WA nickel mine to close this month

About 180 workers will be out of a job as Russia's Norilsk Nickel closes its Lake Johnston operations this month.

Lake Johnston has been up for sale as a going concern but the company has failed to identify a buyer.

Staff were notified in January by the company’s Australian managing director Edwin van Leeuwen that the mine would close on April 22 if a buyer was not found, the West Australian reported.

It has been reported the decision to shut Lake Johnston, Norilsk's only Australian mine, was made after senior Russian executives visited the site in late March.

Senior managers and contractors were last week told the Western Australian mine would close, but it is not clear if staff have been directly notified yet.

The Australian subsidiary is understood to have outstanding supplier bills running into the range of at least $20 million to $30 million.

It remains unclear whether the company will be sent into receivership, or whether its Russian parent will step in to pay mounting debts and expected redundancy packages.

Accrued employee entitlements are estimated to run into millions of dollars.

Norilsk has been struggling to pay suppliers and contractors since at least last December.

After bills were not paid several mining contractors withdrew services, including the site’s catering contractors.

On at least one occasion Norilsk failed to pay workers on time, van Leeuwn told staff the delay was due to "internal technical changes to the financial approval process" at its parent company.

A steep decline in the nickel price coupled with a limited mine life at Lake Johnson has now assisted the company’s efforts to sell the mine.

The company’s other Australian assets are still for sale, including the mothballed Waterloo nickel operations and the Honeymoon Well nickel project.

Honeymoon Well is regarded as Norilsk’s most attractive asset, and as recently as last year the company was reported it would ramp up development by 2017.

But the multibillion-dollar development cost associated with the deposit is likely to be a hurdle, and it is unclear whether those plans will now go ahead.

The company has also recently undergone extensive management changes after a settlement deal between feuding Norilsk shareholders United Co Rusal and billionaire Vladimir Potanin.

In October, Australian Mining reported more nickel mines may close.

Former WA mining minister Norman Moore at the time warned that nickel exploration may drop and if prices keep falling then "more mines may close”.

"The current price has reached levels not seen since mid-2009 in the midst of the global financial crisis," he said.

"This is a cause of concern and if the trend continues more mines may close."

Moore said the price falls had already caused "much pain" to nickel producers, with companies making significant layoffs over the last 12 months.

Last year Xstrata closed the Cosmos and Prospero mine and sacked 150 workers due to the declining market.

BHP also laid off around 155 workers at its Nickel West operations last year.

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