Metals News
Ample Nickel Stocks Soften Impact of Kwinana Refinery Interruption
industry news
Dec 22,2010

Dec. 22 -- An interruption to nickel production at Australia's Kwinana nickel refinery was having little impact on world prices for the metal, with ample supplies to cover any short-term needs, metals traders said on Monday.

BHP Billiton said on Friday that a shortage of nitrogen gas has interrupted production at its 65,000-tonnes-per-year refinery in Kwinana, Western Australia, ranked as the world's No. 3 producer of the metal. [ID:LDE62G0WG]

BHP in an email to Reuters on Monday said it had no additional information on which to update the situation at the refinery.

Traders said they were unaware of any declarations of force majeure on deliveries from the refinery, which supplies around two dozen customers in Europe and Asia.

"If you look at LME inventories, they are sufficient to cover most short-term needs if it comes to that," a trader in Sydney said.

As of Friday, LME nickel inventories stood at 131,862 tonnes, roughly 10 percent of annual world consumption, marking nearly a 10 percent gain over the past three months.

The Kwinana refinery is the final link in BHP's Nickel West production chain. Nickel concentrate from BHP's own mines and a small handful of independents in the west Australia outback is first processed at the 100,000-tonnes-per-year Kalgoorlie nickel smelter and turned into nickel matte.

About two-thirds of the matte is railed 600 kilometres (310 miles) to Kwinana for refining using an ammonia leach process into London Metal Exchange-grade nickel.

BHP in mid-March was forced idle the refinery after the plant's hydrogen plant failed and usual back-up supplies from a neighbouring gas facility were unavailable.

It was 11 days before operations resumed.

Nickel, a key ingredient in manufacturing steel , traded at about $24,900 at 0607 GMT, down about $300 since Friday. Nickel prices hit an all-time high of $51,800 in May 2007.


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