Protesters burn vehicles, buildings at New Caledonia nickel mine

SYDNEY Mon May 26, 2014 10:26pm EDT

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SYDNEY (Reuters) - Dozens of protesters caused tens of millions of dollars in damage to vehicles, equipment and buildings at Vale's nickel mining site in New Caledonia, as anger boiled over at a chemical spill into a local river.

The $6 billion Vale plant at Goro in southern New Caledonia was closed earlier this month after some 100,000 liters of acid-tainted effluent spilled, killing about 1,000 fish and sparking protests at the mine site.

The Vale plant had been expected to produce about 40,000 metric tons of nickel this year, out of global supply of around 2 million metric tons. But it has been beset by problems in recent years, including several chemical spills and violent protests.

Tensions between the local population and Brazil-based Vale escalated over the weekend with young protesters frustrated at the latest spill by the Brazilian-based giant and a lack of response from indigenous Kanak chiefs, according to local media reports. Television footage showed images of burnt mining vehicles and equipment.

"There was damage at the site, but no damage to the plant. We had burned vehicles, one administration building was damaged, but no damage to the plant itself," Vale spokesman Corey McPhee told Reuters.

Peter Poppinga, an executive director at Vale, told Les Nouvelles Caledoniennes newspaper that damage to the mining site was estimated at at least $20 million to $30 million, including the destruction of perhaps one third of the truck fleet.

"If there is no activity for several months, we will shut the plant, but that's not the case. The closing of the plant is not on the table," Poppinga was quoted as saying.

Earlier this month, New Caledonia's southern provincial government ordered an immediate halt to operations and started legal proceedings under its environmental code after the spill.

The local government, which went through a leadership change last week, has yet to say when Vale can resume production.

"We got to this point because, clearly, part of the local youth, particularly from the southern tribes, reject the perspective of maintaining the plant in activity, even with the reinforcement of safety procedures," Philippe Michel, the newly elected president of New Calonia's Southern Province, told local television on Monday.

Global nickel prices hit a 27-month high earlier this month and are up by about 40 percent this year, driven by a decision by Indonesia to halt exports of raw nickel ores and news of the Goro closure.

"Vale's got lots of issues in the country," said Tom Price, a mining analyst at UBS in Sydney. "Nickel has recovered back to the marginal cost of production. It's inviting for them to continue to invest, but it's been a world of pain for them for quite a few years."

Vale employs high pressure technology and acids to leach nickel from the abundant tropical laterite ores found in New Caledonia.

"There is an inherent risk in Goro's type of operation," said Gavin Mudd, a professor of environmental engineering at Monash University in Melbourne.

"It would certainly be reasonable to expect the Goro facility to remain shut until the public is assured that the problem has been identified," Mudd said.

(Additional reporting by James Regan; Editing by Lincoln Feast and Richard Pullin)

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