Benzinga - by Stjepan Kalinic, Benzinga Staff Writer.
Canadian miner First Quantum Minerals (TSX:FM) has temporarily halted mining operations at its Ravensthorpe nickel mine in Western Australia.
The decision follows the forced closure of one of the company's key assets, a copper mine in Panama.
The Ravensthorpe nickel operation will witness a 30% reduction in its workforce — approximately 125 people. First Quantum stated that nickel sales would continue from existing stockpiles.
Mining will resume at the Hale Bopp and Halleys ore bodies at Ravensthorpe once the stockpiles are depleted. That could take 18 to 24 months.
The mine’s recent financial performance has been under strain, with losses amounting to $66 million in the nine months leading up to September 30. Coupled with the ongoing decline in nickel prices, First Quantum opted for this temporary suspension, considering the Ravensthorpe mine’s relatively high operational costs.
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Ravensthorpe had previously faced a suspension in operations from 2017 to 2019. Known for its difficult laterite geology, Ravensthorpe involves a more costly processing method called high-pressure acid leach (HPAL).
In 2021, First Quantum sold a 30% stake in the Ravensthorpe mine for $240 million to South Korea’s POSCO (KRX: 005490), retaining a 70% stake and continuing as the operator.
Last year, the mine produced approximately 30,000 tons of nickel in mixed hydroxide precipitate and nearly 1,000 tons of cobalt.
However, neither of these metals fared well, with oversupply causing the post-2020 bubble to deflate and prices to return to levels not seen since early 2021.
South East Asia Iron and Steel Institute reported that BMI research expects oversupply to continue, owing to a growing production in Indonesia.
In 2023, nickel was the worst-performing metal on the London Metals Exchange and the Shanghai Futures Exchange, losing over 40% of its value.
First Quantum’s move to halt operations at Ravensthorpe aligns with its broader strategy to navigate challenges in the mining industry, including the suspension of its dividend, reduction or rephasing of capital expenditure, and exploring the sale of smaller mines and interests in larger mining assets. The company aims to strengthen its financial position while maintaining its commitment to operations in Zambia.
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