The mines and petroleum minister of Western Australia, Norman Moore, has said nickel exploration in the Australian state is expected to drop further in 2013 and "more mines may close" if prices keep falling, according to media reports.
Speaking at the Paydirt Nickel conference in Perth, Mr. Moore said the market price for nickel had dropped significantly, stating, "The current price has reached levels not seen since mid-2009 in the midst of the global financial crisis."
According to Moore, Western Australia produced 188,000 mt of nickel during 2011, but the value of nickel production declined by nine percent to A$3.9 billion. "This was due to a seven percent decrease in average nickel prices in 2011," he noted.
The Western Australian mininster also said the price falls had already caused "much pain" to nickel producers, with companies making significant layoffs over the last 12 months. Accordingly, Xstrata announced in September the halting of operations at its Cosmos mine, and last year the company also closed its Prospero mine due to the declining market. Also, BHP Billiton recently announced a 155 staff reduction at its Nickel West operations.
However, Moore noted that the nickel industry was expected to worsen in the short term but was also showing signs of a recovery in the long term.