nickel price

The nickel price is doing well tonight with a drop in LME Stocks of 336 tonnes. Also with the issue of the flooding at the BHP,MRE and MCR mines will put a floor on the price unlike copper that seems to be in a freefall at the moment. AUZ at these nickel prices will report a profit of between 12-16 million this year not bad for a company with a market cap of only $34 million. Also awaiting the results on some important exploration at area 57 which could add significant reserves.

Spot nickel currently up over 1%

BHP, Minara Halt Output at Australian Nickel Mines (Update7)

By Madelene Pearson

Jan. 4 (Bloomberg) -- BHP Billiton Ltd. and Minara Resources Ltd., Australia's two largest nickel producers, halted output at mines after heavy rain, which may add to supply shortages that have driven prices to a 19-year high.

Pit operations at the mines in BHP's Nickel West division, the third-largest producer of nickel in concentrate, in Western Australia have halted, Emma Meade, spokeswoman for Melbourne- based BHP said by phone today. Minara stopped output at its Murrin Murrin mine after 75 millimeters (3 inches) of rain, spokesman Willie Rowe said from Perth.

Nickel prices reached a peak in December as China's rising demand for stainless steel helped cause a supply shortfall. Use of the metal will outstrip supply by 57,000 metric tons this year, according to BHP, the world's largest mining company.

``The nickel market doesn't tend to like interruptions of any kind,'' James Wilson, resource analyst at D.J. Carmichael & Co., said from Perth. ``Any kind of interruption to production or anything like that, the market tends to react badly to those and the price of nickel tends to go up.''

Nickel for three month delivery rose $275, or 0.9 percent, to $32,750 a metric ton on the London Metal Exchange yesterday amid forecasts of downpours in Australia's biggest nickel mining area by the nation's Bureau of Meteorology. The metal surged 147 percent last year.

Shares Drop

Shares in Minara, 51 percent owned by Glencore International AG, dropped 31 cents, or 5.5 percent, to A$5.30 on the Australian Stock Exchange at the 4:10 p.m. close of trade in Sydney. Zug, Switzerland-based Glencore is the world's largest commodity trader.

BHP shares fell A$1.11, or 4.4 percent, to A$24.37. A 7.7 percent drop in copper prices in New York yesterday also dragged on the mining company.

A deep, low weather system, formed out of what was Cyclone Isobel, produced ``unseasonally heavy'' rain and ``localized flooding'' in Western Australia's south, where Nickel West's Mt. Keith and Leinster mines are located, the bureau said. Falls of 10 to 20 millimeters are forecast for later today.

``When the ground gets too soft they obviously can't move the big equipment around safely,'' BHP's Meade said in reference to the closed mine pits.

As much as 44 millimeters of rain fell through to 6 a.m. Perth time today at the town of Leonora, located about 200 kilometers (124 miles) south of the Leinster mine, the Bureau of Meteorology said on its Web site.

Ravensthorpe Prepares

BHP's $2.2 billion Ravensthorpe nickel project to the south of the Leinster and Mt. Keith mines, is ``tying down'' in preparation for the rain, Meade said. Ravensthorpe is due to start production next year.

The poor weather had also slowed some trucking of ore for Mincor Resources NL's four underground nickel mines in the area, Steve Cowle, chief operating officer with Mincor said. Still, he said it wouldn't affect production for the month.

Jubilee Mines NL and Sally Malay Mining Ltd., which also mine nickel in the area, said the rains hadn't disrupted their operations. A Jubilee spokeswoman said it was ``business as usual,'' at its operations. Richard Jordinson, the chief operating officer at Sally Malay, said there had been no major disruptions at its mine.

Open pit mining at Newcrest Mining Ltd.'s Telfer mine has now resumed after being suspended last night because of rain, a spokeswoman for Australia's largest gold mining company said. Telfer is located in the state's north.

Short Term

``The shutdown's only going to be short term,'' said Gary Armor, who helps manage $2.9 billion at AMP Ltd. in Sydney. ``It happens quite a lot this time of the year,'' referring to stoppages brought about by rains, he said.

Cyclone Isobel forced Woodside Petroleum Ltd. and Santos Ltd. to shut down facilities accounting for almost half of Australia's oil output yesterday as it passed near the nation's main crude producing areas.

Processing operations at the Murrin Murrin mine, 40 percent owned by Glencore, won't be affected by the rain as the company has ``significant amounts'' of ore inventories, Minara's Rowe said.

The rain hadn't affected operations at BHP's Kambalda concentrator or the Kalgoorlie smelter yesterday, Meade said.

Australia was the second-biggest nickel producer in the world in 2005.