Oversupply of low-quality nickel from Indonesia made the higher quality, but higher cost, ore from Australian mines uncompetitive.
The receivers and managers of the Mallee Resources group of companies on Wednesday announced that the Avebury nickel mine, in Tasmania, will transition into a care-and-maintenance programme.
KordaMentha’s distressed business division has been operating Avebury while looking for a long-term buyer. However, the decline in the nickel price, largely attributable to the significant expansion in Indonesian supply, has put potential buyers off.
The LME nickel price is currently about $15 000/t to $16 000/t, more than 50% lower than what it was at the start of 2023.
Receiver Scott Langdon said the oversupply of low-quality nickel from Indonesia made the higher quality, but higher cost, ore from Australian mines uncompetitive.
“As a number of Australian miners have recently experienced, without a structural change in the market to properly value low carbon, battery-grade nickel, local mine operations will continue to be disadvantaged compared to their competitors,” he said.
Langdon noted that KordaMentha had received interest from global participants; however, navigating the current market conditions posed challenges in finding the right course for a sale at this junction.
The sharp downturn in the nickel market has resulted in BHP reviewing its nickel assets in Western Australia, Panaramoc Resources suspending its key mine after entering into voluntary administration, First Quantum scaling back its Australian operation and IGO shutting a site.