Norilsk Nickel (GMKN.MM: Quote, Profile, Research) is in talks to sell its Cawse nickel operation in Western Australia to exploration firm Poseidon Nickel (POS.AX: Quote, Profile, Research) after suspending all of its Australian operations due to the global financial crisis. Poseidon Nickel, whose non-executive chairman is self-made mining billionaire Andrew Forrest, said on Monday it was in confidential discussions with Norilsk regarding the acquisition. The negotiations are incomplete and ongoing.
Norilsk Nickel declined to comment.
Poseidon said it issued the statement in response to an article in The Australian Financial Review making reference to its possible interest in acquiring the Cawse project.
The company did not give more details. The Australian Financial Review article said the acquisition could be worth around A$50 million ($32.9 million).
Norilsk, the world's largest nickel miner, has brought its entire Australian mining network to a halt after a sharp decline in prices and demand for the metal used in stainless steel.
Nickel MNI3 is worth less than a fifth of its record price of $51,800 a tonne reached in May 2007. In the last 12 months alone, it has lost about 70 percent of its value.
The Russian company said on Oct. 17 it would halt production at Cawse, which it acquired through its purchase of OM Group's (OMG.N: Quote, Profile, Research) nickel business in 2007. [ID:nLH324050]
The mine had been operating under increasing cost pressures for some time.
It has since suspended production at its Waterloo, Silver Swan, Black Swan and Lake Johnston nickel operations, all of which it acquired when it bought control of LionOre Mining International.
Analysts have estimated the Australian closures were equivalent to 13 percent of Norilsk's 2008 nickel output.
Poseidon Nickel's main activities are the exploration and development of nickel leases in Mt Windarra, Western Australia. The company says on its Web site, www.poseidon-nickel.com.au. that it also has gold exploration interests in Ghana. (Reporting by Robin Paxton and Aleksandras Budrys)
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