Minmetals said that 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.

Minmetals' Australian subsidiary MMG said that "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."

It may be noted that several Australian nickel mines were shuttered in 2008 when the nickel prices dropped below the cost of production, making operations uneconomical.

But now, prices have since recovered, with the London Metal Exchange three months contract MNI3 last indicated at USD 25,900 a tonne, almost three times the recession low of USD 8,850 in October 2008.

MMG said that "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."

Ms Keith Goode analyst at Eagle Mining Research said that "All nickel have to do is hang its star on steel production, which is increasing rapidly, creating more need for nickel. Nickel's prospects have improved greatly since the crisis passed."

The Avebury mine was slated to yield 8,500 tonnes of nickel a year, in a world market of around 1.3 million tonnes, all going to Chinese refiner Jinchuan Group under an exclusive supply pact before being shut. The pact with Jinchuan still stands and will be reactivated when the mine reopens.

(Sourced from www.reuters.com)



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