Depressed nickel price prompts care and maintenance for First Quantum’s Ravensthorpe mine

VANCOUVER (miningweekly.com) – Starting in September, base metals producer First Quantum Minerals will mothball its nickel-producing Ravensthorpe mine, in Western Australia, on the back of the persistently low nickel price, the company announced on Wednesday.

The Toronto-headquartered company expects that full care and maintenance will be in effect by early October.

First Quantum said the cost to suspend operations and enter care and maintenance is estimated at $10-million, with subsequent annual maintenance of about $5-million.

"This decision is disappointing to us. Ravensthorpe is an excellent operation with an outstanding workforce and a supportive community but the continuing depressed nickel market conditions, over some years, leave us no option.

"Over the next few weeks we will work closely with our employees and key contractors to mitigate the impact and manage carefully the staged shutdown of operations. We will be offering assistance to employees in seeking further employment opportunities,” said chairperson and CEO Philip Pascall in a statement.

The permitting process for the Shoemaker Levy satellite orebody is planned to continue, along with regular review of the market conditions for a potential restart of operations. Restart cost, should favourable conditions prevail, is estimated at $10-million, the company advised.

First Quantum was ramping up throughput at Ravensthorpe as it enters a lower-grade phase, pushing nickel output 19% higher year-on-year to 5 920 t in the second quarter. Nickel C1 cash costs of $4.43/lb were lower by $0.30/lb compared with the same period in 2016, driven by higher nickel production and by-product credits at Ravensthorpe.

The company had previously forecast nickel production of about 25 000 t this year.

Meanwhile, the Enterprise nickel project, in Zambia, designed to produce about 38 000 t of nickel in concentrate a year, with scope to increase to 60 000 t/y when market conditions are considered suitable, remains suspended.

Given the operational and infrastructure synergies with the Sentinel copper mine (located 12 km away), Enterprise is expected to be a low-cost mine. Construction of the process plant was completed in 2016, and some sections of the plant have been incorporated into the Sentinel process circuit to provide additional processing flexibility in the short term.

However, as the nickel price remains depressed, Enterprise continues to be on hold with pre-strip mining activities deferred.

Nickel traded at $10 360.50/t on Tuesday, up 10.85% month-on-month, and the highest since April. Historically, nickel reached an all-time high of $54 050/t in May 2007, and a record low of $3 730.50/t in December 1998.