Aug 19 2008
Falconbridge Dominicana C x A (Falcondo), a nickel mining and processing operation with an annual capacity of 29,000 tonnes of nickel in ferronickel, is temporarily suspending operations as a result of market conditions.
This is due to a combination of extremely high oil prices, which represent the majority of the site’s costs, and lower nickel prices. The shutdown is anticipated to last for four months, during which time furnace repairs and crucial maintenance activities will be conducted. The suspension will also enable the acceleration of feasibility studies into the energy conversion project, to switch the operation’s power source from oil to coal, and the development of the Loma Miranda project, which will provide a new higher-grade mining area for Falcondo and extend the mine life.
“Falcondo has implemented various measures to alleviate the negative impact of record high oil prices on its financial position. These actions have resulted in approximately US$20 million of cost savings,” said Ian Pearce, CEO of Xstrata Nickel. “Nonetheless, in the light of current market conditions and the requirement to conduct maintenance and repairs, we have decided to temporarily suspend operations as the best option for the long-term future of Falcondo. Importantly, the suspension will provide us with an opportunity to further advance the energy conversion and Loma Miranda projects, both of which are critical to ensure the long-term future of Falcondo as a stable producer throughout the nickel and oil price cycle. The resumption of activities will be assessed based on market conditions, which are expected to improve towards the end of 2008.”
“During this period, in excess of 90% of Falcondo’s full-time workforce will be engaged to perform maintenance activities, development of our two major projects, earthworks, mine rehabilitation and reforestation activities, and wherever possible Falcondo employees will be used to replace contractors,” said Ernest Mast, President and General Manager of Falcondo. “Falcondo will continue to maintain rural roads, support cultural, sports and other community activities and continue to fund the Falcondo Foundation, which supports local development in health, education, environment and culture. The site will also continue to generate power to help regulate and stabilize the national grid.”
Ernest Mast added, “Feasibility studies and development work into the energy conversion project and the Loma Miranda development area, situated 25 kilometres from the Falcondo site, are well advanced. The successful development of these critical projects will reposition Falcondo on the cost curve and secure the long-term economic prosperity of our nickel business in the Dominican Republic.”
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