norilsk close to dealing...

Norilsk Nickel open to offer from Poseidon
Devon Maylie | April 07, 2009

Article from: Dow Jones Newswires

NORILSK Nickel has flagged it will consider an offer from Australian nickel miner Poseidon Nickel.

“If the offer is good enough, we would consider it,” deputy chief executive officer Oleg Pivovarchuk said.

“These proposals must be very good though.”

In March, Poseidon said it was in “confidential discussions” with Norilsk Nickel to acquire the Cawse nickel operation in Western Australia.

Russian nickel miner Norilsk put the laterite mine on care and maintenance last year, citing low nickel prices.

Cawse is estimated to be worth about $50 million and produced about 8500 tonnes in 2008.

Due to low prices the company placed all of its Australian operations on care and maintenance. These account for roughly 43,500 tonnes of capacity.

Mr Pivovarchuk said the Australian assets were hit particularly hard by the drop in nickel prices, which fell 80 per cent at the end of 2008 from a record high in 2007.

The cost of production ranged between $12,000 a tonne and $20,000 a tonne at the Australian operations, and prices on the London Metal Exchange are currently trading around $10,600 a tonne, having fallen to as low as $8,850 a tonne in October.

Norilsk also has two operations in Africa - Tati Nickel in Botswana and Nkomati in South Africa, which is a joint venture with African Rainbow Minerals.

Both are still operating, and Mr Pivovarchuk said the company had no intention to sell the African operations or to cut production.