UPDATE: Xstrata to Close Sinclair Nickel Mine in Australia

-- Mine shutdown in mid-May to affect 149 workers

-- Move comes amid weak nickel price, high Australian dollar

(Adds background on mining downturn, production figures and job losses from second paragraph)

 
   By Stephen Bell 
 

PERTH--Xstrata PLC (XTA.LN) said it plans to close its Sinclair nickel mine in Western Australia state this month, in the latest move by a major mining company to cut costs amid soft metals prices.

Mining at Sinclair will finish mid-May after the operation reaches the end of its expected life, affecting up to 149 workers, Xstrata said. Stockpiled ore will continue to be processed into the third quarter of the year.

"The majority of the mining workforce are contractors and will depart on or after the 15th May when mining ceases," an Xstrata spokesman told The Wall Street Journal.

The remaining workforce will be "progressively reduced" through to the end of processing, he said.

A total of 93 contractors and 56 employees were working at the Sinclair operation at the end of last year, the spokesman added.

The mine produced 7,472 metric tons of nickel in concentrate in calendar 2012.

Its closure follows Xstrata's move to shutter the nearby Cosmos mine in September due to a prolonged period of low nickel prices and the high Australian dollar.

The price of nickel, used in stainless steel, is down about 14% this year, following other industrial metals such as copper lower amid worries about China's slowing economic growth.

Last week, Russia's Norilsk Nickel (GMKN.RS) said it would lay off 60 nickel miners after suspending operations at its Lake Johnston operation in Western Australia state.

International mining companies like BHP Billiton Ltd. (BHP) and Rio Tinto PLC (RIO) have in recent months closed unprofitable mines, laid off workers and put up for sale non-core assets in an effort to contain costs.

Sinclair includes an underground mine and a concentrator with an annual capacity of 350,000 tons of ore a year. Nickel concentrate from the mine is transported to Esperance Port for shipment to Xstrata's nickel smelter in Sudbury, Canada, the company said on its website.

Xstrata placed a major bet on Australian nickel in late 2007 when it purchased Jubilee Mines NL for 3.1 billion Australian dollars (US$3.2 billion).

The latest closure comes as Xstrata and Glencore International AG (GLEN.LN) finalize their merger, which is due to come into effect Thursday.

The combined company's Murrin Murrin mine will be its sole operating nickel asset in Australia.

-Write to Stephen Bell at [e-mail]

Subscribe to WSJ: http://online.wsj.com?mod=djnwires