First Quantum shutters loss-making Ravensthorpe nickel mine in WA, again.
Fickle nickel has struck again as First Quantum completely shutters its Ravensthorpe mine amid news Sumitomo and Mitsubishi are backing a new WA nickel project.
Another WA nickel producer has called it quits, with First Quantum Minerals confirming on Monday it will wind down the processing plant at its Ravensthorpe nickel mine in the state’s South West.
First Quantum ceased mining at Ravensthorpe in January as the nickel price fell below $US16,000 a tonne, but left part of its processing plant running using stockpiled ore to save costs.
Nickel has since staged a partial recovery, trading at just over $US19,000 a tonne last week, but First Quantum said the company was still unable to run Ravensthorpe at a profit.
“Despite Ravensthorpe’s best efforts to maintain operations by transitioning to a new operating strategy that involved ceasing mining activities, processing stockpiles and altering its approach to production, the site is incurring significant current and projected losses,” the company said.
About 330 jobs will go at First Quantum as it is placed in care and maintenance, plus another 200 contractors, with the company likely to retain only a small workforce to maintain the plant.
The latest closure of Ravensthorpe is its third in about fifteen years, and comes as BHP is considering the future of its own Nickel West operations, where about 3000 jobs are at risk due to the nickel price carnage. BHP said in April it expects to make a decision about the Nickel West future by the time it delivers its annual financial results in August.
The processing plant is designed to treat difficult laterite ore through a high pressure acid leach system. It was originally built by BHP, but cost overruns and delays meant it first opened as the nickel price plunged in 2008.
Ravensthorpe cost about $US2.2bn at the time, but BHP mothballed the mine and processing plant just eight months after its opening, at a cost of about 1800 jobs.
Canada’s First Quantum Minerals bought the mine for $US340m in 2010 and Ravesnsthorpe returned to production the next year. A structural failure of the mine’s acid leach tanks temporarily forced its closure in late 2014. Low nickel prices led to Ravensthorpe again being mothballed in late 2017.
It reopened again in 2020 amid signs of booming demand for nickel for batteries, and in 2021 Korea’s POSCO paid $US240m for a 30 per cent stake in the operation.
But Ravensthorpe has always been vulnerable to wild swings in the nickel price, and First Quantum booked a $US854m impairment against the asset in its 2023 annual accounts. The mine booked a $US124m gross loss in 2023.
But, despite the doom and gloom surrounding much of the Australian nickel sector, signs of life still remain with Japanese majors Mitsubishi and Sumitomo committing $98.5m for studies on the development of a separate nickel project in WA.
ASX-listed Ardrea Resources said on Monday the two Japanese mining and trading houses had agreed to commit the cash to back a definitive feasibility study on the company’s nickel project, which sits about 70km north of Kalgoorlie.
The company said Mitsubishi and Sumitomo would also help assist Ardrea find debt funding for the project, which could ultimately produce about 30,000 tonnes of nickel and 2000 tonnes of cobalt a year over 40 years, for a construction cost of about $3bn.