VANCOUVER (Reuters) - First Quantum Minerals Ltd said on Wednesday it plans to suspend operations at its Ravensthorpe nickel mine in Western Australia next month due to persistently weak nickel prices, affecting around 450 employees and contractors.
The mine will be placed on care and maintenance, which is expected to take effect in early October, it said.
“This decision is disappointing to us,” First Quantum Chairman and Chief Executive Philip Pascall said in a statement, blaming “continuing depressed nickel market conditions, over some years.”
The suspension comes despite moves by some miners to combat weak traditional markets for nickel in steelmaking by moving to capture demand from the burgeoning electric vehicle battery market.
BHP on Wednesday unveiled plans to target the battery market for its once-ailing Nickel West division, based 500 kms (310 miles) from the Ravensthorpe mine.
Glencore Plc’s nearby Murrin Murrin nickel operation “remains business as usual”, as it too sees opportunities in electric batteries, a company spokesman said.
Vancouver-based First Quantum said the latest shutdown at the mine, located 500 kms southeast of Perth, would cost an estimated $10 million. Subsequent annual maintenance is expected to cost around $5 million.
Ravensthorpe produced 23,624 tonnes of nickel in 2016 against a global market of around 1.8 million tonnes.
“Ravensthorpe makes one of the perfect nickel products to go into the battery space,” said UBS commodities analyst Daniel Morgan. “The battery companies run the risk that all these nickel mines they are going to need are going to start shutting because they are not paying up enough for the nickel.”
Shares in First Quantum, which primarily produces copper, fell on the news, ending 4.6 percent lower at C$13.41 on the Toronto Stock Exchange.
Nickel prices are off by nearly two-thirds since early 2011, weighed down by a supply glut. Ravensthorpe resumed operations that year after it had been shut down by its previous owner BHP Billiton Ltd in 2009, when nickel prices also dropped.
First Quantum bought Ravensthorpe from BHP in 2010 for $340 million.
Of the 450 people working at the Ravensthorpe site, roughly half are direct employees and the rest contractors, company spokeswoman Sharon Loung said in an email.
The permitting process for the Shoemaker Levy orebody at Ravensthorpe would carry on along with regular reviews of market conditions for a potential restart of the mine.
Reporting by Nicole Mordant in Vancouver; Additioan reporting by Melanie Burton in MELBOURNE and James Regan in SYDNEY; Editing by G Crosse and Richard Pullin