will be recommenced imminently it does demonstrate MMG's commitment to the project and the region," MMG, Minmetals' Australian subsidiary said on Wednesday.
Several Australian nickel mines were shuttered in 2008 when nickel prices dropped below the cost of production, making operations uneconomical.
Prices have since recovered, with the London Metal Exchange three-months contract last indicated at $25,900 a ton, almost three times the recession low of $8,850 in October 2008.
In the first quarter, nickel prices rose 34.9 percent as steel mills appeared to replenish stocks, making nickel one of the top London Metal Exchange performers. Nickel, the fifth most common element after iron, oxygen, silicon and magnesium, is used in stainless steel manufacturing.
"In tandem with this review, MMG will continue to monitor nickel prices as part of its longer term decision around recommencing the operations at Avebury," it said.
The former owner of the Avebury mine, Oz Minerals, along with Mincor Resources, BHP Billiton, Xstrata and Norilsk all idled mines in Australia as the bottom fell out of commodities markets.
Mincor this week said it could be the first to resume operations if a study due for completion next month supports reactivating its Miitel mine.
"All nickel has to do is hang its star on steel production, which is increasing rapidly, creating more need for nickel," Eagle Mining Research analyst Keith Goode said. "Nickel's prospects have improved greatly since the crisis passed."
