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BHP shuts Australia nickel refinery for 4 months
SYDNEY, June 12 - Global miner BHP Billiton Ltd said it would immediately shut down its Kwinana nickel refinery in Western Australia for about four months as it had to rebuild a furnace at its Kalgoorlie nickel smelter earlier than planned.
The announcement drove BHP's shares down 3.5 percent and sent nickel prices up $500, or 2.2 percent, to $23,750 a tonne at 0032 GMT.
BHP estimated the shutdown would cut its nickel sales by 25,000 tonnes in the financial year to June 2009, and by 3,000 tonnes for the current year to end-June.
"This will be very significant. We will lose 25,000 tonnes of metal because of the shutdown. We already estimate the refined nickel market will be in deficit by 80,000 tonnes this year, and this will just deepen the shortfall," a trader in Sydney said.
"It's time to forget about the stainless steel glut and falling demand. We could see nickel $1,000 a tonne higher by this evening. In fact I wouldn't be selling nickel anywhere below $25,000, I'd buy."
BHP said on Thursday it had planned to start rebuilding the furnace at its Kalgoorlie nickel smelter next year but decided it had to be done now due to deterioration that made it unsafe.
The Kalgoorlie smelter produces around 100,000 tonnes of nickel-in-matte a year which is fed into the Kwinana nickel refinery and also exported to other customers.
BHP said its Nickel West operations were trying to continue concentrate production.
The furnace rebuild has freed up gas supply for BHP's Worsley Alumina refinery, which had been hit by a power shortfall following an explosion at a gas plant operated by Apache Energy on Varanus Island off Western Australia.
The blast last week cut about a third of gas supplies to Australia's biggest mining state, and Apache expects it will take at least two months to restore partial supplies.
BHP shares touched a low of A$41.91 and last traded down 3.2 percent at A$42.06.
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