gee just plain bad luck

Nickel Exports Blocked at Esperance Pending Changes (Update1)

By Jesse Riseborough

May 8 (Bloomberg) -- Australia's port of Esperance will be blocked from exporting any more nickel concentrate until ore loading procedures are changed, the Western Australian state government said.

The port, which banned lead exports in March on pollution concern, must reduce the potential for nickel dust escaping and make improvements such as waterproofing after minor spillages were observed during loading last week, Western Australia's Department of Environment, said in a statement.

LionOre Mining Ltd. and Jubilee Mines NL, the only two nickel mining companies to use the port, exported 213,000 metric tons of concentrate between them last year. Nickel, used to make stainless steel, rose to a record May 4 as supply slumped 81 percent in the past year to less than two days of global consumption.

``The port is required to make improvements to parts of its loading facility to reduce the potential for escape of dust and to prevent spillage into the marine environment before any future shipments of nickel ore,'' Robert Atkins, a director at the environment department said late yesterday in a statement.

Shares of Jubilee fell as much as 49 cents, or 2.7 percent, to A$17.51 and traded at A$17.65 at 1:28 p.m. in Sydney. Shares in LionOre, the subject of C$5.3 billion ($4.8 billion) takeover bid by Russia's OAO GMK Norilsk Nickel, rose 19 cents, or 0.7 percent, to A$26.23.

Loading Monitored

The department monitored the loading of 20,500 tons of nickel concentrate from Toronto-based LionOre and Perth-based Jubilee over the weekend. While three environmental notices were issued during the loading the ship left for Rotterdam on May 6.

``Until we know what the notices are we can't really say whether or not it will have any impact,'' LionOre's Australian managing director Brian Hill said by phone from Perth today. ``It is something we are trying to look into.''

LionOre, planning to make its next nickel shipment in the second half of June, is yet to make contact with the port, Hill said. He added the notices ``were probably minor things''.

Nickel for delivery in three months on the London Metal climbed $1,800, or 3.6 percent, to $51,600 on a ton on Friday, the most recent day of trading. Earlier, prices reached $51,625 a ton, the highest ever.

Lead shipments from the port, located on the southern coast of Western Australia state about 730 kilometers (450 miles) from Perth, were suspended in March amid concern of lead pollution in the town.

To contact the reporter on this story: Jesse Riseborough in Melbourne at [email protected]

Last Updated: May 7, 2007 23:44 EDT