First Quantum to buy Australian nickel mine

CanadaÔÇÖs First Quantum Minerals is buying BHP Billiton's Ravensthorpe nickel mine on Western AustraliaÔÇÖs south coast for $340 million.  The Vancouver, BC-based mining company plans to resume operations at the site, which was mothballed in January due to falling nickel prices, within 18 months. The mine was originally designed to process low-grade nickel laterite ore. The site cost BHP $2.2 billion to build but led to around $3.6 billion in writedowns after less than 12 months in operation. Almost 2,000 workers lost their jobs when the site was shut down. Some local businesses were also forced to close due to the knock-on effects. The new operation is expected to employ around 600 workers once it is up and running. First Quantum said its strong balance sheet and the realistic capital cost base for Ravensthorpe provided the company with enough time and flexibility to address the commissioning and operational issues previously encountered by BHP in order to realize the full potential of the project. ÔÇ£The acquisition of the Ravensthorpe Nickel Operation is a major step towards First Quantum achieving its goal of becoming a globally diversified mining company,ÔÇØ said Philip Pascall, chairman and CEO of First Quantum, in a statement. ÔÇ£We are committed to re-starting Ravensthorpe which we believe we can successfully achieve within a realistic timeframe. We are confident that our experience from many years of successfully developing and operating complex projects will be invaluable in making this a reality.ÔÇØ He added: ÔÇ£First QuantumÔÇÖs successful growth to this point has been built on identifying projects with high potential and applying our comprehensive skills to realize that potential. We embark upon this diversification and expansion of the CompanyÔÇÖs asset base with confidence.ÔÇØ BHP had reportedly been hoping for up to $500 million for the sale of the mine. China was believed to be one of the lead bidders for Ravensthorpe, with a joint offer from China Metallurgical Group (MCC) and local nickel miner Minara Resources said to have been the strongest contender. Also in the running was Western Australia-based Poseidon Nickel. The sale is subject to approval from AustraliaÔÇÖs foreign investment review board and the West Australian mines minister. If approvals are granted, the deal is expected to close in the first quarter of 2010. *┬á┬á┬á┬á┬á┬á┬á *┬á┬á┬á┬á┬á┬á┬á *