|Group to buy idle MMG nickel mine in Australia
An Australian private company has agreed to buy the long-idle Avebury nickel mine in Tasmania from China's MMG Ltd for A$40 million ($37.65 million), Reuters reported Tuesday.
In 2009, the mine was shut as the cost of producing a pound of nickel exceeded the going price at the London Metal Exchange. This week, the LME three-month nickel price hit a 14-month high of $17,917 a ton.
Nickel has staged a rise since January after the Indonesian government banned exports of nickel ore, cutting off a key supply source for Chinese steel makers.
The private company, QCG Resources, said it had entered into a binding agreement with MMG and would be making an initial payment of A$1.75 million within 15 days of signing a formal agreement.
"Internal studies conducted by QCG and its advisors as part of the due diligence process show the project in its current form is economic at current nickel prices," QCG Chairman Doug Daws said.
Talks were underway to secure the funds for the full purchase price, which includes a A$33.25 million closing payment and A$5 million in two stages on the first 20,000 tons of production, according to QCG.
The mine is capable of producing 7,000 tons of nickel in concentrate annually and holds an agreement with Chinese nickel refining company Jinchuan Group.