June 2, 2014 / 1:36 AM / 4 years ago

UPDATE 1-New Caledonia allows conditional restart of Vale nickel mine

* Vale nickel plant at Goro closed early May after acid leak

* Spill sparked violent protests causing more than $20 mln in damage

* Goro nickel plant has troubled history with spills, protests

* World nickel prices up strongly this year on supply concerns (Adds quotes, detail on statement)

By Cecile Lefort

SYDNEY, June 2 (Reuters) - New Caledonia authorities said on Monday they have authorised a conditional restart of Brazil-based Vale’s nickel operations, which were suspended more than three weeks ago after acid-tainted effluent spilled into a river.

The leak sparked violent riots by young Melanesians that caused more than $20 million in damage to buildings, equipment and vehicles and left three policemen with gunshot wounds.

Police remained on alert as protesters maintained a presence near the plant.

“The situation is calm and some (protesters) are still camping near the plant,” said a local government spokeswoman.

Some protesters, who have been frustrated by the lack of response from indigenous Kanak chiefs to the chemical spill, are seeking the permanent closure of the mine - something Vale said last week was not on the table.

Vale could not immediately be reached for comment on when production would restart.

The Southern Province of the French-administered Pacific island noted it was Vale’s sixth major incident at the $6 billion Goro site and set hightened safety standards as a condition of the mine operations resuming.

Conditions also included a full audit of safety management and the establishment of a multi-party surveillance committee.

Vale, the world’s second-largest nickel miner, employs high pressure technology and acids to leach nickel from abundant tropical laterite ores.

“Every time (there is a problem with Vale), it’s the same response by the Province... Yet, it happens again,” said Louis Kotra Uregei, president of New Caledonia’s Labour Party.

Uregei is asking for a halt of the acid-based nickel processing.

“We need to focus on ore mining and let the processing get done somewhere else,” he said.

Nickel mining is a key industry in New Caledonia, which holds as much as a quarter of the world’s known reserves. Vale’s plant is the second-largest employer in the southern province, with some 3,500 employees and contractors.

LME nickel prices finished May up 5 pct at $19,250, having soared 40 percent so far this year, largely on supply concerns from major producer Indonesia. (Additional reporting by Melanie Burton; Editing by Lincoln Feast and Richard Pullin)

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