A 30 percent slump in nickel prices this year has piled pressure on small Australian miners, forcing some of them to delay new projects and expansions as they wait for the market to recover.
Poseidon Nickel became the latest miner to succumb when it said on Thursday it would put its Lake Johnston mine on care and maintenance – a sign casualties were mounting amid near record metal stockpiles and weak demand from key consumer China.
Exchange stockpiles of the metal used to make stainless steel nearly doubled in the 18 months to June, pressuring benchmark prices to six-year lows of $10,430 per tonne last week, down 32 percent since the start 2015.
“When you’ve got 70 percent of an industry at break-even or loss making you’re going to see people defer projects and shut down,” said UBS analyst Daniel Morgan in Sydney.
“I think you’ll see a steady stream of these type of announcements for the next several months,” he added.
Panoramic Resources blamed the low metal prices for its decision this week to curtail development of its Jury-Metcalfe lode, saying “significantly higher” prices were needed for it to ramp up output as planned in December.
It also warned of possible job losses.
Mincor has said it could start cutting output by November unless nickel prices improved.
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