(Recasts with statement from New Caledonian provincial government)
May 9 (Reuters) – New Caledonia’s southern provincial government said on Friday it was starting legal proceedings against Vale over environmental damaged caused by an effluent spill at the miner’s nickel operations.
Vale said in an earlier statement that the spill contained some acid, but that subsequent test results carried out on a nearby river and the sea showed conditions appeared to have returned to normal.
The mining giant said it had suspended 80 percent of its nickel production in New Caledonia and planned a complete shutdown later on Friday, helping to send nickel prices up nearly 6 percent. A spokesman for Vale could not immediately be reached for further comment.
The southern province of New Caledonia was starting legal proceedings under its environmental code after the spill had killed about 1,000 fish, and swimming and fishing had been suspended in the area, it said in a statement. The local government did not say when it might allow Vale to resume operations, but said pollution had been contained to a river.
The stoppage had affected 3,500 workers, Vale said, of which 1,300 are employees and the rest subcontractors.
News of the shutdown added more heat to London nickel prices which have soared by more than 47 percent this year on supply concerns after Indonesia banned ore exports in January. Three-month nickel on the London Metal Exchange (CMNI3) surged 5.7 percent to a 26-month peak of $20,500 a tonne.
Nickel buyers in China and Japan are scrambling to secure supplies as soaring prices and a fear of shortages boosts demand for both refined metal and long-term ore contracts. (Reporting by Cecile Lefort and Melanie Burton
For the original version of this article, click here: http://in.reuters.com/article/2014/05/09/vale-sa-newcaledonia-shutdown-idINL3N0NV2D320140509