MRE "would like to move into the nickel sulfide arena" and may be interested in acquiring one of Norilsk Nickel's Australian assets, Minara Chief Executive Peter Johnston said. "We would be interested in Honeymoon Well but the deposit has high impurity levels and it would require a large amount of capital spend. We haven't had direct discussions with Norilsk so far," Johnston told Dow Jones Newswires on the sidelines of the Minerals Week conference. Norilsk Nickel acquired Honeymoon Well as part of its US$6.25bn takeover of LionOre International in 2007, as well as a suite of other assets. Norilsk has since closed all of its Australian mines that include Cawse, Waterloo and Black Swan. The company has since started talks to sell Cawse to Australia-based Poseidon Nickel Ltd. Minara's producing asset, Murrin Murrin in Western Australia, is a laterite mine that uses a high pressure acid leach system that requires high levels of maintenance and its profitability is exposed to swings in sulfur prices, used in the leaching process. Nickel from sulfide systems tends to be smelted. "We would like to move into the sulfide arena but you've got to have to hit the right one. Honeymoon Well isn't an easy deposit," Johnston said, adding that the company was also looking to add copper projects to its portfolio.
Since reaching record highs in excess of US$50,000 a metric ton in 2007, the nickel market has plummeted to less than US$9,000/ton last year to leave much of the industry struggling to turn a profit. Unlike for other base metals, nickel's recovery has been more muted due to a slow recovery in stainless steel demand, nickel's biggest consumer. But a recovery also looks dogged because of significant idled capacity that could be restarted at short notice should demand turn around. "The big issue is the lack of stainless steel demand, which is tied to world growth. We think we are at the bottom, but we're also still cautious," Johnston said. MRE gained 2 cents (2.26%) to $0.68.
MRE Price at posting:
64.0¢ Sentiment: LT Buy Disclosure: Held
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