Mumbai: After the sharp decline in early 2008, nickel futures are set for an upward move in the short term.
The recent explosion at Apache Energy’s plant on Varanus Island in Western Australia on June 3 is expected to hit gas supply to mining companies thus hampering production.
Western Australia’s biggest source of gas supply was cut off after two pipelines feeding offshore gas ruptured, causing an explosion at the plant and the total evacuation of staff.
Smelter Furnace
BHP Billiton, the world’s largest miner, has reportedly closed a nickel factory in Western Australia for four months, while it rebuilds its smelter furnace. The company said it has to renovate the furnace at Kalgoorlie nickel smelter, as it has become unsafe for use. The Kalgoorlie smelter has an annual production capacity of about one-lakh tonne of nickel-in-matte, which is fed into the Kwinana refinery and exported to customers.
The shutdown will halt production at Kwinana refinery and reduce global supply by two per cent. Analysts estimate that the shutdown of Kwinana would cut nickel sales by 25,000 tonnes in its next financial year to June 2009 and by 3,000 tonnes for the current fiscal year ending June 2008. The company recorded a sales turnover of 1.01-lakh tonnes last financial year.
Minara Resources, Australia’s second largest nickel miner, has also cut production.
A day after the blast, Apache invoked a force majeure clause, absolving its responsibility to meet supply contracts, leaving users looking for other gas supplies as well as diesel fuel and electricity.
More than 40 companies have reported reduced production, as a result of the gas shortage, while many resource companies have made the costly switch to diesel power. Western Australia is home to 1,030 operating mine sites, producing over 50 different minerals and supplying about a third of the world’s iron ore, 20 per cent of the gold and tens of thousands of tonnes of copper, nickel, zinc, lead and other industrial staples.
Production of ammonium nitrate and cyanide in the State had been completely halted due to the cut in gas supply. Both the materials are needed by miners of gold and minerals sands, such as zircon.
Nickle prices were down by about 10 per cent till May 2008, due to poor demand from stainless-steel manufacturers, which consumes two-third of global nickel production. Prices on MCX have been on the upswing since June 3. It has shot up 10 per cent to Rs 1,046 per kg on Saturday.
The recent explosion at Apache Energy’s plant on Varanus Island in Western Australia on June 3 is expected to hit gas supply to mining companies thus hampering production.
Western Australia’s biggest source of gas supply was cut off after two pipelines feeding offshore gas ruptured, causing an explosion at the plant and the total evacuation of staff.
Smelter Furnace
BHP Billiton, the world’s largest miner, has reportedly closed a nickel factory in Western Australia for four months, while it rebuilds its smelter furnace. The company said it has to renovate the furnace at Kalgoorlie nickel smelter, as it has become unsafe for use. The Kalgoorlie smelter has an annual production capacity of about one-lakh tonne of nickel-in-matte, which is fed into the Kwinana refinery and exported to customers.
The shutdown will halt production at Kwinana refinery and reduce global supply by two per cent. Analysts estimate that the shutdown of Kwinana would cut nickel sales by 25,000 tonnes in its next financial year to June 2009 and by 3,000 tonnes for the current fiscal year ending June 2008. The company recorded a sales turnover of 1.01-lakh tonnes last financial year.
Minara Resources, Australia’s second largest nickel miner, has also cut production.
A day after the blast, Apache invoked a force majeure clause, absolving its responsibility to meet supply contracts, leaving users looking for other gas supplies as well as diesel fuel and electricity.
More than 40 companies have reported reduced production, as a result of the gas shortage, while many resource companies have made the costly switch to diesel power. Western Australia is home to 1,030 operating mine sites, producing over 50 different minerals and supplying about a third of the world’s iron ore, 20 per cent of the gold and tens of thousands of tonnes of copper, nickel, zinc, lead and other industrial staples.
Production of ammonium nitrate and cyanide in the State had been completely halted due to the cut in gas supply. Both the materials are needed by miners of gold and minerals sands, such as zircon.
Nickle prices were down by about 10 per cent till May 2008, due to poor demand from stainless-steel manufacturers, which consumes two-third of global nickel production. Prices on MCX have been on the upswing since June 3. It has shot up 10 per cent to Rs 1,046 per kg on Saturday.
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