Australia's second-biggest nickel producer, Minara Resources has returned its Murrin Murrin plant in Western Australia to full production, after output was affected by an explosion that severed natural-gas supplies to the region from an offshore plant.

The company has arranged an alternative supply of gas, part of which is uninterruptable, and believes it is on track to achieve its June production forecast of between 31 000 t and 35 000 t of of nickel for this year.

Shares in Minara, which closed its plant for five days last month after the explosion at Apache Energy's Varanus Island gas facility, rose 4,6% on Friday, to A$2,98.

The firm said it had operated the plant at its Murrin Murrin mine at between half and two thirds capacity for the remainder of the month after the plant was restarted.

The company produced 7 268 t of nickel during the quarter ended June 30, compared with 7 598 t in the same period last year.

Cobalt output declined to 505 t, from 551 t in the second quarter of 2007.

Minara is the fifth-largest producer of the metal in the world.

“[The] Murrin Murrin plant performance was commendable thoughout the quarter despite the difficult operating conditions...with the plant now back to full production we are confident that we will meet our production forecast,” said MD and CEO Peter Johnston.

Miners in Western Australia were left looking for energy alternatives early last month, after a pipeline ruptured at the Varanus Island plant, causing an explosion and cutting gas supplies from the plant, which supplies most of its production to industrial customers, including iron-ore and gold mines, and aluminium producers.

Apache, which has said it expects to resume partial gas supplies from its Varanus Island facility by mid-August, is responsible for about a third of Western Australia's gas supplies.

A number of producers have reported that they have arranged for temporary gas supplies, but several are still operating on costly diesel power.

“Coupled with the increased cost of gas and related production losses, there is a range of cost pressures affecting the mining industry in Western Australia,” Minara said on Friday.

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