UPDATE 2-Australia nickel, zinc units restart after cyclone

Fri Feb 4, 2011 5:53am GMT
 

* Australia's QNI nickel, Century zinc, Mt Isa copper to restart

* QNI needs 18-24 hours to resume normal operations

* Century staff to return on Saturday

* Gold mine restarting (Adds details of Pajingo gold mine restarting)

By James Regan

SYDNEY, Feb 4 (Reuters) - Australia's second-biggest nickel refinery and largest zinc mine are set to reopen by the weekend, after both were shut down along with other metal producers ahead of Cyclone Yasi this week.

The 30,000-tonnes-per-year QNI refinery will resume production on Friday and the Century zinc mine will be reactivated over the weekend after precautionary closures, owners of the operations said on Friday.

The Mt Isa copper mining and smelting unit is also set to start operations, its owner Xstrata said, though it was still unable to say when its 300,000-tonnes-a-year Townsville copper refinery, which is being checked for damage, would restart.

Production at the refinery, located close to the QNI plant, was suspended on Feb. 2.

"A preliminary investigation of our port facilities has not identified any major structural damage, however a comprehensive site audit of our Townsville port and refinery operations is yet to be completed as part of the recovery planning process," Xstrata's local operations chief, Steve de Kruijff, said in a statement emailed to Reuters.

The refinery's shutdown was cited as a factor driving world copper prices to record highs this week.

A one-week outage at the Townsville refinery would result in between 5,000 and 6,000 tonnes of lost production.

The London Metal Exchange copper price on Thursday rose to a record $10,000 a tonne. Analysts predict tight copper supplies worldwide will help drive prices to $12,000 a tonne as output struggles to keep up with demand into 2012.

QNI spokesman Mark Kelly said the nickel refinery should resume production at 6 p.m. local time (0800 GMT) as the first work shift returned, and another 18-24 hours to return to its normal production rate.

"The good news for us is that we have got our power back at the refinery," he said.

NO DAMAGE TO CENTURY ZINC MINE

The Century zinc mine did not suffer damage from Cyclone Yasi, which passed over the mine site on Friday after being downgraded to a tropical low, said mine owner MMG, a unit of Minmetals of China .

"We didn't expect to get flights for workers back in until Sunday or Monday, but now I think we will start getting flights in on Saturday," a MMG spokesman said.

MMG on Thursday suspended output at the remote mine and evacuated workers as a precaution against the cyclone.

The Century mine in 2011 is forecast to yield just over 500,000 tonnes of zinc in concentrate, making it the second largest behind Teck Resources' Red Dog mine in Alaska.

Production losses from the suspension were likely to be less than the one week, or 9,600 tonnes, anticipated earlier by the company, MMG spokesman Bruce Loveday said

"We were lucky on this one, very fortuitous," Loveday said. "We have very high winds, but very little rain."

The Australian Bureau of Meteorology said wind gusts of around 90 km per hour were still possible in the region of the mine.

Zinc futures are up 15 percent since early December to $2,490 a tonne ($1.13 a pound) on expectations steelmakers will need more metal for galvanised steel products

Cyclone Yasi, which smacked into the northeast coast of Queensland state on Wednesday night, had dissipated to a tropical low by the time it reached the Century mine.

The low also passed over the Mt Isa mining region 300 kms south of the Century mine.

Xstrata's Ernest Henry Mine at Cloncurry even further inland was reduced to a skeleton crew in anticipation of high winds generated by the storm, the company said.

The Mt Isa operations yield around 160,000 tonnes of copper in concentrate and 214,000 tonnes of copper anode a year.

The Ernest Henry unit produces 90,000 tonnes of copper in concentrate a year, which is either transported to Mount Isa for smelting or sent to the port at Townsville for export.

"We remain focused on getting our operations back online as soon as possible to also assist the economic recovery of North Queensland," de Kruijff said

Conquest Mining's Pajingo mine, 50 km south of the historic gold mining town of Charters Towers and yielding around 2,200 ounces of gold a month, will resume full production on Friday after evacuating staff this week, the company said.

There was no damage to the mine, it said. (Editing by Ed Davies)

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