Metals News
UPDATE 1-Mirabela Nickel Cuts Production Outlook, Will Not Impact Supply Glut
industry news
May 15,2012

SYDNEY, May 15 (Reuters) - Australia-listed Mirabela Nickel has cut its 2012 production guidance by 1,000 tonnes after mining lower grade ore in the first quarter, though this is not expected to dampen a supply glut that has weighed down prices for the metal.

Mirabela's reduction to a projected 19,000-21,000 tonnes this year from its Santa Rita mines in Brazil pales against the mounting over-supply of metal that's driven nickel prices down 20 percent since February to just under $17,000 a tonne , commodity analysts said.

The surplus largely reflects weakness in the stainless steel manufacturing sector in China, the world's largest user of nickel, due to weaker exports and soft domestic demand, Barclays Bank said in a report.

There was 26,700 tonnes of surplus nickel supply in January and February, data from the International Nickel Study Group has shown.

Barclays said the glut could balloon to 66,000 tonnes by year-end as more mines are built and demand wanes.

Western Areas has said it would exceed its production guidance by 1,000 tonnes this year due to better-than-expected mine yields in Australia.

Meanwhile, Australia's Ravensthorpe nickel mine, shut down in 2009 due to low metals prices, will produce between 33,000 and 36,000 tonnes of nickel in 2012 after resuming commercial production, according to owner First Quantum Minerals Ltd .

Overall, world output of nickel is forecast by Australia's Bureau of Resources and Energy Economics to rise to 1.984 million tonnes in 2012 from 1.942 million in 2011.

Mirabela also said it had launched an offer to raise up to about A$120 million via a placement to Resource Capital Fund V L.P.

Shares in Mirabela, which requested a trading halt in Australia before making the announcement, have tumbled 70 percent this year.


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