Minmetals reviewing shelved Sepon expansion

Production and Markets

A rebound in metal prices this year has prompted producers to study reopening shuttered mines and boost output on optimism that demand has rebounded from the worst global recession since World War II.

China Minmetals Corp, the nation’s largest metals trader, may revive a shelved plan to boost copper output at the Sepon mine in Laos by 23%.

The company’s Melbourne-based Australian unit, Minerals and Metals Group (MinMetals), will review in the “near term” a project to boost copper production capacity to 80,000t/y, from 65,000t, it said today in an e-mailed statement.

Minmetals, which paid US$1.39 billion for most of the assets of OZ Minerals Ltd in June, may also restart the Avebury nickel mine should prices improve next year.

“Once we are comfortable that the price is going to be steady around the US$20,000 mark then that’s when we will feel more confident,” Andrew Michelmore, MMG’s chief executive officer, told reporters today on a conference call. “When we look at the demand and the potential supply, we are still not comfortable that that price is going to sit at the level that we would need.”

Former owner OZ Minerals shut the mine in Australia’s Tasmania state in December because of a slump in prices. However, nickel has rebounded 62% this year as plants that make stainless steel, the biggest use of the metal, boost production. The price on the London Metal Exchange was US$18,995/t on Oct 23.

The previous cost estimate of US$178 million for expanding capacity at Sepon will also be reviewed, Mr Michelmore said.

Oct 26 (Bloomberg)