PARIS, Feb 21 (Reuters) – French mining and metals company Eramet postponed its flagship nickel mine project in Indonesia on Friday citing depressed prices which it said would find support from the country’s ban on unrefined mineral exports.
Benchmark prices of nickel, mainly used in stainless steel, languished at four-year lows for much of 2013 due to global oversupply, leaving many producers operating at a loss.
Indonesia, the world’s largest exporter of nickel ore, last month went ahead with a ban on shipments of unrefined metals, including the ore, boosting international prices on prospects that the global surplus would be curbed.
“We hope that this ban is going to be kept firmly in place,” chairman and chief executive Patrick Buffet said at a presentation of Eramet’s 2013 results.
“This is the factor that could bring a recovery in the nickel market within a reasonable period.” Uncertainty over policy ahead of parliamentary and presidential elections this year had contributed to Eramet’s decision to delay a final investment decision on the Weda Bay mining project, Buffet said.
Eramet, which had been due to take an investment decision this year after already putting back the deadline, booked a 224 million euro ($307 million) impairment charge for the delay.
Eramet has a majority stake in the project alongside Japan’s Mitsubishi Corp. and Indonesia’s PT Antam.
In addition to low nickel prices, protracted negotiations with the Indonesian government on tax and ownership issues had also held up the project, Buffet said.
The postponement will involve closing an engineering support office in Malaysia at the end of March with about 50 expatriate staff to be redeployed while personnel in Indonesia to be reduced to about 250 from 450, said Bertrand Madelin, head of Eramet’s nickel unit.
Eramet posted a 2013 current operating loss of 45 million euros versus profit of 153 million a year earlier.
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