Minara Nickel Output Drops 15% on Pipeline Failure (Update 1)

LONDON, July 13 -- Minara Resources Ltd., Australia's second-largest nickel producer, reported second-quarter production dropped 15 percent after a pipeline failure at the Murrin Murrin plant in Western Australia

Output of the stainless steel ingredient was 6,680 metric tons in the three months to June 30, compared with 7,842 tonsa year earlier, Perth-based Minara said today in statement.

First-half costs gained 15 percent because of the pipeline failure, which has been repaired, the company said. Nickel prices in London averaged $22,382 a ton in the quarter, compared with $12,992 a year earlier.

"The negative impact of the pipeline incident on production has been reflected in an increase to our unit cost of production," Chief Executive Officer Peter Johnston said in the the statement. "We anticipate the nickel price to remain volatile in the short to medium term."

Minara rose 1.4 percent to 73 cents at 10:19 a.m. Sydney time on the Australian stock exchange.

Glencore International AG, the world's largest commodity trader, owns 40 percent of Murrin Murrin and 70.63 percent of Minara.

Forecast full-year production remains unchanged at the lower end of the 30,000 ton to 34,000 ton range, the company said. Cobalt output for the quarter was 459 tons from 634 tons a year earlier, it said.