A subsidiary of Philippine Stock Exchange-listed Atlas Consolidated Mining and Development Corporation has suspended operations in its mine site in Palawan in the Philippines.
Atlas told the Philippine Stock Exchange that Berong Nickel Corp. has also laid off 600 workers owing to weak demand for nickel ore and has decided to halt its operations until April. China's demand for laterite ore has fallen substantially and the company was unable to close a deal with Australian firm BHP Billiton for a bigger volume allocation for this year. However, it has secured a contract with BHP Billiton to supply of up to 500,000 tonnes per year of nickel laterite ore until 2013, with an option for additional five years to 2018.
Negotiations to increase the volume to 1 million tonnes were unsuccessful.
"Whilst disappointing, approximately half this volume can be supplied from stockpiles which mean full scale mining operations can be deferred until the second half of 2009," Atlas said.
Presently, Berong Nickel has less than 50 people employed at its mine site.
"It is never pleasant having to lay off more than 600 employees and contractors, especially in a region with little alternative employment opportunities. However, this action is essential to the long term viability of (Berong Nickel) and hence the prospect for future prosperity within the local community," Atlas said.
The company has also announced that in 2008 Berong Nickel has produced 476,850 tonnes of ore, 53,000 tonnes less than in 2007. For the fourth quarter of last year, output was only 16,279 tonnes.
"Production was reduced in response to the increasing stock levels, deteriorating markets and onset of the non-shipping window," the company said.
Atlas said that from late-October to February, shipments are difficult due to the irregularly rough sea conditions making loading unsafe.
In October, Berong Nickel delivered 47,995 wet metric tonnes of nickel laterite ore to BHP Billiton in Australia at an average grade of 1.54-percent nickel and 34.13-percent iron.
In the last quarter the Chinese market for laterite ore further declined and is expected to remain depressed until this year.
"Anecdotal evidence suggests more than 8 million tonnes of laterite ore is currently stockpiled at Chinese ports," Atlas said.
Source: GMANews TV
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