TORONTO (miningweekly.com) – The nickel market is skewed at the moment by a strike at Vale Inco's Sudbury, Ontario, and Voisey's Bay operations, which raises questions over the sustainability of the current price, FNX Mining CEO Terry MacGibbon said on Thursday.

FNX also has mines in Sudbury, but stopped mining nickel ore in December 2008, when the metal's price fell last year, and is focusing at the moment on copper- and precious-metals-rich ore.

“I'm not sure if the price is sustainable,” MacGibbon said on a conference call, in response to a question about whether the firm might consider restarting nickel mining operations.

“We don't think that this is a realistic nickel price that one could use to determine sustainability."

Still, if it was realistic, “it would probably make sense” to mine nickel again at current prices, MacGibbon said.

However, the strike at Vale Inco also has other implications for FNX – Vale has a long-term processing agreement covering all FNX ore, and is currently running its Clarabelle mill with nonstriking staff, producing a copper concentrate, rather than nickel.

Like FNX, Vale is focusing its limited mining activity in Sudbury on parts of the orebody rich in copper and precious metals.

MacGibbon also pointed out that, while the copper ore can sit in an inventory almost indefinitely, nickel ore can not be stockpiled or it will oxidise, which means the company must be sure it can process any ore that would be mined.

The spot price for nickel has gained almost 50% in 2009 and was sitting at around $7,30/lb on Thursday evening.

LOOKING FOR OPPORTUNITIES

After passing through what MacGibbon termed “survival mode” this time last year, FNX is now ready to start looking again at growth opportunities.

The company is developing the Levack Footwall deposit, at its Levack mine, and expects to have it in commercial production around mid-2010 and is also busy exploring for additional resources and reserves on its own properties.

However, the firm is also prepared to look for acquisition opportunities “in Sudbury and elsewhere”, MacGibbon said.

“Who knows what might happen in Sudbury? There are a number of properties that are inactive, that remind us of some of the properties that we bought in 2002,” he said.

FNX was formed in 2002, when it bought five Sudbury properties from what was then Inco, and has made several discoveries of its own since then.

“We would like to have the opportunity to become involved in some of those properties,” MacGibbon said.

“What we have done, is put ourselves in a position that if something comes available and is an interesting opportunity, we have the capability of doing it.”

Besides Vale Inco and FNX, Xstrata Nickel also has mines in the Sudbury basin.

Shares in FNX, which published third quarter results earlier in the day, slid 1,07% on Thursday, to C$10,19 apiece by 15:59 in Toronto.

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